Arizona Residential New Construction Starts Answer Lack of Resale Inventory
If you’ve been on the prowl within the last couple of years to purchase a home, chances are there’s been a level of frustration to the process that was totally unexpected. Even with all the right intentions, securing that next property is challenging. Many buyers are discovering how Arizona residential new construction offers an ideal solution.
Resale Homes Lackluster Compared to New Builds
First time buyer or seasoned homeowner? Either way, walking into a home available for purchase will only grab your attention if it has that “WOW factor”. This is the spark that touches your visual senses, entices desire, and turns emotions into an attachment for the property.
A little of something is better than a whole lot of nothing.
In a Sellers’ market from 2020 ebbing into 2021, current owners are less inclined to invest dollars into creating a WOW factor as the lack of home inventory doesn’t necessitate it. Buyers today are more willing to say “yes” to the house for the sake of securing something rather than nothing. Is that ideology wise? It depends. How deep are your proverbial pockets?
Settling for less than you want is never a notion easy to swallow. Even the probability of that opportunity is likely lost to an all-cash buyer or one who is willing to dump part of their 401k towards a higher down payment and/or pay $40,000 over asking price to get the winning bid and head into escrow.
There is another way to get into the home you want.
Everyone Loves a Shiny New Coin
Imagine sitting down at a friend’s house in their kitchen at a breakfast bar. You notice on the countertop two pennies: the one on the left is brand new, shiny and bright while the one on the right is faded, dull and dirty. Your eye would naturally go to the shiny one.
The same goes for housing, unless you are an investor looking for a wholesale deal. If you are looking to buy a property to live in, the shine is what you’re likely after.
Currently, available resale homes on the market equate to a less than three-week supply. There are more ready, willing and able buyers than property.
This is the perfect environment for new home builders to thrive. There are two different ways for Phoenix area buyers to get into new construction—new subdivision/community or new build infill lot.
Start Up Subdivisions
Amidst suburban sprawls across Gilbert, Mesa, Chandler, Fountain Hills and Scottsdale, new residential communities are popping up. Renowned builders to include Maracay Homes, Toll Brothers, Fulton Homes, and Taylor Morrison dot the landscape with the promise of sought after neighborhoods with tree-lined streets, lush parks, and community-gathering places and spaces.
In a world of “I want to be included”, being part of a fresh community draws immense appeal for young families, single professionals, and retirees. There’s a sense of hope in it.
For new subdivisions that are constructed with local infrastructure already in place, the growing pains that accompany a more desolate part of town are avoided.
A good sign to look for in a new community is whether it is located near a major arterial roadway or a soon-to-be-built new onramp to an existing freeway. It will bring the home values up.
For new builds in already established neighborhoods, the cost of land is much higher than its outlying suburban counterparts. With homebuilders being in the business of making money, they are looking for ways to cut back on costs and increase their profit margins. As such, startup residential developments in seasoned parts of the Southeast Valley, for example, will offer smaller lot sizes and two-story homes to satisfy builder and buyer needs.
Infill Properties for a Price
In looking towards the future, people could be going back into the commercial workspace outside the home, post-pandemic. At that point, location or proximity to the office will be paramount to home purchase decision-making. In addition, an increase in oil prices or the distance an EV can commute will also dictate the miles between work and home life. And with the influx of new Arizona residents migrating from other States, our roadways during rush hour will be far more crowded by 2022.
Builders have been infiltrating the more densely populated areas of Phoenix to include Arcadia and the Biltmore areas, as well as the coveted McCormick Ranch in Scottsdale, and buying existing homes.
Once purchased, a builder will either gut the inside of the structure and replace with new systems and cosmetic updates for an extensive remodel or demolish the property entirely and do a complete new build. These are known as infill projects and are desirable for people wanting new construction with a more urban location.
Benefits of New Construction Compared to Resale
There’s something to be said about being the first owner of a property. The first one to use the bathroom sinks, showers, tubs and toilets. A kitchen that’s designed with the accoutrements to your personal liking. The ability to choose interior options that fit your unique way of life and the day-to-day functionality to match. These are some of the attributes to purchasing new construction from vacant land to completion.
