Last year, the housing industry reached an 11-year high for residential construction in the United States. In fact, recent reports show that the inventory on the housing markets reached all-time lows. For this reason, prospective homebuyers are considering more now to build a new home due to the limited availability of residential homes and higher prices.
Is it possible to find a contractor?
As the construction industry continues to thrive, contractors are becoming even more busy. In smaller towns across the United States, it’s realistic to wait about 6 months in order for the contractor to commence work. On the other hand, it’s little easier to find a contractor in a larger city, since there are more options to choose from.
How much does new construction cost?
The average median home price is around $269,000 according to realtor.com. In addition to building the home, it’s important to consider the price of the land in which you want to build. Parcels that are located on the water, river, or lakes are most likely to be much more expensive than a parcel of land found in the suburbs. In addition, a piece of property in the midst of the city is likely to be more expensive too.
To build a 2,000 square foot home, home advisor reports the cost per square foot is $150. Of course, the price will certainly depend on the type of material that will be used. Although it’s slightly more expensive, many home buyers are electing to build block frame homes versus wood-framed homes. This may be an important consideration if you plan to purchase real estate in the hurricane-related area.
Can I finance new construction or do I need to pay cash?
Building a home is considered to be much riskier than purchasing a home, at least in the eyes of lending institutions. It’s important to have a high credit score and as much as a 20-25% down payment on the total cost of the construction project. This means that a bank will not give you a construction loan unless you have 25% of the total loan in cash.
There are some alternatives to building a home. FHA offers a construction loan to build a new home. This is a loan offered by the government’s federal housing administration. This type of program offers down payments as low as 3.5% in some situations additionally a lower credit score may be accepted (around 620).
Consider the benefits of new construction
In contemplating whether it’s better to build or buy, there are many benefits to constructing your new home. No immediate repairs will be needed once you move into the house. It’s obvious that an older home will require more maintenance. You won't have this type of issue with a brand new home.
Additionally, there will be no hidden defects when you move into your newly constructed home. Often homebuyers report of termites, mold, or other issues when the purchase used homes. This simply won't happen to your new home, because everything is brand new. There are many benefits to building a new home, especially in today's economy.