Before you build a brand-new dream home, you should know the pros and cons of new construction homes. By understanding the big picture in this type of real estate, you can decide whether a new construction home purchase or an existing home is right for you.

What are the advantages and considerations of buying a new construction home? As with all real estate transactions, there is the good and the bad, so we’re not here to sugarcoat anything. After all, this is one of the most important financial decisions people make in their life, so knowing the pros and cons makes a big difference in what path you choose. Here are some insights from Marketplace Homes’ real estate experts to help you with your decision.

Pros of New Construction Homes

1. You can customize your new construction home.

If you take part in the planned new construction process, then you’ll take part in major decisions like what lot, model, and materials are in the home. Custom home construction plans are available from our builder partners, which include a variety of floor plans, material and design options, and upgrades on a checklist. The earlier you enter the homebuying process, the more custom options you have with the home’s appearance.

You may also buy a brand-new home that is move-in ready, like a model home! These are homes that either were complete and lost their buyer or model homes that give prospective buyers an example of what they would buy. Model homes are typically at a discount compared to built-to-order homes, so they can offer the best of both worlds between a resale and a new construction home. Ask us about how we can connect you with a builder that can match you with your dream home!

woman buying a home with realtor and partner the pros and cons of new construction homes

2. You will have zero buyer competition. 

Homebuyers that are tired of making compromises in their home selection (and the bidding wars) enjoy being the one and only buyer of a new construction home. This makes buying new construction such a convenience, especially in highly competitive seller’s markets.

With interest rates now averaging 7% and up, even more owners of existing homes are not selling. This means that if you want to find a nice home on your own timeframe, it can just be easier to forge a new construction home contract with a builder…and of course, under the representation of a real estate agent experienced with new construction homes.

3. Housing shortage? No problem. 

New builds are the answer to a still-low housing inventory. In fact, our 2023 Market Trends Report stated that existing home inventory is still around a 3-month supply, and our mid-year market report didn’t note much change, which makes getting outbid still one of the most common reasons for not getting the house of one’s choice.

When you build a new home, existing housing inventories don’t affect you. In this type of market, having a sure thing is a major perk. You also get exactly what you want without having to omit a feature you desire, like a new HVAC system, modern floor plans, countertop materials, and much more.

4. You can have a flexible move-in timeline.

When you sign a new build contract, you can get an approximate timeline for its completion date. This allows you to make a flexible move-in schedule and gives you an overall timeline on how to prepare for upcoming transitions. Whether you need to sell your first home for funds, finish the school year, or time a career transition, having a flexible moving schedule is a major benefit of a newly constructed home.

  • Tip: Buying a new construction home is easier after you sell your first home before the new build is complete. Our special incentive programs like Sell & Stay and Guaranteed Buyout give you cash for your first home that you can use toward a new build. This not only simplifies the timing but it also gives you a lot of financial leverage. You can also stay in your old home as a renter as you wait for your new home to be complete, saving you the cost of moving twice.

new construction home interior the pros and cons of new construction homes

5. You’ll be the first owner. 

As the first owner, you don’t walk into a house with a mysterious past. You don’t have to question how old the HVAC is, or if any previous owners were diligent about servicing it. As the first owner, you know everything about the house and can have peace of mind that everything is turnkey.

A new home construction means you get to start everything on a clean slate and keep everything on a routine maintenance and inspection schedule, which helps greatly when you ever want to sell in the future.

6. Everything in your house will be new, which means less maintenance.

In a new construction home, everything is up to date; no renovations are required! You can’t say that about a resale home. New appliances mean you don’t have to worry about replacing anything after you move in. Many builders also offer builder warranties to offer even more peace of mind.

Everything that is a big-ticket repair, like the roof or windows, is likely to be under warranty and less likely to break or wear down. Low maintenance costs for the first few years are a luxury! In many ways, the traditionally higher sales price is worth the convenience of less maintenance and being up to all building codes.

7. New construction homes are energy efficient. 

Since new construction homes benefit from the latest best practices and technology, these structures typically benefit from better insulation, which leads to less heating and cooling loss. Energy efficiency is also a feature that many buyers desire in a new home.

On the other hand, older homes can have drafts from older models of windows and doors, as well as outdated insulation types, but new construction homes are built with modern standards in mind.

8. Builders usually offer a new construction home warranty.

When you make a contract with a builder, depending on the company, you can get a new-construction home warranty. This is a written agreement between the home builder and the future homeowner, and it often protects the homeowner against the costs of any structural defects. Having financial protection against such financial risks gives the homeowner peace of mind after move-in day.

