New or Resale?

The new construction market has a lot more inventory relative to comps in the resale market. Buyers are snatching those up too. This article from last summer is still relevant and since I am out of town today, I figured I'd recycle.

Originally posted on this blog, July 10th, 2015, by Rod Sager

Many home buyers may be feeling frustrated at the lack of resale inventory in the market. here in Clark County it remains a tight seller's market. There are many buyers and they seem to be preferring that move-in ready house rather than the one that needs "TLC". The builders are back and they have come with force. Dozens of new developments are underway all over the fruited plain.

For the buyer that has to have the house just so, a new home holds an advantage in that often times the buyer can choose carpets, flooring, counter tops, colors, etc. The downside is that builders are booked solid and completion times are pushing 6-7 months. New spec homes are always and option but they lose the pick you theme angle in exchange for buy me now availability.

The general theme in new homes has been big house, tiny lot. The older homes are usually found on nice big lots with 7-8 thousand square feet and go back to the 1970s and you will likely find reasonably priced homes on 10,000 foot lots.

That remains the trade off, older homes on giant lots versus newer homes on smaller lots. In general a new house will appreciate quicker in the first 5 years. When looking at newer subdivisions consider the neighborhood and price ranger. Entry level homes will often hold up better if an HOA or strong CC&Rs exist to keep the neighborhood conforming and tidy. Generally upscale developments with large expensive homes fare well with or without an HOA.

I have written in the past that sometimes buying a brand new house in an older neighborhood can backfire. Be aware of your needs and think about the future. Buying a home is a little more "permanent" than renting and will require a bit more time commitment on the part of the purchaser.

Most new home developments list their properties on the local MLS so your favorite Realtor® can still help you find your dream home, whether it is brand new or 100 years old.

Resale Homes Remain Strong, Despite New Construction

Clark County, WA is alive with the sound of hammers. Builders are pulling permits for homes faster than the local carpenters can put them together. In fact the average build time has swelled to a sluggish 6-7 months because there simply is not enough tradesman to keep up with the flurry of buyers.

Often when new construction is booming it comes at the expense of resale homes. The new homes tend to fetch higher prices and can create an artificial ceiling on the values of similar sized resales. But for the most part, that is just not happening right now.

There are several things helping to push new construction homes up in value, including increased regulatory requirements on development, rising land values, and materials and labor costs. Newer homes tend to be built on smaller lots in more compact neighborhoods. The advantage of new construction aside from the oblivious, 'newness' lies in the fact that neighborhoods developed since the 1990s follow better planning guidelines and are more uniform and offer superior infrastructure. These new homes have the latest floor plans and design elements.

For the buyer the trade off is new and modern versus older, possibly dated but with a larger lot and wider streets. Lately another trade off is the 6 month wait for construction. So as long as construction times remain out in the half-year range, resale homes will continue to challenge the values of similar brand new homes. For sellers this means now is a great time to list your home. At some point demand for sub-contractors will begin to lure people to the industry. When the construction time returns to a more tradition 2-3 months, new homes will begin to pull away in value or resales will start to lag. It all depends on other economic conditions of course.

The time to sell is quite likely, right now.