Could a Brand New Home be a Bargain for You?
In many areas, the housing market is hot for sellers right now. Mortgage programs abound for every type of borrower, and homes are in high demand. What many people don’t realize is that in many Midwestern and Southern U.S. locations, new home builders have become overly zealous in recent years. Many new home developments have vacant homes just waiting for the right buyer. Educated consumers realize that the sellers (builders) are desperate to sell these homes and recoup their building costs. After all, a home that sits vacant and doesn’t sell right away decreases in value and sits on the books as a liability. Builders would prefer not to assume such liability, and so builders are extending many discounts and other incentives to attract buyers.
In states like Ohio, Kentucky, Michigan and Indiana, stagnant population growth and declining job growth over the past several years have decrease the demand for entry-level, moderately priced homes. Ohio, for example, has seen a loss of jobs unrivaled by any other state since the year 2000. The main cause of the decline has been reprioritizing within the automotive industry. Consequently, people searching for homes are much more likely to find bargains in pre-owned home market as residents relocate to other areas. Because the automotive industry is localized in the Midwestern states, economists predict that the rest of the nation will remain relatively stable in terms of the housing market. Locally, the trend is expected to continue in the affected areas.
The Midwest is not the only area where overly zealous builders have tried – unsuccessfully – to profit. Consider North Carolina, for example. When the economy of Charlotte, North Carolina began to improve and job growth hit 3.5%, builders began to flock to the area. Competition among home buyers intensified until suddenly there were too many houses. As a result, Charlotte builders faced the same problem as did those in the Midwest. Buyers became winners as the builders began to compete for sales, throwing in excellent incentives during the negotiations. Some home owners have benefited from the trend, receiving top-of-the-line kitchens and bathrooms, window treatments, and expensive flooring options at no additional cost. Other incentives include landscaping, builder-subsidized down payments and free air conditioning units. As you can see, if you are planning to move into either of these areas in the near future, the market offers you many advantages if you buy a brand new home. Builders are often forced into offering such incentive programs in order to sell their homes. In general, these incentives are offered on high-priced homes, and not the more moderately priced starter homes.
With stock market returns lagging, the strong housing market has proven to be an effective means for garnering wealth and boosting local economies. The housing market in the Midwestern and Southern U.S. states supports the long-held belief that the housing market is dependent on the strength of the local economy. Obviously, if the local economy takes a downturn, the housing market will suffer. This is exactly what has happened in the Midwest, and it will take some time for the housing market to recover.
Akron, Ohio has a strong buyer’s market. Most buyers can easily find homes that they can afford – and not just one or two homes. One buyer recently looked at hundreds of homes before selecting one that met all of her requirements, including the price range. This story is not unique, so it is imperative for sellers and builders to meet buyers’ rising expectations.
Meeting expectations is not builders’ only concern. The market in Detroit, Michigan is problematic for sellers who used to be able to finalize sales within a few weeks. Now, new homes are on the market for several months before a buyer makes an offer. As a result, builders are offering to cover closing costs and agent commissions, upgrade appliances and throw in any number of amenities. These offers are being advertised to potential buyers in order to attract them to the new home developments.
These local trends are an excellent indication that this is the time to buy. First-time homebuyers generally do not have access to surplus cash from home equity or home sale proceeds, so every penny counts. Fortunately for them, competitive interest rates and flooded housing markets provide good opportunities to find the perfect bargain price in a brand new home. Yes, interest rates are higher than they were one year ago, according to Freddie-Mac, but this seems to have little significance, given that housing prices are lower now in some areas of the country.
Many of the prominent builders in affected areas of the South and Midwest seem unconcerned about the current market flooding. They are willing to offer incentives to sell homes. But not all builders have remained optimistic. Some smaller firms have been bought out by larger developers and builders when they could no longer afford to compete with the buyer’s market.
Other builders are optimistic, believing that they will reap the benefits of businesses choosing to move to these areas as a result of readily available new housing. Certainly, a company looking to relocate will want to choose a location where the housing market is favorable for its employees. Throughout the nation, businesses seem to be attracted to areas with a slow housing market. The anticipated job growth in these areas will probably play a role in the housing market. However, it will take some time for the economy to adjust and begin to favor the builders.
If you are a potential homebuyer in any of the areas mentioned above, a new home might just provide the bargain that you have been waiting for. Incentive programs are widely available. Contact your realtor today to find the home that is right for you. You may find more than one, along with unbelievable options to realize your dream of home ownership. However, be prepared to do your research. Most buyers are not accustomed to having so many homes available for comparison. Make a detailed list of your requirements and desires for a new home prior to beginning the shopping process. Otherwise, it will be quite difficult to adequately narrow down the list of options.
