I think that times in real estate are still changing at a rapid pace, and I consumers are changing their budgeting accordingly. As real estate professionals, we must consider this massive shift in thinking that is about to occur. As consumer credit and spending contracts, buyers will be less likely to take on a home that needs a major overhaul. Buyers will want to buy a home, not an ongoing life project. How does this effect us in real estate? First of all, consumer spending is contracting out of fear of the uncertainty of the economic times. Home buyers are cautious and fearful of job loss, monthly budgets, and the potential of higher inflation and taxes down the road. Consumers are trying to pare down their personal debt, and at the same time save as much as they can. As a whole that translates to budgets in, budgeting dollars and strategic planning. In real estate that will impact us in many ways, and especially in the homes that consumers choose to buy. I personally believe the clear choice is that in the foreseeable future buyers will consider buying a new home first.
If a buyer has the choice of buying a 20 year old resale home for 250K vs. a new home for 225K with all the updates which one will they buy? The new home has a 10 year warranty that includes structure, and it has a new roof and appliances. The resale home has no warranties and especially on appliances or HVAC systems. The new home has energy efficient HVAC, and energy rated appliances. The hot water tank isn't leaking with a rust ring around it. The carpeting does not smell like a wet pet, and to-date no one has smoked3 packs a day inside the home. In a new home, the bathroom commodes do not have a plunger sitting next to them. The new home also has granite counter-tops, and stainless appliances that have never been used, and they do not have to be cleaned out before using. The windows in a new home are thermal paned and the house is wrapped in Tyvek, and has Hardiplank Siding. The buyer does not have to move into an older home and replace carpeting, LP siding, polybute plumbing, neutralize personal paint choices from the previous owners, and update oricinal appliances and lighting with monies that are hard to come by.
Consumers will continue looking for the best deal for the dollar spent.
- Home prices will continue to go ower as mortgage rates and taxes start to rise.
- New homes will offer a much safer and more practical investment choice.
- New homes are not personalized with dated wall paper and personalized paint choices.
- Warranties off buyers peace of mind.
- New homes are turn key.
- Selections can still be made on new home choices.
- New home buyers can build to suit their specific needs.
- New homes offer current technology choices, pre-wire for alarm, cable TV, LAN etc...
- Builders will pay closing costs, negotiate and offer warranties.
- New homes don't smell funny!
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Hello Jim, you have hit the "nail-on-the-head" many times here with what is available in new homes these days. A recent client of our sold her 1940's 800 sqft home, and purchased a new 2,400 sqft home -- her fuel bill in the new home is a mere 25% of what it cost to heat her older and much smaller home! John