Building materials continue to be in short supply along with labor shortages for skilled trades. Despite these challenges the National Association of Home Builders and Wells Fargo found that builder confidence rose in December 2021. Confidence is rising because of the high demand for housing.

“The existing home inventory is quite low, and that is supporting demand for new construction,” said Robert Dietz, Chief Economist with the National Association of Home Builders. Prices in Chicago are expected to continue to increase through the rest of the year while the number of sales is expected to decrease. In September, median prices rose in both Illinois and Chicago PMSA. Homes in Illinois sold at a rapid pace in September as inventory remained low and median price increases slowed, according to data from Illinois REALTORS®.

 The median home sale price in the Chicago Metropolitan Area (it comprises the nine counties) was $290,000 in September 2021, up 5.5 percent from $275,000 in September 2020. In a seller's market, real estate prices increase. The strong buyer demand is driving prices in the Chicago metro area as compared to the previous year. Stronger buyer activity will continue with speedy sales and multiple offers leading to price gains. According to local realtors, Illinois and Chicago PMSA both have already recovered to their pre-bubble levels on average. Illinois home prices will rise 8.3% to 19.6% this year, while the Chicago PMSA will rise 6.9% to 16.0%.

“So we’re seeing a lot more interest in building larger, more expensive homes,” Vitner said, adding that a lot of big investors have been interested in buying rental housing — entire neighborhoods of homes built to be rented. “From a home builder perspective, that offers economies of scale. Because they’re building a lot of homes in close proximity to each other. They have a better idea of what they need to order,” he said.

Vitner said that’s good news for builders, but not so much for potential home buyers — they may have a harder time competing with investors for new homes.

The Home Buyer's Guide is here to help you make informed decisions about buying a new construction home. We've compiled information on the process and taken all of your questions into account. This blog post will serve as an informational guide for anyone who wants to purchase a new construction home but isn't sure what they need to do in order to move through the process smoothly.

Find an experienced agent specializing in new construction

The process of buying a new construction home is very different from the traditional route and we recommend finding a real estate agent who is an expert in new construction. Most agents have never been a part of a building process and know nothing or very little about the steps necessary or what you can really expect during this process. It is important to find an experienced agent who can be your guide and advocate during this process.

In fact don't be surprised that most agents will try to talk you out of building a home and will instead steer you in the direction of a used home. Why? It's typically an easier and faster process from start to finish which means they get paid sooner. But easier and faster does not always equal exactly what you wanted. So although building a new home can come with it's own set of challenges it will be a much more rewarding to live in a new home designed for your lifestyle when all said and done.

Experienced real estate agent is also typically connected within the builder industry and will know about the latest developments in your area as well as which builders have the best reputations and which-not so much. They'll also know about any incentives that builder may be offering and how to negotiate your contract. Working with an experienced agent is always a must, but especially when the inventory is tight-they will know what's coming up and where so you can be the first in line when a new community opens up.

Determine your budget, explore financing options and get pre-qualified

Just like with an agent, you'd want to work with a loan officer who specializes in new construction. There are many financing options available and the terms will largely depend on a type of a home you build-aka buy your own land and build it yourself, vs. buying in a development where other homes are being constructed. There are a lot of myths associated with new construction financing, so it's important to speak with a knowledgeable loan officer about this.

Many builders will offer their own financing, but be sure to review the terms closely. Many of them will tie incentives to using their lander and some may even require it-but be sure to compare their terms before you sign on the dotted line. Typically it is a good idea to use builder's lander as they offer a number of incentives that can help make it affordable.

Figure out your must haves or your priority list

What are the things you absolutely must have in your new home? A large kitchen or a garage, for example. If you're buying your home with a partner be sure to compare your lists and talk about it with your agent.

There is no unicorn when it comes to building a home and chances are you'll need to compromise on something-unless the unlimited budget is something you're working with. Creating this list in the first place will help you make easier decisions and to stay on track, especially once you'll start to get distracted by pretty, shiny objects (lots of options that you can choose from)

Speaking of options, be prepared to spend about 20% of your overall budget on options. So that's in addition to the base price-what options will go into your home to make it truly yours.

We hope you’ve found this guide helpful and informative. If so, please share it with friends who are looking to buy a new home or condo! You may also want to contact an agent at your local real estate company for more information on how you can take advantage of the benefits of buying new construction in Chicago, IL. This is just one way that we can help make sure that every buyer has all the necessary resources they need along their journey from dreaming about owning a home to signing papers and living in your dream home. Share our blog post with anyone who would like some advice on navigating through the process of building a brand new house.