Is Anyone Buying a New Home Now? Surprisingly Yes, and Here’s Why
You probably think the housing market in this country is still going through post-Covid turmoil if you watch and read primarily national news sources, and to an extent, that is very true. In certain markets, however, strong growth paired with major incentives offered by developers and lenders is making 2023 an extremely compelling time to shop for new homes.
Why You Should Consider New Construction Homes
Shopping for a new construction home in an uncertain economy has both advantages and disadvantages. On one hand, a dynamic economic climate can provide unique opportunities for buyers to negotiate better deals with builders and developers. On the other hand, an uncertain economy may also cause builders to slow down construction, leading to delays and potentially higher costs for buyers. Additionally, a slowdown in the economy can result in fewer available financing options, making it more difficult for certain buyers to secure a mortgage.
While it’s important to carefully consider the potential risks and challenges before making any major purchase, shopping for a new construction home in an uncertain economy can actually have significant benefits to the savvy purchaser.
The Current Texas Real Estate Market
Looking back to the peak of the housing crisis in 2021 shows that the real estate market throughout Texas and the rest of the country were largely defined by high demand and low inventory. That meant increased competition and higher prices on smaller homes. Such a climate will naturally discourage new home buyers, reducing the overall momentum of the housing market, as well as the various service industries connected to housing tangentially. For this reason, housing is seen as a significant indicator of our economy’s overall health.
The scarcity that defined the crisis of 2021 lingers, but it no longer neatly describes the totality of the Texas housing market today. Our state’s real estate and financial sectors are trending towards post-Covid normalization and even growth in some markets. Every subtle change in market conditions creates opportunity in the housing market for buyers, sellers, or both.
New Construction Homes in Texas: Why to Shop Now
Five key reasons why buying new construction homes in a dynamic economy can be a good idea for both your investment portfolio and your family’s future are as follows:
A troubled economy can often see dips in home prices and interest rates, creating windows of opportunity that make securing financing and becoming a homeowner viable for more consumers.
The number of new residential construction projects going up in attractive markets like New Braunfels ensures that one side of that equation is taken care of, with plenty of brand-new homes available now.
2. Tax Benefits for Homeowners
Home buyers in the State of Texas can take advantage of a vast array of tax benefits, including the ability to deduct mortgage interest and property taxes from their taxable income.
Just a few of the most important tax tools available to Texas homeowners include the following:
- Mortgage Interest Deduction: Any interest paid on the mortgage for your primary residence can be included as an itemized deduction when filing your taxes.
- Property Tax Deduction: Much like your mortgage interest, some or all of the property tax burden on your primary home can be itemized as a deduction.
- Homestead Exemption: Texas homeowners can claim a homestead exemption up to $25,000 on their primary residence’s total value. This is a simple way to lower the property tax burden associated with your new purchase.
- Disabled Veterans Exemption: If you or your co-buyer served your country in a military capacity and, as a result, became disabled, Texas offers a special property tax exemption of up to $12,000. Many private lenders also have special mortgage programs available for veterans and others who serve their communities.
3. A Home Is a Stable Investment
It’s true that the short-term value of homes can fluctuate in a way that is troubling for both homeowners and prospective buyers, but when viewed through a long-term lens, owning a home will almost always provide a family (or individual investor) with a stable and steadily appreciating asset. Historically, the value of housing and real estate in this country has always risen over time, making a home one of the surest investments out there. Despite the many ups and downs of the economy as a whole, real estate, historically, has always shown appreciation over the long term.
Owning and building equity in a home is also a unique financial instrument in the sense that it’s almost like a savings account you can live in. Paying a mortgage is essentially a way to force yourself to save money because every monthly mortgage payment builds equity in your new property. This equity can be leveraged later at a time when additional liquidity is required.
A home is a tangible, practical asset that retains value fairly well in times of economic uncertainty.
4. Great Incentives for First Time Buyers
First-time home buyers in Texas may be eligible for a variety of valuable incentives that help make owning a home more affordable. The following are some of the most leveraged incentives available in Texas:
- Texas First-Time Home Buyer Programs: The Texas Department of Housing and Community Affairs (TDHCA) offers several different programs for first-time home buyers. Perhaps most notable among these programs is the My First Texas Home program, which provides eligible buyers up to 5% of the total loan amount to help them get their down payment together.
- Federal Tax Credits: First-time home buyers in Texas may also be eligible for a federal tax credit of up to $8,000 through the First-Time Home Buyer Tax Credit program.
- Local and State Level Down Payment Assistance Programs: Depending on where exactly you’re looking to purchase a home, there may be down payment assistance programs at the local or regional level, which can help first-time home buyers with the cost of a down payment and go towards closing costs.
- Incentives from Lenders and Developers: Don’t be afraid to ask your bank or the management of your residential development what sort of incentives are available directly from them. They are looking to fill units and write loans to keep their businesses growing, so you may find the value of the offer to buyers surprising, even in this challenging economy.
It’s important to note that these incentives and government assistance programs can change over time, so it’s always important to check with a local housing authority or tax expert for the most up-to-date information. Eligibility for these incentives will vary based on your income, location, and other factors.
5. Building Community
Owning a home doesn’t just give you a place to live; it can also provide a sense of stability and community. Neighborhoods that foster community are becoming ever more important in a world where we can feel disconnected from humanity by our busy work schedules, harsh urban architecture, and increasingly digitized worlds. A welcoming, well-planned residential community like Mayfair in New Braunfels fills this important societal need.