Warranties are also part of the package of a new home build: roofing, HVAC, appliances, overall contractor workmanship as well as manufacturers’ products. Peace of mind to a buyer in reducing the likelihood for costly repairs can be invaluable, compared to a resale home transaction.
Buyer Beware Before Signing New Home Contract
Many people believe that working directly with new home builders is an easy-peasy process. That’s what they want you to believe. In fact, their agreement to purchase and other supporting contract documentation is written in the best interests of the builder, not the buyer.
While you might be lured to purchase new construction from the pretty pictures and awe-inspiring model walkthrough experiences, there are things to consider before you drop down money to hold a lot and sign on the dotted line.
What to Watch for During Build Out
You know the ol’ saying…looks can be deceiving. The same holds true for the model homes that portray what a new home builder has to offer.
Many of the new communities showcase an onslaught of designer upgrades to each floorplan that can be yours…simply add $150,000 to $200,000+ to the base price of the home. Seriously.
Carefully review the following before you buy a new construction home:
Review lot choices and get confirmation of what’s to be built on all sides of lot
Includes greenbelts, retention areas, common areas, etc.
Confirm whether undeveloped land that borders specific lot and community overall is dedicated for additional subdivision build out, commercial property, or other
Ask if there is a lot premium attached to a desired lot and compare to price/size of standard lot
Ask about property setbacks (front, sides, and back)
Are there builder guidelines in placement of two-story homes that border single-story homes
Get financing in order
Are there builder incentives (towards closing costs with builder preferred lender or upgrades)
Timeline for monies due
Lot hold
1st deposit for lot and floorplan
2nd deposit for structural options
3rd deposit for electrical
Design deposit
IS THERE A BUYER RECESSION PERIOD WITH DEPOSIT(S) REFUND FOR CANCELLATION
Get a clear understanding of what options are included in the base price vs. what are upgrades
Cabinet choices and finishes
Countertops and backsplash tile
Flooring, baseboards, doors and trim
Bathrooms (single or double shower, type of hardware, sinks and vanity counters
Paint
Appliances (manufacturer, color)
Window coverings (if included)
Front landscaping
Backyard landscaping (not usually included)
Pool and/or spa (can this be added during escrow through builder or after closing)
Ask if there is a Homeowners Association
What are dues and how often paid
What does HOA fee include
How long will fees stand before a potential rise in dues
What are the HOA restrictions for homeowners in the community
Parking on street
Parking of vehicles, boats, trailers, RVs behind gates
Visible parking on driveway of work/commercial trucks
Type of landscape allowed
Addition of ramadas, covered patio structures, basketball hoops
Choice of exterior paint colors after close of escrow
How long after close of escrow can a homeowner sell their property
The above list of questions and considerations could affect your decision to purchase and the property’s value long-term. Before signing the contract is the time to get clarity, not after.
Why Buyer Representation from a Licensed Realtor Is Essential
Review the list noted earlier again. Now, what if you walked into a new subdivision sales trailer without knowing what to ask or expect? Envision signing over a large sum of money with your eyes closed to people you don’t really know and certainly don’t have an established relationship that’s been nurtured or built on trust.
When you have a Realtor represent you, the buyer, on a new home contract—he, she, or they are there to represent you.
The builder has on staff listing agents who are there to represent the best interests of the builder, period. The builder also has a fee built into their base price of the homes to cover a buyer Realtor’s commission.
Don’t think that the builder will remove the commission for the buyer’s Realtor if you decide to go solo on representing yourself. Nope. They’ll pocket that commission for themselves.
Why wouldn’t you have a licensed Realtor there to represent and protect you from initial contract through every phase of construction?
How Buying Time Can Pay Off in 2021 Real Estate
With home values in Arizona expected to escalate again this year, residential new construction may give buyers the home they really want while adding more equity to their current property.
Most home starts in new developments will take 9-12 months for completion. With Sellers listing homes and going under contract in a matter of days, it allows buyers of new construction with an existing home more time for it to appreciate.
One more aspect to consider, a builder cannot raise the price of your new construction home once you’ve established the options chosen. So while resale homes are seeing value increases over time, so too would new construction (as long as a buyer doesn’t overload it with upgrades and overbuild for the neighborhood).
Ready to Build Your Dream Home? Ask Me About New Community or Infill Options