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Why are people still buying brand-new homes nowadays, despite the abundance of vacant existing ones?
A week or two ago, there was a report about a rise in new home sales, or something to that effect which benefits homebuilders. My question is, if there are so many foreclosures available, why would anyone want to have a new home built? It makes no economic sense. Real estate prices are about half what they were a couple years ago, but prices of construction haven’t fallen much at all. Existing homes, especially foreclosures, sell for pennies on the dollar with respect to what it would cost to build the same home today with new materials and buying land to build it on.
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The prices of brand new homes have fallen too.
Some people want a new home because and existing home may need renovation work.
Some people want a new home because a new home has all of the modern design styles and appliances. An existing home may not.
People tend to like new things not used things. This is why you don’t see huge crowds at Salvation Army buying used clothing.
People want low maintenance and therefore buy new houses. Existing houses require upgrades and repair. Not everyone has the time or skills to do this. I bought just such a house and spent the entire winter renovating my bathroom so that it was nice and didn’t leak. Not something most people want to do nights/weekends.
I agree that with so many houses, it is a shame that we have to keep clearing land for a new house.
You also have to take into account the types of foreclosures that are available. For instance, my mom has been looking for a ranch (1-story) home in good condition, and all of the foreclosures in our area are either really old (wood paneling, green appliances, etc.) or in disrepair, or if they’re in move-in condition, the prices are so high they might as well be new. So she’s looking at new homes because the inventory of the type of home she’s looking for is so low. She can’t even find a house with a master on main that’s a decent price, even for foreclosures.
There are so many baby boomers out there that are looking for homes, and buying a two-story home or fixer-upper just isn’t feasible, and that seems to be all that there is in terms of good foreclosure deals.
So you kinda have to look at new homes.
Also, purchasing a foreclosure, while seeming to be a good deal, is a humongous hassle, and a lot of times people don’t feel like being bothered. You put an offer on a home, and find out you have to pay to have all of the utilities turned on so you can do the inspection. Then you find out you have to pay for a water meter to be installed just so you can do the inspection, since the previous one was stolen. Then, appliances aren’t included. Air conditioning unit – stolen. Copper pipes – ripped out. Mold – everywhere. Roof – needs to be replaced. Carpet too. This has been the story at almost every foreclosed home I have looked at recently. The ones that are move-in ready end up in bidding wars, and the geniuses bidding on them don’t realize they’re bidding up to almost near the price of homes that aren’t foreclosures.
So if you have the patience, yes, get a foreclosed home. If you can, get an existing home. If you want something brand new, where you can pick every appliance, tile and countertop and someone else will handle it for you and you don’t have to turn over any money until it’s completed and you’ve done an inspection, get a new home. It’s all about personal preference. Do what you feel is right for you.