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Buy a New Construction Home
in DFW

Are you in the market for purchasing a new construction home? While a majority of us have no problem buying brand new phones or new cars, some people have never considered buying a new construction home. Depending on the quarter and year, less than 5% of all DFW home sales are new construction home purchases. Buying a new construction home involves a different process than buying an existing re-sale home, but this actually offers many benefits in our current real estate market.

new homes in denton county

DFW is a Hot Real Estate Market for New Construction Homes:

  • Major employers continue to announce expansions into North Texas, bringing an influx of new home buyers into the market.
  • Work from home entrepreneurs are choosing to live in the DFW area due to its lower taxes, lower cost of living, and higher quality of life.
  • DFW is benefitting from both intrastate and interstate migration from places like California.
  • Millennials are moving out of apartments and settling down in their own homes, creating a bubble of first-time homebuyers.
  • Land, permits, and approvals are usually easier to secure for new home builders in DFW, allowing for more options and typically more affordable new homes.

Myths About Buying a New Construction Home

You may have heard a few myths about buying a home. Depending on who you talk to, it’s either a great time to buy a home or the worst time ever! Truthfully, the right time to buy is when your family needs something different. Timing the real estate market to buy under perfect conditions simply isn’t feasible and is furthermore not necessary to build equity.

Let’s explore some of the benefits, myths, and misconceptions many buyers have when it comes to buying new construction homes.

Myth: You Must Have a 20% Down Payment

If you are delaying a home purchase due to the 20% rule, realize that this is no longer required. Most new home buyers today would struggle to find $80k cash for a $400k new home.

New home builders at Harvest by Hillwood accept not just conventional loans, but also VA and FHA loans which have down payment requirements closer to 3%. Even better, some qualified VA loan applicants need no down payment if they meet certain requirements.

In fact, when interest rates are trending up as they are now, saving for years towards a down payment can end up costing you more if you end up borrowing at a higher rate. Also, consider the opportunity cost. Delaying a home purchase and continuing to rent – when you could buy and build equity right now –  could be the worst financial decision you can make.

Furthermore, you can expect your rent to go nowhere but up. In Dallas Fort-Worth, apartment rents have increased 17.4% in 2022 and there is no tenant protection. Rents can continue to rise in the double digits.

Myth: Interest Rates Are Too High

It’s true, today’s 30-year-fixed mortgage interest rate is higher than the pandemic’s historic low rate of 2.68%. However interest rates are still low compared to their highest rates 40 years ago: 16.63% for a comparable loan back in 1981. The future is impossible to predict, but higher interest rates are expected for at least the next few years. Delaying your new home purchase is more likely to result in an even higher interest rate.

Buying a new construction home allows for more flexible financing and loan options over an existing home. Pre-owned homes are in such high demand, buyers may be required to buy in cash or only use conventional mortgages; this is not so with new construction homes.

Another benefit to buying a new build is the ability to lock in interest rates pre-construction. If your new construction home takes 8-10 months to build you can avoid the chance of a more expensive mortgage in the future.

Myth: New Homes Are a Poor Investment

Dallas and nearby suburban cities such as Argyle and Northlake are a seller’s real estate market. There are far more buyers than existing home inventory on the market. As a result, bidding wars are frequent and greatly increase the cost of pre-owned homes. Some homes will even sell for more than their appraised value.

In contrast, bidding wars for new construction homes are uncommon. The price listed is the price paid on a new home without closing costs. Most new home buyers build equity from the time a contract is signed and their move-in date months later. As a whole, DFW has one of the lowest rates of negative equity or underwater mortgages in the nation. While there is a risk of upside down mortgages, it is less likely to happen in DFW due to the market’s rapid price appreciation.

The sheer “newness” factor in well-built new construction homes makes them good investments. Improved building materials means better energy efficiency and lower utility bills for the long term. And, a well constructed new home is less likely to require home repairs and renovations. Appliances and HVAC are brand new, and buyers don’t have to wonder if the home’s systems were properly maintained by the previous owner. On top of that, buyers get the additional peace of mind that comes with the builder’s warranty.

