Very importantly , new homes define the concept of a good neighborhood . Where new homes are built , new schools and shopping centers may be built or close by . In some large new home developments , homes could be a part of a masterplanned community with amenities such as parks , swimming pools , softball and soccer fields , and walking trails , just the kind of place where most families want to live .
It is not a strict law that
Image by Gerd Altmann from Pixabay buying new homes is best . During the last recession ( between 2008 and 2011 ) the best strategy was to buy foreclosed properties from the banks , at low values , regardless of what their age might have been . However , during regular ( nonrecession ) times , brandnew singlefamily homes are , in my opinion , the best investment .
When you have a 1031 taxdeferred exchange , the time limits will likely not allow you to wait for new homes to be built from scratch . In that case , however , there are new homes that are ready to close now or in a couple of months at any given time . They would satisfy the exchange time requirements .
Buying new homes comes in three “ flavors ”:
1 ) Ready to buy , alreadybuilt homes . These are relatively rare . In many cases it ’ s a new home that was ready to close , but the buyer ’ s financing fell out .
2 ) The home is in the midst of being built , to be ready in a couple of months . These are not as rare as readytoclose homes , but not very common .
3 ) The buyer and broker choose a lot , and the builders begin construction of the home once there is a buyer with a contract . This is the most common form .
Under ideal conditions , new homes can take anywhere
from as little as 4 months to about 7 or 8 months to build . However , delays can happen for a variety of reasons .
One such reason is weather delays , such as heavy rains , and other weatherrelated phenomena .
Another possible delay can happen due to local authorities being slower than expected on permits . Usually , in the Sun Belt Metros we buy in , bureaucracy is relatively minimal . Nevertheless , bureaucratic delays can happen from time to time . Other reasons could be delays in builder ’ s financing , and other reasons . Over my long history I have seen builder delays in various markets , from Phoenix to Dallas and others .
As a buyer , I am very tolerant of builders ’ delays . If the market is trending up in price , a delay is actually a possible financial gain for me . I have a contract at a specific price . I only put a couple of thousand dollars ( usually ) as an earnest money deposit . Now if there is a delay and the value of the home is higher than my contract , I made this extra gain while only having a couple of thousand dollars tied up , and being able to use the rest of the down payment money during the delayed period .
Another thing I look at is where the interest rates are heading . If interest rates are stable , delays don ’ t interfere with locking a rate . If rates are trending down , there could even be a gain for me due to a delay by getting a lower rate when the house is ready .
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