Pros and Cons of Buying a New Construction Home

With modern designs and options to customize, new construction homes have become increasingly popular in the last few years. But even new homes can come with their own set of problems.

When making a purchase, it’s important to understand both the pros and cons of new construction homes.

1. Newly Built
The #1 thing that attracts buyers to new construction is the fact that they are brand new. Generally, you won’t have to deal with a leaky roof, an old HVAC system, damaged plumbing, foundation issues, and other problems that could come with a pre-existing home. You could be saving thousands of dollars on repairs or bringing the structure up to code.

2. Customizable
There are many different builders you can choose from (like KB, Lennar, Richmond American, etc.). Each community has different models and layouts to choose from. In most cases, you have the opportunity to customize the flooring, fixtures, paint, etc. Some plans may even give you the option to add additional rooms or a loft. Since you can choose the design elements, it would save you the time, energy, money, and added stress of renovating.

3. Community Amenities
Most new construction communities provide resort-style amenities. They usually include pools/spas, parks, sports courts, gyms, and clubhouses with movie theaters, recreational centers, meeting rooms, and libraries. The “staycation” environment is a huge selling point for many people, especially those with growing families. You’ll never have to worry about a boring weekend.

4. Builder Warranty
When you purchase a new construction home, it will most likely come with a warranty. This means that if there is a major issue with the property within the first few years (or the time period agreed upon in the contract), the builder will get it resolved for you. You can enjoy your new home without having to worry about costly repairs.

1. Higher Taxes
In our local area, the average property tax rate hovers around 1%. New construction homes typically come with Mello-Roos taxes that fund the development of local infrastructure, including parks, sidewalks, schools, and first responder services. Some can last anywhere between 20-40 years, while others are levied in perpetuity (meaning they never end). 

The higher tax rate of 1.8-2% could lower your affordability. For example, a $700,000 new construction home with Mello-Roos would have roughly the same monthly payments as a $775,000 home without Mello-Roos. (With the higher HOA fees, that difference in purchase price could be even bigger!)

2. Potential Delays
Not only do you have to sign up on a waiting list if buyer demand is high, but the construction process can take months. Even for homes that are marketed as “move-in ready”, the escrow period is notoriously unpredictable, with builders often pushing back the closing date at the last minute.

3. Not As Perfect As They Seem
Most people purchase new construction with the expectation they will be getting a new house without any problems. But this isn’t usually the case. In fact, some home inspection reports for newly built properties come back with more red tags than some existing homes. We’ve seen incorrectly installed flooring, missing fixtures, crooked windows and cabinets, electrical hazards, poor paint jobs, etc.

4. Cookie-Cutter
While you may be able to customize much of the interior, new construction homes tend to be more cookie-cutter. With a limited number of models to choose from, many of your neighbors will have the same layout, design, and architecture style as you do. If you’re looking for a unique home with tons of charm and character, a new construction home may not be the best fit for you.

Schedule a no-obligation strategy session with us below. Whether you’re planning on buying a new construction home or not, our team is here to guide you from start to finish.