Pros and Cons of a New Construction Home (Is It Right for You?)

You’re on the fence in your new home journey. You can choose an older home in an established neighborhood that needs updates. Or you can buy the new home in a brand new development. What’s right for your finances, lifestyle, and aesthetics? There’s no clear-cut answer, and the right choice will be different for everyone. At Felix, we want to arm you with the best information on new construction houses.

We’ll walk you through the advantages and disadvantages of buying new construction. You can make the best choice for yourself and your family on your dream home purchase. Whether you or a first-time or experienced homebuyer, read on to find out more about the new home buying process.

What Are Some Of The Pros Of Buying Brand New Construction?

We know that buying a brand new home can feel overwhelming, but the pros outweigh the cons for many people. Let’s look at the benefits of buying a new construction home.

Pros of new construction from a financial perspective

The sticker shock of a new construction home can throw off many prospective homebuyers. But there are a few things to consider beyond the price.

There are no bidding wars when you buy a new construction home. So the price you see often is the bottom line price. Builders don’t usually negotiate on price because they don’t want future sales in a subdivision to be influenced by a lower sales price. (Your Realtor can negotiate other discounts and incentives.) This results in consistent home prices throughout the new housing development, and you will see a better return on investment.

It can pay off to be the early bird to a new development. Often prices are lowest in the early stages of building a new development, and they generally rise over time. You can lock in the price the day you sign the contract (usually 6-9 months before you close on the home). In an increasing market, you will likely have equity built into the house on day one from the appreciation in the market during the build time.

Your new construction house will also save you money compared to an older home. You will not have to worry about replacing the roof, water heater, HVAC system, and other costly items for many years. New buildings also come equipped with more efficient materials like double pane windows, better insulation, energy-efficient appliances, LED lightbulbs, and more. This means your house will run with more energy efficiency and lower your costs. You will notice these savings each month.

Pros of new construction from a design and architectural perspective

You can get more of what you want from a new construction home. Many homebuyers want an open-concept floorplan, and for good reason. Homes with open-floor plans feel more spacious compared to similarly sized homes. You can also customize many floorplans to suit your needs when you work with a builder. You may pay more, but you will have a layout with the right amount of rooms for your family. It can be hard to re-engineer a floor plan without extensive renovations in an existing property.

Many people who buy older existing homes often want to update homes with new building materials from the previous owners’ design decisions. But you do not have to do this with a new construction home. Instead of painting every room in the older home you buy, consider a new construction home for modern and light interiors. New construction homes come in the latest colors, with larger windows, and higher ceilings. You can also expect the latest finishes like granite countertops and luxury vinyl flooring. Materials in a new construction home are often better for the environment and energy-efficient.

You also may find new housing communities that fit your needs. Many new construction neighborhoods are built with underground utilities so electrical lines are buried. These new developments also have sidewalks on either side of the street to create a family-friendly environment. You can find neighborhoods with amenities like pools or wellness centers to fit your lifestyle.

Pros of new construction from a convenience perspective

New construction may be for you if you like to be more hands-off with home maintenance. New homes are generally less maintenance since you do not have to worry about replacing anything for years. It is unlikely that you will have to worry about replacing things like the roof, water heater, HVAC, and other major home components for a while. Even if something breaks, your builder warranty should cover all issues and repairs.

You will also experience a more convenient lifestyle in a new construction home. Many new homes are in Planned Urban Developments (known as PUDs). These typically have amenities that make your life easier, like community pools, playgrounds, and more.

What Are The Cons Of Buying New Construction Home?

Buying a new construction home isn’t for everyone. Here are some of the most significant downsides.

Cons of new construction from a financial perspective

The upfront costs for buying a new house might make it a difficult option. Typically, new construction homes are more expensive on a price-per-square-foot basis. Additionally, home builders don’t always negotiate on the price of the house. If they offer you a discount, then other buyers in the development will ask for the same deal.

It can also be challenging (but not impossible) to buy a brand new home. Builders often require a large deposit, which can be as high as 3% of the purchase price. You have to pay this as soon as you sign a contract. For many, this is a lot of money that they do not have access to until they sell their house. Many builders won’t allow you to have a sale of home contingency, and that can make buying your new home challenging. You won’t have as much money accessible until you sell your old house. (Side note: an experienced Realtor can help you navigate this with options like a bridge loan with a trusted lender.)

You may also incur some additional costs after you sign your purchase contract. First, you will attend a design session. Some of the design decisions will be standard and part of your price. Other choices may cost extra, and they can add up. Try to prioritize upgrades that matter most to you and discuss resale value with your Realtor. Builders usually require you to pay the cost of upgrades upfront.

Finally, many new homes are part of planned settlements with homeowners’ associations (HOAs). While HOAs overall intention is to protect property values, some costs are associated with being a part of an HOA. Most HOAs charge an initial transfer fee, a working capital fee, and a monthly or quarterly fee for community upkeep. So keep this in mind when you’re examining your budget.

Cons of new construction from a design and architectural perspective

If mature landscaping is high up on your priority list, you might want to consider a few things before buying a new construction home. Your house will probably not have lush and established landscaping. Often builders only landscape the front with minimal plants and sod. The backyard will have straw and grass seed. Most new housing developments will not have mature trees. You will also be close to your neighbors and have a smaller yard. This is because builders want to maximize their profits by building the most houses possible.

When you live in a new construction home, you’re often part of a larger housing development or subdivision. These developments often come with an HOA. HOAs have a lot of pros, but there can be obstacles to designing your dream house. HOAs have rules and an approval process for exterior changes made to the home, such as adding a particular type of fence or even painting your front door a certain color.

Many HOAs will also require the home's exterior design to be approved by an architectural review board. While many builders are typically aware of this and already have their plans approved, you may not be able to build the exact home you’d like if it doesn’t get approved by the board for whatever reason.

Finally, builders will charge a premium for different exterior styles, or “elevations,” which may not increase the resale value – it’s crucial to work with an experienced real estate agent who will help you keep resale in mind when choosing what to upgrade during the building process. A Realtor will know how to save money in the right places.

Cons of new construction from a convenience perspective

You can’t always move into a new construction ASAP. This is especially true if you are customizing your home with the builder. It can take more than six months to build a house (even longer if you’re building a true custom home). In a scenario where the builder does not allow sale-of-home contingencies, you may need to take out a bridge loan or even rent. It also means that if you are in a rush to move into a new home, you may need to consider “move-in-ready” homes.

Once you do move in, there will be construction going on nearby. So you will need to consider your level of tolerance for construction noise, traffic, and debris. But the good news is the construction will end in your development after about a year of living there.

How To Find New Construction Homes For Sale?

The best way to find new construction homes for sale is to sign up on Felix! We’ll alert you whenever a new home that matches your criteria is under construction. At Felix, we’ll learn a little about what you look for in a home. Then we will guide you throughout the entire process, from choosing the best area to picking a reputable builder and managing the sale.

About Felix Homes

Felix Homes is where five-star service meets low commissions! To date, we've saved our clients $1,610,738 in commission fees and have earned 120 five-star reviews on Google!

How are we able to offer five-star service AND lower commission fees? It's simple:

• We're an independently owned brokerage – not a franchise which allows us to keep more of the commission we earn.
• By offering a lower commission, more folks want to work with us which means we close more deals. By closing more deals, we can pass more savings along to our customers!

Still not convinced? Read all about our low-commission mission here.

If you have any questions about the state of the market or the home buying/selling process, please feel free to contact us at contact@felixhomes.com or 615-354-5731.