The Expert Podcast

So is the new construction industry going up or down? We've seen a lot of conflicting information. There are news stories that say new homes are on fire, and a lot of people say maybe it's going to crash. This is an article from The New York Times that says a lot of buyers are looking for new homes because there's not a lot of homes to look at—resales, right? Even with the rates coming down a little bit, not a lot of people want to sell them because they can't find something to buy either. Even if they're not locked in by a rate, they can't find anything to buy. So what people are doing is looking for newly built homes instead of an existing one.

Now, you might think that that's more expensive, and sometimes newer homes are a little bit more expensive, but here's the thing: You don't have to do any work on it from day one. Even if you buy a nice resale that's five or six years old, you're going to have to start looking at paint, roof, gutters, and other things. Where a new home is turnkey, you might have to buy some first-time things, like window treatments and drapes—things that are first-time buyer-type things. But here's the problem: If you buy a resale home, it might already have them, but you probably want to replace them anyway. You probably don't want the old drapes, right? You probably want to get new carpet. So that upfront expense that a lot of people say on a new house is going to be cost prohibitive may not be that big a deal because you probably have to do it on a resale anyway, since you're probably not going to like what's there.

It says the housing market has been mired for the last year, bogged down by high prices, soaring mortgage rates, and lack of inventory, pushing buyers to the sidelines. Existing homes account for 90% of sales, but homeowners are locked in with low rates, reluctant to sell because they can't find another house, spurring a rise in construction as developers build more homes. This may be the wave of the future.

Homes even that were built after the 80s are a little more disposable. If you look at houses from the 60s, 70s, and into the 80s, they were solid-built homes that are going to last for a long time. Houses from the 90s and 2000s are a little more cookie-cutter, and they may not be the same quality, so they may not even be lasting as long. You're almost better off buying a 50-year-old house than a 20-year-old house. A 50-year-old house is probably going to be in better shape than a 20-year-old house because the construction wasn’t as good as it was a long time ago. They cut a lot of corners.

New homes now could go either way. You have to check with your builder and make sure that you get not only a good inspection but also reviews of how the construction was done. This particular story is about somebody in Las Vegas. We just read an article where there's a builder in South Florida who just bought a piece of land, and they're going to build 300 new homes on it. So, there are new homes going up everywhere. Let us know in the comments what you're seeing in your neighborhood—if new home construction is booming or if it's still too much money.