3 Big Changes in New Construction

What do Cabbage Patch Dolls, Tickle Me Elmos, Power Rangers, and new construction homes all have in common? They’re all selling out and you have to work harder and be more patient to get one – and they’re gonna cost you a lot more than you think! 

Today we’re talking about experiences that our agents and our clients have had in the last 120 days with new construction homes. April 1st, right at the beginning of the second quarter, is when we felt the most change happen. So here are three big changes in new construction based on the last 4 months.

Video: 3 Big Changes in New Construction

1. Buying Process

Builders aren’t making as many homes available for purchase as they were before. One builder we’ve worked with is only allowing the sale of two homes a month right now. So on the first day of the month, their agents are selling both of those homes and the rest of the month they can’t sell anymore. This is creating and perpetuating a huge backlog of demand of buyers. 

Then, if you’re on a waiting list, when your name comes to the top of that list you have less time to make a decision whether you’re in or out. When a builder has an inventory home come up and they call you, sometimes you have only 24 hours to say yes and get your deposit into their office. This isn’t every builder, but some builders are doing it this way. 

2. Design Center

Typically the best part about new construction is picking out all of your options and designs and touching everything – and that’s not the case right now. There are many builders that have moved to “package only” selections. This means you’re given a few options, like the “tan” option or the “gray” option, and there’s no mixing and matching. 

Builders have moved away from the fully-customizable design center. There are still a few builders doing that, but we’ve seen a lot of them switch to the package-style design center. 

3. Pricing and Incentives

The base price to build a home is increasing often every two sales, or at least every month. And these aren’t small increases – one of our clients had a $12,000 price increase in one month!

Lot premiums (the cost of the piece of land underneath the house) are also going up. Given the amount of demand for new construction, builders are charging more and more for lots. We’ve even seen companies lotteries and bidding systems for these lots. 

Builders are also doing fewer incentives. In the past, even just last year, it was common to get your closing costs covered by a builder’s lender. You also might have gotten credit towards design center to upgrade your home. 

The gap between the higher cost of lots and base pricing and the lower amount of incentives is really spreading. 

What’s driving these changes in new construction?

Scarcity. Scarcity in available housing, the cost of building materials and supplies, and a shortage of skilled labor. All of this is driving the pricing and costs up. And on some things like supplies, no matter what you’re willing to pay – you can’t get them. 

What should you do if you want new construction?

There is nothing like having a new construction home. Walking into it and knowing it’s yours. You’re the first one to own it. You’ve watched it being built. You were part of the process. You were the one who did that for your family. 

If you want new construction, like so many of our clients do, we need to talk as soon as possible. Not towards the end of your lease. The process for some of our clients is taking a full year. So if this is something that you’re wanting to do, do not wait. Let’s talk as soon as possible. Call/text us at 407-267-2319 or reach out using the form below!

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