They’re Back!
At long last, after a near-moratorium on new home starts resulting from the economic downturn, new construction homes are staging a comeback throughout Southeastern Wisconsin. Challenged markets, combined with the larger national lending crisis, prompted many builders’ banks to get out of the business of new construction loans for both subdivisions and speculative projects alike. That slowed new home starts to a crawl.
Few builders were in all-cash positions to speculate – and those that were had good reason to be cautious. Luckily for Wisconsin, the picture for new construction has improved significantly in the past couple of years. The state’s economic upturn has created both new buyer demand and positive changes in lending. Resale home inventories have also tightened. Such developments have prompted a significant rise in what economists call “builder confidence rates” – and, in following, there are many more new construction homes breaking ground across our counties.
Because of the added buying requirements of extended time, patience and vision to build or buy new, new construction is not for everyone. Most buyers will still opt for the market mainstay of a tried and true resale home. But, for others, a new construction home may be well worth the journey – one made smoother with the support of a team of professionals, including a knowledgeable Realtor, a qualified builder, a construction-savvy mortgage lender, and certified inspectors.
This is the most complex option, requiring a great deal of personal time, focus, decision-making and teamwork. If you stand ready and excited to make your personal imprint on land you love, have a year or more before you need to move in, and are not on an overly strict budget, you may well be a prime candidate for a custom home.
Typically, the custom option is the most costly one, and for good reason. The builder and buyer are creating a truly one-of-a-kind home from scratch. Finding the perfect piece of land with your Realtor and builder is the first step to make sure the land “works” for your specific needs. Next comes in-depth team discussions of space and design parameters with your builder and architect/designer, as well as your Realtor and lender. Their collective job is to translate your dreams into acceptable floor-plans, elevations and blueprints, with an additional eye to financing and market values. The buyer also has an important role in picking myriad finishes and materials per deadlines, a job that can be both exciting and labor intensive. The final home plan must meet not only your lifestyle needs and financial parameters, but also adhere to the building requirements and local codes of public governance, as well as any homeowner’s association rules and guidelines. If variances or exceptions are needed, it may extend time and costs, and concessions or changes may be necessary. Working with a builder who specializes in custom homes in your area will maximize success and satisfaction. Ask your trusted Realtor for referrals.
These homes fall into two categories – spec homes and ready-to-builds. They are more accessible than custom to a wider group of buyers for reasons of timing and cost.
A “spec” home is so called because it is speculative for the builder. He or she decides to break ground on a self-owned lot and build a home with their own cash or a bank loan-basing their investment decision on their understanding of what most buyers in their market will want in a home in terms of location, size, exterior elevation, floorplan and finishes. The assumption, usually a good one, is that if they build it, a buyer will come.
Depending on when a buyer comes along in the process, there will be varying ability for customization. Those early in the process may have the option to make changes, like moving a wall, adding windows, or selecting cabinetry. Closer to the end, the option for buyer personalization will be more limited.
It should be noted that spec homes, while making a comeback, are still somewhat rare finds in our market, as builders are conservative in their planning. Fortunately, there is another option: Ready-to-Builds. These also offer a greater opportunity for semi-custom finishes.
With Ready-to-Builds, the builder may own the land, or simply partner with the lot owner. In either case, a full home package for the lot is offered to buyers at a known cost, complete with exterior elevation, floor plan, complete specifications, and priced options. Typically, occupancy is under 5-6 months from the time of contract. The buyer has more leeway to tweak the plans before breaking ground, and also can select from a good range of finish options. The appeal here is that a buyer gets choices that will allow them to make the house their own, but within limits that still also allow the builder to stay on time and on budget. If you like the locale, but don’t see a style you like reflected, ask your Realtor if there are other unadvertised options available from the builder. The lot may also be for sale separately, without builder affiliation.
Production or tract home subdivisions are those in which a developer features several complementary-look model plans with set specifications, allowing for efficient production and quick delivery (sometimes as short as 3-4 months). There are often limited personalization choices – colors, counters and carpeting choices for example – but prices are the most competitive here as the builder can depend on regular output, known production times and controlled costs. Production homes are often a popular choice for buyers with limited time and set financial purchase limits, who nonetheless want a brand new home.
NEW CONSTRUCTION’S COMEBACK IS A WELCOME ADDITION TO OUR MARKET, WITH SLOW BUT STEADY GROWTH.
New construction’s comeback is a welcome addition to our market, with slow but steady growth. For those buyers looking for something new who have the time to wait, these homes may be an attractive option to consider alongside existing home choices.
How do you know if new construction is right for you? As noted above, there are key questions to be asked and important research to be done before embarking on this type of home purchase. Keefe Real Estate agents are well-schooled in the new construction process and well-informed about available subdivision lots and vacant land parcels across the counties. In addition, they can connect you with reputable builders and stay closely involved throughout the build process.
We at Keefe are greatly encouraged by what we see in new construction options today, and we welcome the opportunity to serve as a guide and professional resource. Contact us today, and we will connect you with an expert to get you started.
Photographer: Matt Haas
By: Julie Morse
