Is It a Good Time to Buy a Home - Your Guide to the Housing Market for New Construction

Pros and Cons of Buying a New Build Home in Today’s Market

Looking to buy a new build home amid today’s housing market can be both exciting and nerve-wracking. But rest assured, as there are some definite pros to consider along with the possible drawbacks. If you’re currently asking yourself if it’s a good time to buy a home, rest assured that new build homes remain a popular choice for many buyers, and there’s no reason you can’t weigh the pros and cons for yourself to see if it’s the right time for you to join their ranks.

 

Pros

• Less Competition - With interest rates no longer at historic lows, it has allowed the housing market to cool off a bit. Many buyers who witnessed the stressful bidding wars and above-asking-price offers are “quiet quitting” the housing market, which could mean less competition for those looking to purchase now.

• Increased Equity - One of the best benefits of homeownership is the home equity you can build over time. Despite home prices continuing to rise largely in part due to inflation, if you are purchasing in an area with consistent growth, it is likely your home value will continue to rise above what you paid for it.

• Builder Incentive Offers - As the market begins to shift, now could be a great time to take advantage of incentive offers from your home builder! These incentives could include covering your new home’s closing costs or temporarily lowering your interest rate with a buydown. Reach out to your nearby Centex Community’s Sales Consultant or Pulte Mortgage Representative to learn more about Centex incentives in your area!

 

Cons

• Interest Rates - While higher interest rates may dissuade many homebuyers in today’s market, remember that you should “marry the house and date the rate!” If you are financially ready and you find your dream home, it’s best not to wait around. You can always choose to refinance your home once interest rates drop.

• Upfront Costs - No matter the market, buying a home comes with some hefty costs. If you have big-ticket priorities, such as paying down debts or finishing your degree, you’ll want to carefully consider if buying a new home right now is the best choice.
  

• Long-Term Commitment - When you purchase a home, you’ll be putting down roots for several years, at least. A good rule of thumb is that you’ll need to stay in your home for at least five years to start building equity. So if you do intend to buy a home, know that you may be making a five-year minimum commitment before you’ll start getting any return on your investment.

 

Your Priorities

Finding your next home isn't solely driven by market trends; it's often a reflection of life's important milestones. Your new job or expanding family may be calling for a change in scenery or more space. Explore some of the key life priorities below that often inspire individuals and families to make the leap into homeownership to see if any resonate with you. If so, it might be a good time to buy your next home.

• Family - We know family comes first for many homebuyers. Whether you're preparing to welcome new members or aiming to be closer to your loved ones, the importance of creating a unified and spacious living space could make the difference when deciding if it’s the right time to buy a home for you.

• Space - You might be looking for more space to accommodate your growing family or to embrace a new lifestyle. Or maybe you prefer a cozy, simplified home that's easier to manage. Whatever your needs, this real estate market can still provide the perfect space that meets your unique requirements, ensuring comfort, efficiency, and a worry-free living environment.

• Career - Whether you want to cut down on your commute or you’ve gone remote and need more space, embracing a better work-life balance is key to many homebuyers when deciding if it’s a good time to buy a home for them.

• Lifestyle - Many homebuyers take their lifestyle into consideration when looking to buy a home. Whether it’s urban conveniences or suburban tranquility, your desired lifestyle will be a big factor when choosing to buy a home.

 

Finding the Perfect Financing Option for Your New Build

Working with an affiliate mortgage company offers more flexibility than using an outside lender, as the mortgage company is familiar with the builder’s process and can work more closely with the builder to ensure a smooth and timely closing. Partnering with a homebuilder’s affiliated lender like Pulte Mortgage can streamline the financing process and ensure a smoother, stress-free experience for new buyers!

 

Tips and Tricks to Help Get the Best Price on Your New Home

No matter what the housing market looks like, there are several tools that homebuyers can utilize to snag the best price on their new home!

 

Buydowns

When mortgage rates are on the rise, your lender may offer a mortgage rate buydown to help temporarily or permanently reduce your interest rate. This can help you save money by lowering your monthly payments during the initial loan term!

What is a buydown?

A buydown involves paying an upfront sum at the time of closing, which is then applied to reduce the interest rate for an agreed-upon period, often the first few years of the mortgage term. Homebuyers might opt for a buydown to alleviate initial financial strain, making homeownership more accessible. It's a nuanced approach that allows buyers to enjoy lower monthly payments early on, gradually stepping up as the interest rate adjusts to its original terms.

 

The most common mortgage buydown structures used are 3-2-1 buydowns and 2-1 buydowns.

 

3-2-1 Buydowns

A 3-2-1 buydown enables a buyer to pay less interest on their mortgage for 3 years after obtaining the loan. The points paid upfront reduce the interest rate by 1% for each of those first 3 years. For example, say a homebuyer qualifies for a 30-year mortgage at an interest of 5%. With the 3-2-1 buydown, they would pay an interest rate of 2% the first year, 3% the second year and 4% the third year but would have to pay the full 5% from years 4 – 30.

 

2-1 Buydowns

A 2-1 buydown applies to only the first 2 years of the loan where the interest rate would be 2% lower in the first year and 1% lower in the second. Using the previous example, the buyer would be expected to pay an interest rate of 3% the first year, 4% the second year and 5% from years 3 – 30.

 

Refinance

Homebuyers possess a valuable tool in their financial toolkit: the option to refinance once interest rates decrease! Refinancing, or “refi,” not only helps in managing costs but also provides an opportunity to adapt to changing circumstances and take advantage of improved financial conditions.

 

How Does Refinancing Work?

Refinancing involves replacing an existing mortgage with a new one, typically to secure a lower interest rate or adjust the loan terms. This strategic move can result in substantial savings over time, reducing monthly payments or shortening the loan duration. Savvy homebuyers keep a watchful eye on market trends and consider refinancing when interest rates are favorable, enabling them to optimize their mortgage to better suit their financial goals.

 

Builder Incentives

A big advantage of buying a new construction home is the financing incentives that are often available to buyers. Many homebuilders have affiliate mortgage companies that offer financing incentives such as lower closing costs, reduced interest rates, or other perks that can help you save money! Speak with a Centex Sales Consultant for the most current incentives.

 

First-Time Homebuyer Programs

If you’re a first-time homebuyer, you may be able to find some valuable resources at your disposal! Check with your state to see if they offer financial incentives, reduced interest rates, or down payment assistance to eligible buyers. By tapping into these programs, first-time buyers can significantly enhance their purchasing power and reduce upfront costs!

 

What to Look for When Choosing a Location for Your New Home

Finding the perfect home starts with finding the perfect location. In addition to navigating the housing market, there are a multitude of location and proximity factors to consider. But with a little research and our expert help, you'll soon find the ideal location for your new home.

 

Here are some location and proximity factors to consider:

• Amenities
• Nearby schools
• Restaurants and shops in the area
• Commute
• Quality of life
• Lifestyle fit
• And more

By doing your research and carefully weighing your options, you can find the perfect location for your new home. Explore new construction homes today to get an idea of what’s available.

 

Conclusion

Despite interest rates on the rise, you may weigh the pros and cons and find that now is still a good time to buy a home for you. After all, there are timeless advantages to buying a home that go beyond the fluctuations of the market.

 

Explore new construction homes today or browse more Centex blogs.

 

 

Written By: Meagan Rochard, a copywriter for Pulte Financial Services.

Last Updated: 12/17/23