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New Construction ISSUES in Miami | Pre Construction Miami
Dated: April 8 2021
New Construction Issues in Miami Florida
By. Sharon Colón
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What is happening in today’s market when buying new construction?
As you are aware, the resale market is super competitive right now with a low inventory and a big buyer’s demand. What has been happening is that the good listings are immediately jumped on by buyers that have been waiting in line since probably 5+ prior not accepted offers. So by the time you get to see the house, the seller already has strong offers on the table. And yes, this can be discouraging especially if you really need to find somewhere to live or have a strong desire to become a homeowner. Yet, the multiple offers that the Sellers are getting are over asking price, waiving inspection, waiving appraisal, and trying to pleased the Seller as much as the Buyer can so their offer can stand out from the rest. But what it’s happening in the new construction world? Is it difficult and competitive too?
Does New Construction Have Competition?
New homes indeed have less competition because they are selling homes often that are not constructed yet, meaning they don’t have move-in-ready homes. Also, getting in on one of these "to be built" projects is often much less stressful. What you will do is you sit down with your realtor and with the builder’s realtor, work out the details, sign a contract, and then you have a future home meaning: no bidding wars, no waiting games, and no rushing around. Of course, that is in a perfect world.
While what I just said is true about no bidding wars, however, in today’s market we are seeing things or changes from builders to the Buyers making it a little complicated. For example in the past, it was very common for builders to offer incentives to the Buyers, to be able to select a lot easier, to go under contract once approved by the bank, and not have to wait for too much risk for a jump in a selling price. Something that recently happened to me was that my Buyers and I went to this builder on a Saturday, they liked this home, numbers with incentives were given and they decided to apply for the loan. Once approved by Tuesday, the incentives went down and they had to wait until they could get the green light to sign the contract because the builder changed their rules in no time. The waiting issue was never explained from the beginning so at that point they could get back to the Buyers saying “we have you the contract, however, there are no incentives this week and prices went up”.
New Rules in New Construction in Miami
So yes, some builders have changed their rules. It is super important for you to receive all the proper information from the beginning so you can be aware of any possible changes or issues that might affect you later on. On the other hand, some builders still are giving incentives to buyers, and are less difficult but keep something in mind, builders are going to keep increasing the prices. Also, it really depends on where you are looking to purchase. If you are flexible with location, then you will have more options and different builders to choose from. Why will they continue to increase their prices? If you purchase a home at pre-construction prices, of course, the prices are not going to be the same as if you buy 2 months later. When you buy early, your home has a chance to appreciate very quickly and builders start rising their price as they complete more and more. Plus, we are in a rising market. Additionally, builders are reporting they are facing issues obtaining lumber, building materials, and now apparently appliances. So having a shortage of building materials turns into inflating home prices, and delays construction. According to the National Association of Home Builders, the price of lumber reached a record high last month, up more than 170% over the last 10 months. That adds thousands of dollars to the cost of a home, delays construction starts, and disrupts closings. Also, the National Association of Home Builders predicts that 2021 will be the first year since the Great Recession that builders will produce more than one million single-family homes nationwide.
So yes, you still have to sacrifice some things like time, you will have to wait for the builder to construct your home, but you won’t have that crazy bidding wars that the resale market is having. With a new pre-construction home, you will have the advantage of selecting your finishes and other things that you won’t have when buying a resale home and you will buy a new home with a one year warranty. So you are buying peace of mind because you don’t need to worry about hidden issues. And yes, you might not get incentives right now, or not that high incentives but anyways if you go the resale way, no sellers will give you any credits in today’s market, and you won’t have a warranty with a resale home, right?
Now if you are thinking to avoid all the craziness of the resale market and buy new construction, but also would like to know how to buy smart and see if you could receive incentives please reach out to me. As I mentioned, there are different builders in town. Depending on how flexible you are in location, price, timeframe, and how realistic you are about the market, you can still save now than waiting to buy in a year or two.
If you want to know more information about living in Miami or South Florida you can get a free relocation guide and other guides in my YouTube Channel.
You can always reach out to me by completing the forms, by going to my website, contacting me directly by phone, email, or social media.
Again, if you are thinking about buying or selling in South Florida / Miami, CLICK HERE or you can call me at 787-462-9914.
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Sharon Colón is a passionate Real Estate Agent, Entrepreneur, and Lifelong Learner on a mission to turn the dreams of buying a home into a reality for the people who contact her. Efficient and empath....
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