First-time homebuyers on a house hunt today quickly learn that they’ve got plenty of competition. Thanks to the COVID-19 pandemic, people are moving more than ever, sending home prices soaring and sparking bidding wars galore. But some buyers have found a smart solution to sidestep this madness: by buying a home that hasn’t even been built yet.
In this latest installment of our new series, “First-Time Homebuyer Confessions,” we spoke with Nicole Krouse (director of marketing at Realtor.com). In June 2020, near the height of the coronavirus pandemic, she and her husband, Pat, purchased their first house in one of the hottest markets in the country: Austin, TX. High demand has driven up Austin’s median home price to $600,000.
Nicole and Pat, however, were able to buy their house for just over half that sum by choosing new construction. Here’s what their homebuying journey was like, and lessons they learned along the way that might convince you to consider buying a newly built home, too.
Location: South Austin, TX House specs: 4 bedrooms, 3 baths, 2,140 square feet Price paid: $319,000
What convinced you to buy a house in the middle of a pandemic?
Truth is, we weren’t really in the market for a home at all. We were visiting some friends who had just moved into a new build in a part of South Austin that’s underdeveloped right now. There’s not even a grocery store around. But within days of our visit, Tesla announced that they intended to purchase land next to the community and build a factory. We saw an opportunity to invest.
Where were you living when you decided to buy?
We were renting a two-bedroom, split-level apartment south of downtown Austin with a small yard. The place had enough space for us before COVID-19, but when my husband and I both started working from home, it was difficult.
So how did house hunting work for a house that hasn’t been built yet?
We made an appointment with the development’s sales consultant, then went to see several model homes. However, our future home was just an empty lot! We ended up touring three or four other new constructions in different areas of town, just to do some due diligence. But after that, we decided the original property was the right one. We ended up signing our intent to purchase that next weekend. It was very fast, almost an impulse decision.
Were you nervous about buying a house as an impulse purchase?
We only had to put down $1,500 in earnest money when we locked in the home. That’s the way new construction was working at the time. So we thought, “Why not?” If we backed out, we would have been out just $1,500.
Was there a negotiation process to buy this property?
When we originally talked to the builder, there were “sticker prices” for the houses, and that’s what you paid. Since we purchased last June, before the housing market took off, it wasn’t as competitive as it is now, since people weren’t sure how the economics of COVID-19 was going to play out. So there was no negotiat