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My fiancee and I are looking into buying a 3-story town home in San Diego, CA, but this would be our first time purchasing. The community has yet to be fully developed, but they plan on wrapping up construction in 2 or so years. The unit we want will become available to buy in about a year, but won’t be completed until 6 months after the fact. What are the costs to “purchase” the home, even though we wouldn’t be living there for 6 months?

3 Thoughts on Questions about buying a newly built home?
  1. Reply
    Serge M
    August 13, 2011 at 3:35 am

    Given today’s real estate market, this may be a very risky proposition. The market is very soft, so buying an unfinished home in an unfinished development may result in owning an unfinished property that you can neither use nor sell. The builder may be unable to sell enough homes to keep up with construction, may go bankrupt, and you may be left with an investment from which you cannot recover anything.

    Of course, this may be a very strong builder who will complete the project. Nevertheless, you cannot predict what will be taking place one or two years from now. Home prices may be much lower a year from now. Committing to a price now for an unfinished home may mean you spent too much. Home prices could also be higher in one year, and you could miss an opportunity to buy at today’s lower prices. either way you are taking a risk. Right now, however, it appears that the housing market will not improve in a very short time.

  2. Reply
    The Jewel
    August 13, 2011 at 3:48 am

    It’s your choice to purchase. Also, when buying a new construction home, it sounds like 1st phase buying, is it? During that phase, price is typically lower and construction loan is converted to mortgage toward closing with first payment due 45 days after closing. Property usually appreciates by Closing. You can’t close on a home that isn’t completed, etc. You can place a deposit (required) with intention of purchase; but you’re not obligated to keep it and should you change your mind, you can exit by taking an investor’s approach by selling your contract to recoup your deposit, plus fee. Also check length of time deposit is refundable. Don’t panic if there’s dip-markets do recover.

    Bottom line: know why you’re buying a home. Since this is your first, why not consider a starter home, or one for investment and progress from there? Perhaps the new development could be considered for leased option purchase (minimum 5 years) while development is still growing. Is the 3 story home a 3 family? Something to think about. Also, what development is this? I’m an investor.

    I believe the housing market will improve (and is), since goods and materials aren’t limited to the US. Foreign countries import foundational materials from us for their market, and are rates are attractive. It would be “financial suicide” or counter productive to increase those rates, thus hurting the US market and discouraging potential home buyers. Additionally, we’re still building. The media will always sensationalize and the public must persevere-as businesses.

    Recent slumps are related to industrial decline, i.e. Michigan Auto business, etc.; and predatory lending practices, i.e. balloon mortgage payments, foreclosures, etc.

    However, new homes are still being built, as are distressed and abandoned properties being prepared for market.

    Note: If for no other reason than peace of mind, check with Chamber of Commerce, City Planner’s office for San Diego re their long range projection for that area of town re their plans, for surrounding areas, etc. This information is documented. You can find out additional investor interest. Also, is this a new developer, and if not, how many other projects are operational? Should they decrease production of current development, reason could be temporary regarding internal matters of priority, as opposed to bankruptcy, etc..

    Let me know what you decide….

  3. Reply
    john t
    August 13, 2011 at 4:03 am

    The builder (developer) will ask for a deposit (check the contract and make sure it is refundable), write in your own stipulations if…then.. statements in the contract. It’s a buyer’s market so you can squeeze the builder, remember you “WILL NOT” need a mortgage just yet, because a bank will not process a loan without a home, ie insurance, legal description, etc… GO HERE
    and ask away… I think it’s a new site but they will surely answer your question- it’s right in there ballpark!!!

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