Over the summer, I ended up fielding a lot of questions from clients about the pros and cons of building a new home vs. buying an existing one, especially in light of the very tight market of existing homes available for sale. The number one question invariably is "Which is more expensive, building or buying?" Almost always, the answer is building a new home is more expensive than buying an existing home - EXCEPT for once a year, and that time is the 4th quarter. Every fall, publicly-traded and large private builders cut the prices of their inventory or "spec" homes to make way for building new spec homes in the spring.
A "spec" home is a home that a builder constructs speculatively without a specific buyer attached to it and then sells when it's complete. Builders build spec homes for a number of reasons, but the main reason is to showcase different house plans beyond just their model. Typically spec homes represent one of the builder's most popular house plans and include their most popular features. Builders front the money to build these specs themselves, so their motivation is high to unload them before the next building season so that they can free up some of their capital to build new specs in the spring. Thus comes my favorite time of the home-buying season: Spec Season.
I have seen builders who would never budge on price for their new construction homes wheel and deal like no other time of the year when fall rolls around. Right now, in our marketplace, builders are discounting their spec home prices anywhere from 8-12%. Add in the projected new home price increases for 2020 of 15%, and now you are talking a 23-27% savings by buying a spec now vs. building next year. That's a huge savings.
So, if you've been kicking around the idea of building a home in the next year, I highly encourage you to consider buying a spec this fall. And always, always, always have a licensed realtor represent you in the transaction. Experienced realtors know a lot of the concessions that builders have given or will give that aren't published and won't be offered by the builder's paid salesperson. It doesn't cost you a dime to have a real estate professional represent you, and contrary to public opinion, builders do NOT pass on any savings to you for foregoing professional representation.
If you aren't sure where to start with your new home search, be sure to check out our website at www.theeliterealtypros.com. You can set up a new home search by neighborhood. Or, feel free to call us at 317-660-5045, and someone from our team can help you find a list of spec homes available in your area.
