A buyer of a used home can expect that they need to check that everything works properly and that there are no structural issues. Now new home buyers are having to do the same due diligence as some home builders rush to get new product out to market as sales heat up.
Used home buyers generally know that they should get a home inspection before finalizing their purchase, but it’s important to get inspections on new homes as well, particularly now. Besides possibly finding an issue the builder might have missed, a new home inspection can ensure that everything is up to local codes. Any surprises can be dealt with before the sale much more easily than after.
New Homes Are Hot!
A lack of used home inventory has put pressure on new homes, which are currently a much bigger share of the for-sale inventory than usual. This March, the sale of new homes was at the highest level for the previous year. *
This momentum has meant that some important issues have been missed by builders.
According to Jason Sharon, owner of Home Loans Inc. in South Carolina,
“Just last week, the ventilation fan for the bathroom was vented to the attic space and not outside of the home,” Sharon told Yahoo Finance. “The week before, a builder did not have the appliances installed, so they had to take appliances out of a different home to install into the home I was financing in order to close. Last month, a builder called me to get a waiver for a bathroom missing tile – obviously that didn’t fly.” *
Real estate agents around the country have seen major problems in brand-new homes recently.
Drains that aren’t attached to a sewer properly, bathroom vents discharging to the attic instead of outside, bad foundations, roof leaks,… and the list goes on and on.
Why Is It So Bad Right Now?
The Pandemic played havoc with virtually every part of the economy, but construction was particularly affected. Lumber really went through a roller coaster of extreme price changes. Lockdowns inspired do-it-yourselfers to renovate their homes and take on other long-delayed projects. Added to that an unexpected demand for new homes for a population liberated from the office by virtual commuting. Sawmills had laid off workers early in the pandemic, so inventory was low while demand rose, and supply chain issues compounded everything to make lumber prices soar to historic levels.
The Fed’s battle with inflation has pushed up interest rates dramatically. That has affected not only home buyers but also home builders. Interest payments on land that they can’t develop and turn over quickly can really impact the bottom line.
Finding skilled labor has also been a major challenge for the industry, which is short approximately 400,000 workers. The pandemic saw a lot of skilled workers retire or move to other industries and the crackdown on immigration means there are not enough new people getting into the industry. On top of a shortage of labor, labor costs have gone up significantly.
Cutting corners is probably a result of all these things. Builders are hanging on for dear life after a very challenging 3 years. They have loans and want to stop the bleeding. They can’t find enough experienced workers. Of course, some are just motivated by profit over quality as well. As these pressures subside, it’s likely that new home buyers find fewer unwanted surprises in their new homes.