Minneapolis home prices have been steadily declining over the last year. Resale homes in the Twin Cities have been the quickest to fall, and builders have been reluctant to give in to the price reductions. We have looked the last year at new construction but were finding that builders still wanted 2005 prices. It got to the point that the best option for us was to look at resales. Well, of course months went by and we just couldn’t find what we were looking for, the most bang for the buck so to speak.
Finally we checked out a couple more builders and saw they were starting to negotiate their prices. Building permits were at their lowest in years and homes have been sitting for over a year.
-one builder came down from his 2005-2006 prices as much as $75,000, but we felt his homes were still too overpriced for this market. The problem was that he purchased the land at a record price in 2004 (the farmer made a killing off this developer) and he still needed to charge high prices for the lots to make up for his purchase.
-another builder wasn’t willing to pay our closing costs. On his home, if he wanted us to pay his price, then we wanted other incentives, like paying for a buy-down. But he wouldn’t budge…five months later, that lot is still for sale and the builder is trying to sell off the lots to another developer to get out of the subdivision.
-the builder we decided on, just so happened to be having an August promotion on his homes in which they were giving $30,000 in incentives, $5000 for landscaping, and $7,500 toward closing costs. The key was that his homes were never massively overpriced to begin with. We found a lot we liked with trees in the back (for added privacy) and negotiated a couple more items. It was a win-win for both parties.
Amazingly, the first builder called me yesterday and said he was willing to come down another $20,000 if we were still interested. Granted we loved his floor plan the best, and the location was top notch, we had to weigh our options. Go with him for the reasons I just stated, or go with the other builder who was offering a finished basement and a nice deck (both for the same price). Since we really wanted the most bang for the buck, we declined his offer. Our short term plan is to hold this house for five years, and then move to an area with more acreage. If we get a huge discount on adding the additional finished square feet in the basement now, then we will come out better monetarily when we go to sell. The first builder wasn’t offering a finished basement or deck.
Granted we would love to wait until the spring to put a new home under contract, (as we feel the market is only going to get worse for builders), we decided to go ahead and get it over with. I mean, we have been looking for 8 months and it is starting to stress us out.
So, get ready for a fun couple of months. I will be writing a series called Confessions of New Construction during the building process, highlighting things that happen and taking photos so you can see the overall process. Building this home is sure to be stressful,especially since it will be built during the winter months, but hopefully I will only have happy stories to tell, and not horror ones. So check back periodically for updates!