Buy a New Construction Home
in DFW

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.

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.

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.

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. 

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!