New construction homes are selling like hot cakes; run—don’t walk—to your prospective new-build communities, because the best lots will be gone by spring parade and prices will have risen by quite a bit. Now’s the time to get out there to see what’s a good fit for you in the new construction market.
Before we share some mind-blowing anecdotes, let’s define a common new construction term: “spec home.” A spec home is a home that a builder can’t build again for the same price due to rising material costs. Lumber costs, for example, have increased to $8,000 per home; the types of homes that were being built in 2020 cannot be built in 2021 for the same price.
Last week some clients of ours wrote a purchase agreement on a spec home in a DR Horton community in Otsego. The property was right around the fast-moving price point of $375,000. Now, DR Horton is a large, well-resourced building company, but they told us that we were the last purchase agreement they could accept for January (keep in mind this video was filmed in mid-January). The representative was having to turn away other buyers, explaining that they had to wait until February to take on new purchase agreements. Simply put, builders nationwide can’t keep up with the insanely high levels of demand.
Given the inventory shortage in the resale market, buyers are flocking to new construction. In turn, builders are busier than ever, projects are taking longer to complete, and new construction buyers have to go on waitlists. After just three weeks, Pulte shifted buyers’ expectations from May closing dates to August closing dates—that’s how fast they were selling out! Homes in the higher price points take longer to build because they’re bigger properties; since builders are already backed up, homes that are 3,500 square feet or larger will take nine to 12 months to complete (e.g., our custom homebuyers working with Hanson are eyeing a December close).
Another buyer of ours just bought a ready-to-go spec home down in Minnetrista and won’t be able to close until after the spring parade in April because the builder wants to be able to show that model’s floor plan and finishes to other clients. The typical closing date on existing construction is about 30 to 45 days out from the purchase agreement, but because this builder has no other models to showcase, our client will have to wait four months.
We here at The McPherson Sisters Real Estate Team are passionate about new construction and are keeping our eyes on the latest developments in our area. There’s a great neighborhood coming soon in Rogers, and if you want more information on that or anything else related to the resale or new construction markets, don’t hesitate to reach out by phone or email. We’re here to be a resource for you.
