Consider new construction
A potential solution for shrinking inventory
If you’ve been having trouble finding exactly what you’re looking for, or everything you like is being swept away before you can even say, “that’s the one,” you’re not alone. Experts have been cautioning about a lack of available home inventory for some time now, with the onset of the pandemic only serving to exacerbate the situation.
After the typically busy spring market was slightly deferred due to lockdown measures put in place, that pent-up demand drove activity as states opened back up. Enticingly low mortgage rates led to an ultra-competitive market, shrinking the number of homes available. The combination of Baby Boomers waiting to sell and Millennials wanting to buy quickly tightened inventory.
Now that we're past that frenzy driven by low rates, the housing inventory remains shockingly low. Recent total housing inventory numbers show only 1.04 million units for sale, which is actually an increase from April 2022 of 1%.
National Association of Realtors® chief economist, Lawrence Yun, continues his recurring call for construction. “The heavy number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition,” he says. “More homes need to be built.”
Build your own dream home
There are three ways to go about purchasing new construction: buying a house already built on spec, having a semi-custom home built as part of a development or having a custom home designed.
When weighing in on this decision, there are some things to consider. If you don’t want to be involved in the building process from start to finish, but you’d like to potentially have some say in the final touches (selecting finishes, upgrades, etc.), you’ll want to decide if you’d be interested in a subdivision. These homes are typically built with the latest technology, cutting down on maintenance. But, do you mind being further away from the city center? Do you like the look of the typical subdivision or will you mind if your home is fairly close to your neighbors? These are all somewhat common characteristics of subdivisions.
No matter which type of new construction you choose, you’ll want to do your research on both the potential neighborhoods and builders. And if you’re looking at developments, you’ll want to make sure to inquire about homeowners’ association (HOA) fees and rules.
The loan process
Many builders have in-house lenders or ties to an outside lender, but you can also find your own financing. There are multiple loan options available that can be used but be sure to inquire about options specific to new construction. For instance, Proper Rate offers lock protection for up to one year while your home is being built, including a free lock up for veteran’s obtaining a VA loan.
Proper Rate also has a National Builder Division with experienced operations teams who are familiar with the markets you’re looking to build in and who understand the unique nature of working with homebuilders.
So, if you’re leaning towards the new construction option, be sure to work with a trusted mortgage specialist who can help you evaluate all your options.
Proper Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.