The Wall Street Journal reported that Homebuilder, Lennar, experienced a second quarter loss due to the erosion of the home market. Additionally, it warned that further losses were expected due to increasing supply of new and existing homes.
Buy a New Home Today
There has never been a better time to buy a new home. With housing stocks on the rise and housing companies experiencing large losses, new homes are currently a great bargain. Many Homebuilders will be offering large discounts, as well as potential financing incentives to qualified buyers.
There is also the opportunity to get free or discounted upgrades. Many homebuilders typically build several tiers of housing in the same community. As the market turns south, the best homes tend to sell the slowest because they are the most expensive. This leads to heavy discounting of upgrades and even upgrade incentives to purchase homes.
Key Considerations When Buying a New Home
Buyers need to prepare themselves for a new home purchase. Many buyers assume that a new home will have less maintenance costs than an old home. While new homes will have fewer items in need of maintenance, they will need more décor items. New homes typically come with starter paint, which means the owner will have to repaint within the first year. If not planned for, this cost could really surprise a new homeowner. Many of these homes also do not come with window treatments and other things buyers take for granted. It is very helpful to make a list of the items needed during the final walkthrough of the property before closing.
Buyers will also want to get their upgrades now. With interest rates rising and companies definitely looking to move homes, upgrades will be far less expensive now than later. Furthermore, buying upgrades now will allow the buyer to tie their upgrades into their mortgage. Waiting for another time will force the buyer to either choose higher interest financing like a home equity loan or store financing.
Buy to Live, Not to Flip
Now is the time to buy and hold. All the signs point to higher mortgage rates and a weaker housing market. Homebuilders also have a tremendous amount of housing in the pipeline. A new home today will be competing with even newer homes tomorrow. There will also be even less buyers in the market. Many homes are currently being purchased by speculative buyers, looking for a quick turnaround. Don’t try to compete with them. Enjoy a new home for five or ten years, while building equity. By then, the market will be ripe for selling.
