Comparison of New Home Options
Overview and Comparison of New Home Options
For most of us, homeownership remains an essential element of the American dream. For some, that dream is for a newly constructed home. It’s not difficult to see why some people aspire to live in a new home instead of a pre-owned property.
Buying a new home means not having to live with and correct other people’s choices in décor and style. It means having “smart” home features built-in and building materials that meet the safety standards of today’s regulations. It means all new and clean appliances and fixtures, HVAC systems, roofs, and siding, which keeps the cost of maintaining the home low.
There are three options for those who dream of owning a new home: tract homes, spec homes, and custom homes. They range in price from the starter home level to the “sky’s the limit” luxury housing. So even if your budget is limited, it doesn’t mean you can’t afford a new house.
The largest category of new homes for sale is tract homes. They are generally built by large residential home construction companies with a regional, state, or national footprint. The contractor buys a large tract of land, makes streets, puts in utilities, separates the area into buildable house lots, and begins building homes.
Generally, a buyer of a tract home will have a few models available to choose from, each with a set floor plan. Custom choices will include paint colors, flooring, cabinets, and fixtures, but selections will often be limited to those in the builder’s design center.
Tract builders will often have a staged model home in each subdivision. They also will build homes before they have buyers and generally have houses you can see in various stages of construction.
Tract homes are available at lower pricing tiers up to the high end of the market, depending on the builder and location. The more expensive homes often have more customization options available to the buyer and the developments higher-end amenities.
Advantages of Buying a Tract Home
- Price – For buyers working with a limited budget, a tract home might be the only option for getting into new construction. However, don’t assume that tract homes are cheap or shoddy. They are generally less expensive because builders buy materials in bulk at a lower price, enabling them to pass the savings on to the consumer. They also may use many factory-produced building components, which translates into more savings.
- Speed – For buyers that need to get into a home quickly, tract builders can be more accommodating. Generally, they have several unsold houses in various stages of construction and can finish them quickly when they have a buyer.
- Model Home – It can be difficult for some to visualize a home from a set of blueprints. Having a fully-staged model to see will give a buyer a much more solid idea of living in the new house.
- Straightforward Process – Having fewer choices means it’s easier to make decisions. Also, because you are working with a standard model and pre-priced options, you are far more likely to stay within the limits of your budget.
Disadvantages of Buying a Tract Home
- Options – Tract home buyers will limit the choice of materials and fixtures. There are also generally no options to customize a floor plan.
- Smaller House Lots – Developments of tract homes tend to have smaller yards.
- Selling – If you have to sell your home while the development is still under construction, it can be challenging to compete price-wise with the new homes still being sold by the builder. When you look at your timeframe, keep in mind how long you plan to stay in the house.
Smaller, local builders also want to get in on the new home market. Since they do not have the resources to develop a large tract of land, they buy individual house lots and build a new home on speculation that they will sell it at a profit. Spec homes target the niche of buyers who yearn for a new home but want the benefits of living in an established neighborhood closer to or within the city.
Advantages of Buying a Spec Home
- Spec homes are often in already established neighborhoods and closer to an urban center than a tract home. You also will not have to deal with the noise and dust of building other houses around you in a tract home development.
- Spec builders are more inclined to be flexible on price and terms, especially if the home is finished and has been on the market for some time.
- If you buy the home early in the building process, you may have more options to customize than you would with a tract home.
- Because spec builders rarely build the same home twice, your home will be unique.
- You will be buying from a local builder and not dealing with a large, impersonal corporation.
Disadvantages of Buying a Spec Home
- If the construction is complete or nearly so, you do not have the option of picking paint colors, flooring, or fixtures as you would in a tract home.
- You will be doing business with a local contractor who may not be in business several years down the road to deal with issues with your home.
Custom Built Homes
A custom home falls into the infinite possibilities defined only by imagination and budget. A custom builder can construct anything your heart desires.
Advantages of Custom Building a Home
- The buyer controls home style, floor plan, building materials, systems, and fixtures.
- The result is a unique home that fits your lifestyle and vision for the future.
- You are not limited to living in housing development. You get to pick your house a lot and decide where to locate your home.
- You will get lots of attention and assistance from the builder as you move through the process of building your dream home.
- You can make changes during the building process.
- You will have better control over your building budget, deciding where you want the top-of-the-line materials and where you are willing to compromise.
Disadvantages of Custom Building a Home
- The cost will be substantially higher than a comparable tract or spec home.
- You will need more cash to begin the project.
- The process is more complicated, and you must prepare to make many decisions throughout the building process.
- Because quality custom home builders are in high demand and only build a limited number of homes a year, it will most likely take longer to get into your new home.
- Because you can make changes throughout the process, it may be more challenging to stay within your budget.