New Home Builds and their Place in the 2024 Market
For both investors and home buyers, the new home build market is set to continue along the increasingly important upward trajectory that we saw last year. This is being driven by the lack of affordable pre-existing properties on the market—and this includes both habitable real estate and full-on rehab properties.
What You Need to Know about the New Home Market
- Why new home builds are increasing
- How do new home builds fit into an investment portfolio?
- Top areas to invest in the new home market
Why new home builds are increasing
There are two main reasons behind the increase in new home builds:
- A lack of existing homes
- Interest rate instability, leading to a reluctance in house owners to sell (and get pulled into a higher mortgage interest rate)
With neither of these having any quick-fix options (indeed, global issues are only fueling the interest rate worries), it becomes easy to see why the new home market is blossoming. The latest figures show that the sale of new-build, single-family properties has grown from 10%-12% to a massive 30% country-wide. This is further driven by the high prices of the existing homes that do come onto the market.
The upshot of this is that more people than ever are turning their focus to new builds, with a predicted rise in sales of a further 5% this year.
How do new home builds fit into an investment portfolio?
For those looking for a quick turnover, a new build might not tick the required boxes. However, for the savvy investor wanting to build a solid property investment portfolio, there are many reasons to consider the new home market.
These include:
- Increased capital growth and higher yields: Purchase in the right place and you stand to benefit from the frequently seen strong inflation in the first few post-years build. This translates to higher rents and capital returns.
- Reduced maintenance costs: New builds come with guarantees and warranties that’ll cover, at least for the first few years, many ongoing expenses. As well as being favorable to your pocket, it also reduces the stresses and effort a landlord must endure to keep the property up to standard for tenants.
- Location, location, location: Most new build schemes are in up-and-coming areas where money is being poured into the infrastructure. In turn, this makes for a highly desirable property—especially in areas where companies are drawing employees to the region. This translates to higher demand and, therefore, premium rents.
Top areas to invest in the new home market
The best places to invest are driven by the attraction to live there. For example, places where there’s high employment, a hospitable environment, great infrastructure, and an affordable cost of living.
The importance of big companies expanding from their usual hubs, such as NYC, San Francisco, and Silicon Valley should also not be underestimated. Four good examples are:
- Nashville, TN: Excellent employment, a growing population, and affordable living make the city a good location for new-build investment properties.
- Austin, TX: An increasingly large number of tech companies moving to Austin is bringing a significant migration of talent to the area.
- Orlando, FL: The city continues its draw, yet remains a market where single-family unit property prices remain below the national average.
- Raleigh, NC: Boasting a strong economy, growing job market, lower-than-average cost of living, and a healthy investment by building companies, the city ticks many boxes when it comes to wise new build real estate investing.
The lure of the new home market is strong. While property remains in short supply and nervous global factors prevent interest rates from dropping to pre-pandemic levels, there’s an awful lot to like about this form of investing.
Looking for Competitive Finding to Invest in New Home Builds? Contact BRRRR Loans Today
BRRRR Loans is a leading hard money lender offering a wide range of loans to suit virtually every property investment purchase. From our namesake—the Buy, Rehab, Rent, Refinance, Repeat—to financing fix & flippers, new home builds, bridging loans, and more, we offer some of the best interest rates in the business and pride ourselves on our fast, simple application process.
Discover more at https://www.brrrr.com and call us today to discuss the art of the possible…
Buy, Rehab, Rent, Refinance, & Repeat. A nationwide direct lender to real estate investors. If you have a project that needs to be funded, you’ve come to the right place.