Take time to consider…
If you are considering new construction take time to evaluate the development as a whole. Some questions are detailed below. You may have more leverage being one of the first lots sold but you also will be living in a noisy neighborhood for a while. Some developments may take more or less time to complete so ask questions and make sure you understand the plans and review past developments for proven work and results. A new construction home can be a forever home, but you want to know what to expect after you move in.
- Are you one of the first or last lots to be completed?
- How many lots are available vs. sold?
- Will you be living next to empty lots until sold?
- Will you be living next to homes being built?
- How many builders own lots in the development?
- When will shared amenities be completed?
- Is there an association and if so, how will it change once the development is completed?
Some recent buyers of new construction homes had the following comments regarding living in new development…
“We had homes being built nearby. One directly next to us wasn’t crazy noisy for most things but when they were digging to pour the foundation our home was literally shaking.”
“They are still building…and the worst part is all the trucks and people going in and out all the time. They seem louder than the actual building.”
“Its a little annoying construction workers loud trucks…Roofing day is louder, but its usually one day. Framing also can be noisier.”
“Framing guns are loud and roofers are loud and the big heaters they use to dry the foundations in winter (all night long!) are loud and yes the trucks who always seem to be in reverse (beep! beep!) are loud. The noise and traffic and trash make it unpleasant to be outside.”
“The backhoe and excavators that actually shake the house are annoying things. The days they would be digging and ground moving we would leave the house.”
Details on finding the best builder…
Much of the real estate analysis is pointing to continued tight inventory in the spring. Winter can be a great time of year to buy if you are ready. It may also be the best opportunity for first-time buyers who also benefit from lower interest rates. Don’t be left sitting on the sidelines in 2018.
Low inventory across the country will continue to remain a challengefor homebuyers in 2018. Experts state that low new housing starts and soaring prices are keeping purchase numbers down. First-time buyers and millennials are the most impacted by the lack of affordable housing. As more homeowners see the difficulties of affording a new home in this climate, they may choose to stay in their current homes longer, which will also impact inventory. Based on a recent survey, Zillow predicts that the shortage of affordable homes will also push housing prices to climb more than 4% in 2018, exacerbating the problem and forcing millennials to remain renters.
|Everyone has been talking about the tight inventory but I think we are OK calling it a straight-up inventory crisis at this point. We just don’t have enough homes. – Svenja Gudell, chief economist at Zillow
Rise in Interest Rates
Speaking of rising interest rates, economists at the MBA predict mortgage interest rates on 30-year fixed-rate loans to rise to 4.6% in 2018, and to more than 5% in 2019. The Federal Housing Finance Agency (FHFA) agrees that rates will hit the mid-4% range next year and mid- to upper 5% range by 2020.
A May 30, 2017 WSJ article goes into detail about the Minneapolis and Denver housing shortage. The shortage is cited as being tied to laws and legal actions taken by homeowner associations against builders on behalf of townhome and condo developments. The laws are proposed to change to bring builder back into the market. This excerpt was especially telling…regarding the trend away from homes below $300,000.
Housing Shortage Influencers
One key element of the proposed laws “requires that at least half of homeowners agree to a construction defect lawsuit before one can be brought by a homeowners association”. The challenge I see with this is when a small percent of the owners are impacted and can’t get a majority of owners to agree to be concerned about it. In my time as a realtor I’ve seen some townhouses impacted by structural defects such as heaving driveways and sidewalks and other units not affected or some units with structural wall cracks if built into a hill and units built on flat ground not impacted. Builders need to be held to a high standard and have oversight over the projects from beginning to end.
Unfortunately, the current housing shortage in our market has created a lot of challenges for this years buyers.
Please share your comments.
If you are planning to sell and/or buy a single family home in the Twin Cities in 2017 be prepared to act quickly. For buyers who decided to wait on the side-lines in 2016 be prepared for more of the same. Homes will be selling pre-list. Average days on market continues to decline at most price points and neighborhoods on average.
Move-up buyers will benefit from selling first and finding interim housing. Offers contingent upon the sale of your home may be rejects out right.
The attached twin-cities-housing-market-report provided by the Mpls Area Association of Realtors is a good point of reference for both existing and new construction.
Great video by BHG Stylist – good for buyers/sellers and those not planning to move.
Recent survey indicates that the general public may be over-estimating the amount needed for a down payment. You can purchase for as little as 3% down. In addition, some cities will offer down payment assistance and rural housing may require $0 downpayment.
So if purchasing a home for $200,000 – 3% would be $6,000. There are closing costs for a purchase in addition which either the buyer can be prepared to cover or negotiate with the seller in the offer for this if cash is a barrier. If selling, know that buyers may ask for help with closing costs.
Happy House Hunting 2016!
Sunday was Vikings Football – so while my family watched another win!!!! I toured some new construction developments in the east metro. It was a windy but beautiful day to be out. Can’t believe it is November in Minnesota.
Lake Elmo developments are pulling new construction buyers from Woodbury per the Pioneer Press…article
Savona by Lennar is well underway in Lake Elmo
- I toured Blakely E, a 2-story model – priced at $601K with a fin basement and 4444 sq ft finished. As mentioned in the newspaper you can live in this area and enjoy the Woodbury amenities. Lot size meets the needs for many of todays buyers but small compared to Lake Elmo existing homes. Lennar has a healthy balance sheet and a variety of home styles to offer. Savona useful documents
- Short video of the main floor and view from a walk-out rambler
Woodhaven – Woodbury – Phase 1 of this development is occurring – with 3 major CUSTOM builders in the immediate area. The two homes I toured were stunning, priced under $1mm. 21 Large Lot Exec Homes sites on 39 acres
- Derrick hosted a walk-out rambler with industrial appliances (yes, I loved this kitchen) and best in class HVAC, windows and finishes. The home was on a stunning 1 acre lot. The hostess, Nancy, was knowledgeable and wonderful. They have 10+ developments underway combined in MN and WI. My next stop will be Miller Farms later this month. Derrick started in the basement by William and Mary Ann in 1967 in New Richmond, Wisconsin.
- McDonald Construction featured a two story Langdon Model for $920K. Unique split stairs offering a TV/lounge area on the 2nd floor. Windows were amazing offering beautiful views – which may change over time as the area develops.
- Gonyea also in the area is working on a model – which similarly will include all high-end finishes and customized to meet your needs/preferences.
These builders along with Creative Homes, Custom One Homes & Stone Gate Builders have a Lake Elmo development in the works for 91 homes called Village Preserve.
Princeton Hills – Woodbury
- Gonyea – Smaller development within an existing neighborhood. The hostess Sue could answer questions about this and other Gonyea work in the area. Completed 2 story on ~.25 acre lot was listed at $649,950. Lots are available in the cul-de-sac for custom development by this well known metro builder.
Posted in Bloomington, Derrick Companies, Lake Elmo, Latest News, Lennar, McDonald Construction, Princeton Hills, Real Estate, Stillwater, Woodbury, Woodhaven
Tagged Buyers, Lennar, New Construction, sellers, Woodbury, Woodhaven