Jan 25, 2023
Making the leap from renting to homeownership can be intimidating. But taking the right steps and understanding what today’s market looks like can help you make the smartest purchase decision for your long-term financial future.
From researching different Chicago suburbs to knowing which features will make sense for you – let us guide you through buying your first home in 2023!
2023 Trends in the Housing Market
If we could predict the future, the housing market would be easy to navigate. Unfortunately, the circumstances of the past few years and the pandemic have been particularly unpredictable...
What we do know is that the National Association of Realtors (NAR) anticipates that the average rate for existing homes will only rise about 0.3% in 2023, which is a significant drop from 2021's 18.2% surge and even 2022's 9.6% increase. So it appears as if home prices are slowing down. This is great news for buyers!
Keep in mind, supply chain issues and inflation have driven up the cost of materials, and in turn, the cost of new homes. Yet the cost of new construction is still competitive with the cost of existing homes. A National Association of Home Builders (NAHB) report released in May 2022 showed the average cost of an existing home was $414,200, while a new construction house averaged $449,000. A $34,800 difference might seem substantial, but you have to factor in all the ways you save by buying a brand new home:
- The latest energy-efficient appliances, windows, plumbing, HVAC systems and more.
- Less maintenance and repair costs over time
- The value of customizing your home to fit your needs and preferences (instead of the expense of remodeling)
- Warranties from the builder
- The latest home safety and smart features
All of these things add value to a home — and the cost savings can more than makeup for the price difference.
Tips for Building a New Construction Home in 2023
If you plan to build a home from scratch in 2023, here are a few tips to help you navigate the process:
Get pre-approved for a loan
Getting pre-approved for a loan gives you an idea of what type of house you can afford. With a new construction home, the possibilities are endless! So getting pre-approved gives you a clear budget to work with and you'll know what your monthly payments will look like. This helps with choosing upgrades and options that won’t break the bank.
Take advantage of a preferred lender
Interest rates have risen substantially in the last year. Many home builders partner with preferred lenders who can help you get the best rate on your mortgage. Plus, they understand the builders’ process, which can help speed everything up. They might even offer special incentives, like closing cost credits or no-cost loan origination fees.
Understand Construction Loan Options
Building a custom home requires a different type of loan than purchasing an existing home. There are two primary construction loan options:
Construction-to-permanent loan: this is a short-term loan and a popular option available with the FHA, conventional, USDA, and VA programs. This pays for each step in the construction process and seamlessly transfers into a permanent mortgage once everything is complete.
Construction-only loan: this loan covers the cost of construction only, and then you can either refinance or pay it off when construction is done.
Work with an experienced builder
A good builder should be able to provide insight into the local market, help you understand building codes and regulations, and offer valuable advice on things like design features, materials and energy efficiency.
Not only that, but from finding the land to preparing it for construction and actually building the home, an experienced builder will make the process smooth every step of the way.
Researching Neighborhoods in the Chicago Suburbs
Every town across the country has its own unique features and personality. When you’re looking for a new home, it’s important to do your due diligence on the neighborhood and city you’re interested in. Of course, you'll want to know the basics:
- Are there top-rated schools nearby?
- What are the commute times to your workplace?
- How is the crime rate?
- Is there easy access to amenities like dining, shopping and entertainment?
But you should also consider what the area could look like in the future.
- Are there any plans to expand highways or build new bridges nearby?
- Are job opportunities growing?
- Are there any new recreational activities planned for the area?
- Is the area in-demand for new commercial or residential development?
All of these things can help you gauge the long-term value of your investment.
Our Signature Neighborhoods are a great starting point for researching the Chicago suburbs. We carefully selected these locations to provide an unbeatable combination of convenience and quality living.
At Overstreet Builders, we understand that buying a home is a big decision. With our expertise in new construction homes and 60 years of experience working with homebuyers, we can make sure your purchase is an investment you feel great about. Contact us to learn more about building your custom home in the Chicago suburbs!