Myth: New Homes Are Cookie Cutter

A home is typically an individual’s largest investment. Buyers want to build because they want a home that specifically reflects them, their taste, and their design aesthetic.

If you are concerned about all homes looking the same, realize that Harvest by Hillwood is not your typical new home community. With a mix of home builders and dozens of floor plans and home styles to choose from, you’ll find that homes at Harvest offer something for everyone. Plus, our monotony rules ensure that homes next to each other do not look the same. 

Depending on the home builder’s availability, a new construction buyer has choices around the floorplan, exterior elevation style, exterior materials/color sections (brick, stone, stucco), interior finish selections (countertops, cabinet style/color, flooring), level of appliances (premium vs. basic) and lot location within the community. 

While you won’t be able to fully customize a home, you can still make it your own when you pick selections from your builder’s design packages. Some builders even offer a design center consultant that works with each client individually to design their new home. 

Myth: The Housing Market Will Crash in DFW

Real estate doesn’t follow a boom or bust cycle. Other than the great recession, which missed DFW, there hasn’t been a major downturn in decades. Dallas, Fort Worth, Denton and surrounding cities in the area have all benefited from increasing home prices. A recent study did find that DFW real estate prices were 33% overvalued.

Much of these price increases are the result of bidding wars on pre-owned homes. Home builders of new construction homes have increased prices as lumber and materials rise. Either way, DFW is benefitting from a variety of macro trends that have accelerated since the pandemic and are expected to continue into the future. Growth projections of DFW place the population on track to become the country’s third largest metro area by 2030. With DFW growing by nearly 20% year after year, there will be far more demand for homes than supply, which is good for your investment!

Frequently Asked Questions About New Construction Homes

How do builder waitlists work?

The process varies by builder, and some builders don’t work with waitlists. Because most home builders do not accept multiple home offers, a waitlist is the alternative. With limited inventory, a waitlist organizes multiple home buyers in order of first priority. Some buyers back out when it is time to sign a contract and a waitlist provides an alternative buyer to the home builder. Builders may have waitlists for both spec homes (a.k.a. quick move-in homes) and new build homes.

What percentage of new home buyers worked directly with a builder and didn’t utilize a Realtor?

Hillwood Communities reports that anywhere from 11-27% of new home buyers did not work with a real estate agent over past 12 months. However, we strongly recommend that all new construction buyers work with a Realtor as they have helpful insight on the market. Real estate agents offer buyers numerous benefits including assistance negotiating contracts with builders.

What is the average timeline for building a new home at Harvest by Hillwood?

Build timelines vary significantly by builder, but the process generally takes somewhere between 8-14 months from signing the contract to move-in day. Most buyers find their process takes between 10-12 months.

Before the pandemic, home builders were able to complete most homes within 7-8 months. If supply chain constraints eventually ease, this faster build timeline may become a reality again.

What are some disadvantages of buying a new construction home?

Current market conditions with rising interest rates that can change buyer affordability and supply chain lead times that can delay home completion times.

How can working with a builder in a new home community offer benefits to the buyer?

A new home community has high quality standards for their home builders. Even better is an HOA community (like Harvest!) that is able to maintain a beautiful appearance, allowing home equity to grow. Builders in master-planned communities have the luxury of keeping their vendors in the same community with more homes being built, which translates to quicker completion times for most homes.

In a typical market, what is the slowest month/time of the year for new construction home sales?

In a “typical market” the slowest time of year for home sales is usually September to December. This is because the new school year has just begun and the holidays are approaching. The busiest time of year is typically mid-spring into July. By August the buying has slowed down as families prepare for school to begin. However, there may be a new “normal” developing as people are being transferred year round for work and more out of state buyers move to the DFW market.

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Harvest by Hillwood Logo
  • New Homes
    • Find Your Home
    • Homefinder Tool
    • Home Types
    • Traditional Homes
    • Patio Homes
    • Townhomes
    • The Retreat
    • Homes for Rent
    • Builders
    • Model Home Map
    • Buy New Construction
  • Lifestyle
    • Lifestyle Program
    • Families at Harvest
    • Photos
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    • Fact Sheet
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  • Amenities
    • Explore Amenities
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    • Argyle/Northlake, TX
    • Vicinity Map
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