There are arguments for both sides of the coin. New home construction has benefits for warranties, perceived better condition (new), and perceived potential higher value. The later has become the most important factor for buyers to consider. Will my home have the same or higher value six, twelve or sixty months after I buy it? Buyers are looking closer at, “Can I afford to make the payment two years from now?” With a resale home you don’t get to pick the colors, style of carpet and tile, or add an extended garage or patio. What you see is what you get.
With recent news about mortgages and new home construction more buyers are looking at resale homes. The resale home market has always been and continues to be stronger than new home sales. Reading this morning home builders stock values are decreasing. In Tuesday’s trading (Aug. 21, 2007) Standard Pacific dropped 9%, Toll Brothers dropped 4.6%, Comstock shed 5.9%, Meritage 2.2%, Lennar 1.6%. The prediction for new home sales a year ago was a 20% decrease in sales, now the 2007 reduction is being adjusted to 35%. Simply put, buyers don’t have faith that their new homes will be worth what they paid for them and/or that they can afford the mortgage.
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