What to know if you buy a home that hasn’t been built yet
So you’ve bought a house, but it hasn’t been built yet? While it sounds strange, this isn’t a new problem to have – but it is becoming a more common situation, as housing demand is up and supply is down. (See the lowest mortgage rates you might qualify for here.)
According to the latest data from the U.S. Census Bureau, the number of new homes available for sale increased by 3.8% in March to 407,000 homes. More than half of this increase was driven by homes for sale for which builders haven’t even started construction. That number now sits at its highest level since the government began collecting this data in 1999 – 105,000 in March, compared to 97,000 the previous month, and 77,000 the same month last year, according to preliminary seasonally adjusted numbers.
“While we expect higher mortgage rates to increasingly weigh on sales, demand appears to still be outpacing the speed at which homebuilders can complete construction, with many homebuilders continuing to report that they are limiting the number of orders being accepted,” wrote Mark Palim, deputy chief economist at Fannie Mae, in a statement.
Though builders are struggling to keep up with demand, sales keep steady each month, as buyers are willing to invest in a new construction home now rather than wait to see what the market will do later. “These are signals that people expect things to get more unaffordable,” Hamilton Fout, vice president of economic and strategic research at Fannie Mae, tells MarketWatch Picks. “People are looking at what is available to buy because they think if they don’t buy now, they’ll pay more later.”
See the lowest mortgage rates you might qualify for here.
If you’re interested in buying a home now and are or have already bought a home that has not been built yet, here are some things to consider
1. Get to know the entire team
It’s understandable that when you’ve bought a new home, the only thing on your mind is getting into it so you can finally decorate and make it your own. But it’s important not only to remain patient but to make sure that you are getting a home to your specifications with no shortcuts taken. Go on-site and meet the team that is on the ground managing the construction of your new home. Get to know the project manager and the super. These relationships will only help you have candid conversations about the build as it progresses.
2. Have a nest egg for temporary housing, should you need it
If you are fortunate enough to have family – blood or chosen – that …….