Buying a home in new developments
Buying into a new home community may seem riskier than purchasing a house in an established neighborhood, but any increase in home value depends upon the same factors: quality of the neighborhood, growth in the local housing market, and the state of the overall economy.
One survey by the National Association of Realtors shows that resale homes do have an edge over new homes. The trade group's figures show the median price of resale homes increased 7% between 1998 and 1999, compared to 2.8% for new homes in the same period.
It can be difficult to negotiate the sales price with a developer because they may claim their prices are based on fixed construction costs. Experts say builders are more likely to be flexible on price at the very beginning and the very end of a development project. Early on, most developers want to move people quickly in to new developments so the project picks up momentum. Later, developers may be more inclined to accept lower offers when only a few units remain.
If negotiating the price doesn't work, buyers commonly negotiate for better amenities—carpet upgrades, light fixtures, or lot location. Experts say developers will rarely pass up a deal over a few hundred dollars worth of carpeting, for example.
What to look for when buying a new home
When you buy a resale home, you can find out a lot more about the property and the neighborhood before you buy. Homes being built in new areas are more difficult to learn anything about. Land to support new-home developments usually is located on the outskirts of town. Potential buyers should ask the developer about future access to public transit, entertainment activities, shopping centers, churches, and schools.
Local zoning ordinances also should be reviewed. A rather remote area can turn into a fast-food-chain haven within a couple of years. Try to ensure that the neighborhood, if not strictly residential, will not begin sprawling out of control.
The developer's role in new developments
A developer's decisions affect the entire landscape, from what the exterior of every house will look like, to the type and size of houses sold, the size and shape of the lots, the layout of the streets, the size and kind of trees planted in your yard, the number of tennis courts, the presence of biking and jogging trails, and if the project is big enough, the mix in the local shopping center.
The developer is keenly aware of buyers and their preferences. All the developer’s decisions about where to purchase land for new developments and how to subdivide it are based on the type of houses he thinks buyers will want. Moreover, the developer has to predict housing trends at the time he purchases raw land, and it can be five to ten years before he is able to sell lots. Though home builders are the ones most often asked to predict housing trends, the real visionaries of the future, by necessity, are developers.
Inside Boston Real Estate is a network entirely devoted to real estate information. The entire Inside Real Estate network has more than 100,000 pages of real estate for cities allover the United States. Inside Real Estate covers several topics from the basic “how to's" of real estate to city-specific real estate information.