New homes usually include a 3%-4% premium for what I like to call the “new car smell”. You’re paying a bit extra for a new home, like you would for a brand new car. I said usually, because that’s not the case right now! Across several different builders, we’re seeing significant price drops and improved financing incentives. Long story short? It’s a GREAT time to buy a new home in Charlotte.
So what’s causing these price drops if home prices are rising? It’s bad luck for the builders really. They’ve finally reach the production levels we’ve needed from them (back to 2006 levels), but now the interest rates are around 8%, pushing buyers out of the market. The result is many almost finished homes are sitting on the market and not selling. This is terrible for the builders. Every month a home sits completed, but not sold, they’re paying taxes on it and tying up their financing needed to start new projects.
New home builders will not negotiate with you on price when you’re building a home from scratch. When it’s almost complete, or when it’s been complete for several months, they’re very keen to make a deal. Pay attention to the emails you get from new home builders (if you get any haha). You’ll notice the price drops and financing incentives starting to look really nice. So if you’re in the market, consider a new home! These deals will only last until interest rates drop and more buyers enter the market. It’s the best time in recent memory to buy a new home in Charlotte!
Benefits of a New Home:
- Many new home prices are dropping! Almost complete homes are sitting on the market. This means price drops and incentives for buyers. Make them an offer! They often can’t build more homes until the homes sitting on the lots sell.
- Financing incentives. Most builders have preferred lenders who are offering ~$10K in financing incentives. That’s a big deal! That means no closing costs or buying down your interest rate. It’s up to you. Some lenders are also offering a “free” refinance in the first 2 years. What they mean is they’ll charge no lending fees for the refinance. So you pay ~$500 for the appraisal and ~$1,000 for a closing attorney and you can refinance once rates begin to drop.
- New home warranties. Most new homes come with extensive warranties. You should be covered for the first few years at least.
Drawbacks of a New Home:
- Many new homes are being built on small lots. Want some space between you and your neighbor? Pay a lot premium so you don’t back up to other homes or build a fence. 9 out of 10 new homes are built on small lots. This changes a bit as you get into higher price points, but land still comes at a premium with new construction.
- Welcome to the country. Most new home communities are on the outskirts of the city. That’s simply where the land is these days. Are you OK with that? Some smaller new home communities (called in-fill projects) are built closer into town on land that was previously undesirable or difficult to built on.
- Be prepared for the up-charge. If you’re building from scratch, identify what is included in the base model of the home, and then plan on spending significantly more than that (as much as $100K more), after adding in structural changes and design upgrades. These add up quickly!