New Homes Can Be Risky
Purchasing new construction can be risky, for many reasons. There are benefits of owning a newly constructed home, but this article is about risks that you may not know about. Please note, that this doesn't just go for brand new homes, even homes that are five to seven years old can be just as risky in some instances.:
New Construction hasn't had time to be tested. The properties value is more of a guess, and hasn't been truly tested by the market. The most recent sales are really only reflective of the recent market economy, not a result of say 20 years of economic ups and downs that. So, if you don't do your homework and need to sell in a down market you could be in trouble.
Here in Baton Rouge, I've heard of an instance where some million dollar homes' foundations in a new development literally sunk down. Also, I know of another development that simply never took off, due to poor construction, where the purchasers in that development are faced with a great deal of troubles.
And there's been a development where the prices did not increase, or appreciate, as the developer continued for years building behind the initial phases of buildings. With the developer building new units and selling them for the same price than the older units, buyers would purchase from the developer, and not previous purchasers. Why would they buy the second-owner homes for sale when they could get a brand new condo for the same price?
A suggestion, would be to do your homework and ask preventative questions when buying new, so as to cover your ground. Older established neighborhoods have a good track record of past sales that prove that value is substantiated where newer developments' prices are extremely variable.