9. New construction homes usually have lower utility bills compared to older homes of the same size.

Since single-family new construction homes are built under the latest building codes, this makes them on average more energy-efficient than older houses. As a result, residents of new construction homes enjoy lower utility bills compared to residents of older homes of the same size. You can even request energy-star components in your building contract to make your new home even better for your wallet.

Cons of New Construction Homes

1. Timing the Move “Perfectly” Is Difficult.

Since most buyers depend on the funds from a previous home to buy a new construction home, they feel the pressure to sell before moving. Ideally, they want to sell on the same day, so they don’t sell too early or too late.

However, selling on the open market leads to risks, like a deal falling through or a home sitting on the market. Selling too early or too late leads to downsides that ultimately cost the buyer money, whether it’s in double payments or hotels.

  • Thankfully, a Guaranteed Buyout from Marketplace Homes solves this problem. We’ll buy your house on the same day as your closing day with your new construction home. No double moves, no hotels, and no stress!

2. New construction homes typically have higher costs.

Sustained higher costs of building materials, labor, and inflation are other drawbacks to building a home. According to HUD, the average cost of a new construction home was $423,300 in 2022. This means buyers must offer a higher down payment than cheaper resale houses and expect higher closing costs.

Therefore, as of now, many buyers of new homes are existing homeowners who can use equity to pay down loans or buy a home in all or mostly cash. However, first-time buyers can also get the home of their dreams through financing. Speak to your lender to find out how you can prepare your finances to get a new construction home.

3. New home building materials off-gas.

New homes come with their own quirks that aren’t usually found in existing homes. However, they are certainly easy to overcome. New houses have a “new house smell,” which is similar to the “new car smell.” To some, this smell is even pleasant, even though it comes from off-gassing, or the emission of volatile organic compounds (VOCs) that come from new building materials.

You also introduce VOCs into your home anytime you bring home a new couch, mattress, or other type of freshly manufactured furniture. Fortunately, you can circumvent this problem by requesting low-VOC paint and materials and keeping many house plants as the emissions peak and then level off. Over time, these emissions will fade.

new construction home frame the pros and cons of new construction homes

4. The moving timeline is also longer than a resale home.

When you buy a resale home, the house already exists, so the only holdups are likely to be lending approval, being able to close, and having the old owners move out. With a new construction home, the home needs to be built and ready for occupants. This timeline is understandably longer than moving into a home that’s already built.

To circumvent this long timeline, you can ask builders if they have any homes that are near completion or complete that don’t have buyers. You can also explore the possibility of buying a model home. When you have a real estate agent that specializes in new construction representing you, you have the best chance at getting what you want.

5. Settlement happens in new construction homes.

Even though new homes are built on solid foundations, every new building will inevitably experience snaps and pops as the home fully settles into its foundation. This process lasts for about a year or two after the home is built and accelerates if the weather isn’t mild.

Also, homes of all ages pop during changing seasons as wood frames expand and contract. Your builder will assure you that all this is normal and that though it seems alarming, it’s a process every building goes through.

6. Expensive upgrades might not help your home’s future purchase price if you plan to sell.

While upgrades are nice, choose them wisely. There may be features that don’t hold value, especially if they are niche materials or specialty components that aren’t universal in taste. Experts advise homebuyers to get quality but basic components and upgrade as you go. Allows you to grow with your newly built home and find the most competitive renovation quotes from local contractors in the future.

7. New development neighborhoods can feel like a never-ending construction zone.

If you buy a new construction house in a new neighborhood, you will likely see more lots where builders are breaking ground. Just when you think it’s over, you hear the whirring of more construction equipment a few lots away.

This is typical of homeownership in a developing neighborhood, but we promise that it will stop. It’s just part of the new construction lifestyle, but once all the construction is complete, your new neighborhood can grow together. Soon, the dirt around each house gets replaced by lovely landscaping and the streets look complete.

two people looking at property tax bill the pros and cons of new construction homes

8. Your property taxes may increase over time.

Ahh, taxes. Doesn’t every adult love them? One thing your real estate agent should warn you about during the new construction home buying process is to take your new loan statement with a grain of salt. That’s because if you’re building in a developing area, the property taxes may be predictable the first year due to tax estimates. However, as more development happens around your home, there can be more changes to your property taxes.

Buy a New Construction Home with Marketplace Homes

Do you have questions about buying a new construction home? Marketplace Homes specializes in working with builders, so many of our solutions resolve the typical difficulties of a new construction home.

In fact, we work with many of the nation’s top 20 builders, which grants our clients access to in-depth information about new construction home incentives. You can also explore a variety of markets and models that include open floor plans, basic to luxury materials, and the option to choose paint colors and other design elements.

Whether you need to time your first home sale just right, break a lease without breaking the bank or get exclusive savings on commissions, our new construction programs are here to help you. Download our program flyer to get more details.

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