Anyone who has searched for a resale home to buy in 2020, is well aware of the limited housing supply in the Phoenix valley. Buyers have had to endure multiple offer situations and properties going under contract before their schedule even permits a showing. The frustration of having to compete with cash buyers coming in from places like California is palpable. Home prices in other states have allowed people to sell for many hundreds of thousands of dollars more than the same house would sell for in metropolitan Phoenix. These buyers see our market as exceedingly affordable compared to where they just left, and are coming in with their pockets loaded with cash equity from the sale of an out of state home. And while there are screechers out there waving up and down about an impending housing crash, we do not see demand slowing down. History suggests that it would take possibly years to have our supply catch up with demand. NOT the conditions we would need to see to predict a crash. In fact, since 2006, Arizona population has risen by approximately 26%. And housing supply has risen by only 17%. Simple math helps us understand why buyers are struggling to find their next home in the Phoenix metropolitan area.
Despite the challenges of a super strong sellers market, so far in the first 3 quarters of 2020 our team has helped over 20 families purchase a new home that they are thrilled to live in. And of that number, 30% have been new builds. More and more buyers, frustrated that they can't compete with cash offers, are turning toward new builds. And developers and builders are heeding the call for increased inventory! This year, we've seen over 3000 permits pulled for new homes - higher than we've seen since 2007. Builder flags and open house signs are everywhere. And lots are selling fast and furiously! We're actually starting to see lotteries happening again.
There are many benefits to a new build - you get to move into a home that NO ONE has ever lived in! You get to choose the updates you like, or hold off on updates that perhaps you could do more inexpensively yourself; you get to move into a neighborhood that is new to ALL of it's residents, providing good opportunities for bonding and creating a sense of community. There are also downsides to purchasing a new home - additional expenses for landscaping and window coverings (which is ALWAYS more expensive than you think it will be); if a pool is in your future, it's significantly more economical to purchase a resale home with a pool vs. paying for a new pool to be built. New neighborhoods often feel pretty barren until the greenery matures. Not to mention the unavoidable difficulties of dealing with builders who are very much in the drivers seat as demand for their product increases. If you can imagine a brand new home in your future, what do you need to know in order to protect yourself and make the process run more smoothly?
- Make sure you have a realtor who can assist you through the process. If you visit a new home community, your realtor MUST register you on a first visit in order for you to be allowed representation.
- Understand that the sales agent at the community works for THE BUILDER. Without your own representation, you will not be alerted to quality control or cost saving opportunities that an experienced realtor can share with you.
- Your realtor will ask questions about the conditions under which your earnest money will be refunded (almost none when dealing with a builder), and any additional earnest money you will owe based upon the upgrades you select.
- When making your upgrade selections, take your realtor with you. They can often estimate what upgrades are priced reasonably by the builder, and what would grant you considerable savings to contract out after closing. And they can recommend contractors and other vendors to help you make that home YOUR OWN!
- Schedule periodic inspections during construction to ensure that what is going inside the walls is being installed correctly.
- No matter what the sales agent tells you about the expected completion date, add a month or two. They almost always run behind.
- Know the players....while the sales agent will be your initial contact, once construction begins, get to know the superintendent for the site. They are the one's with all of the answers related to construction.
- Be cautious about signing up with the builders preferred lender. Often there will be a closing cost incentive offered for using their lender. While the builder won't tell you this, you are not required to use their lender, and you CAN shop around for rate and terms. Sometimes the benefits of using an outside lender, depending on your situation, can far outweigh using the builders lender.
These are just a few tips for coming out on the other side of a new build purchase feeling positive and like you made the right decision. For more information, contact the Sharyn Younger Team at 480-589-2347 or visit coppersummitrealestate.com.