Pandemic changed the way we live our lives and when it all goes to “normal”, whatever the new normal will be, one thing for sure is that it will never be the same. It’s not all bad-in many ways pandemic expedited the natural evolution of how we live our lives and how we do business.
Take shopping for example-most of us now expect Amazon level service and convenience from our every-day stores with features such as curbside pick up becoming a new norm. Most retailers were selling their products on line in addition to stores and now many of them primarily shifting to online business model. And what’s not to love-shop in the convenience of your own home and get your package delivered straight to your door.
Same goes for the way we live in our homes. Most of us are dealing with remote work environment where either one or both parents are now working from home. And if you have kids-you’re most likely home schooling as well, or at least part of the week. What does it mean for your space at home?
Consumers begin looking at their residence not only as a home, but also as a gym, office, child care center and more. Unfortunately, you can’t change your home with just a click of a button (at least not yet). So, we see one of two scenarios happening-a small minority of people realize how much they love their current home because now they can really make a good use of their space. Or you realize just how much you dislike your current home because it no longer works for you in a post pandemic world.
As a result of this dissatisfaction with their current home we see both a huge spike in remodeling and moving activity. Remodeling is costly and not always practical-especially when you have to stay in a home during the construction process. It would test a sanity even of the most stable individual.
The other option is to move, and we’ve seen real estate activity pick up significantly in most parts of the country, including Chicago. The problem is that there are more people looking for homes than there are available homes for variety of reasons. The result is higher prices and potential for multiple offer situations-great for sellers, not so much for completing buyers.
When you get into multiple bid situation you tend to both overplay when you purchase, but also you end up forking out more money during the ownership of your home. The overplaying from get go makes sense-you need to outbid other potential buyers and go in higher than what you would normally agree to pay for that house.
But you’re not done there either. You often complete not just on price, but also on terms. That means you need to be well qualified, potentially put more money towards down payment than you originally planned, but you may also have to agree to forgo inspections in order to win in this game.
This is a personal decision and not an easy one, but we’ve seen many buyers forgo inspections to get a shot at getting a house. So now, you’ve overpaid for the house to begin with, but you’re also not sure what you’re getting into. There can be major issues that would normally be uncovered during inspections and you would at least have a choice to either back out or to re-negotiate on the price. Now it’s on you. Getting a home warranty is good idea in this case as it can help pay for some major unexpected issues, but even with a home warranty you’d end up paying more money out of pocket.
Many buyers don’t think of new construction as a viable alternative to buying a used home for variety of reasons, including a higher price and length of time that it takes to take possession. But it may be a perfect alternative especially in a tight real estate market like we’re in now.
Let’s start with a price. Sure, typically you can expect to pay about a twenty percent premium for a new home when compared to a similar used home. But if you think about it, that number can be a lot lower when you take all things into consideration and here is why.
Typically, you don’t complete against other buyers with new construction. If you purchase in a subdivision you’ll pay the published price or may even be able to negotiate a lower deal, and you don’t have to worry about bidding wars. So, the typical twenty percent price spread can shrink here depending on how much you would overplay for a used home.
Next, ask your builder about any incentives or assistance with closing costs. Often times builders partner with lenders to provide closing cost assistance to buyers, therefore reducing the amount of cash you’d need to spend on a home.
The best part is that you don’t need to give up your right to inspect the home-you’ll still have your inspections giving you a peace of mind. On top of that, builders offer a warranty program that covers a lot of items in your new home post settlement. Beauty of buying new is that you don’t have the typical maintenance expenses associated with buying a used home. Sure, you’ll still need to maintain it, but builders use materials that last longer and don’t require as much maintenance which will save you thousands during homeownership.
All in all you may end up paying more for a used home over time, compared to new home especially when you take energy efficiency into consideration. This is one major expense that can be cut in half or more with a new home compared to energy cost of running a used home that’s similar.
Finally, and probably most importantly you get to design your own home when you buy new. You can customize it to create the extra office space and homework nook for the kids. It’s a lot more cost effective to make these changes when you build vs post settlement.
When it comes to timing you may end up moving into your new home faster versus the time it would take you to finally get a winning bid on a used home. Plus, many builders have spec homes which are basically ready to be occupied in sixty to ninety days and you still have an opportunity to customize the finishes.
Overall, there’s never been a better time to own a new home. It’s where your family spends majority of their time now and investing in home that’s healthy and energy efficient as well as meets your family needs makes a lot more sense now than ever before.
If you’re considering new, ask us about our quick delivery options.
