John,
I just asked myself this question as we're in the market for a new home.

I figure that, prices are set to drop further as buyer demand is largely absent.

Will resales fall? Not quickly if sellers don't set realistic prices.

Resales may offer more negotiating room, based on the seller's situation.

If you find a builder that has a home you like and can comfortably afford, then buy, else wait.

However, not even I will deny that there are some GREAT builder deals now!

If you do decide to purchase, don't forget to take your agent along on your VERY FIRST visit to the builder's site.

I hope this helps.

Thanks,
Vanessa.

Great question- I work with various builder and the word on the street is "SELL" . Many are dumping inventory to just pay the loan off as well as not buying land as they are very much over leveraged and cash poor. It is a great time to buy a new home overall as well as an existing one.

Builders in this area are still highly competitive with their pricing. They have to move product or lay off workers and report to stock holders. They want to sell their inventory.

I think you can likely get a better deal through a builder but that is really a case by case scenerio. I know I work for some local builders on their spec homes and they are reducing 40-50k to get homes sold. The average resale seller does not have the equity in their home to keep up with the builders and many get offended when very low offers come in. I think finding the right agent to represent you is your best bet. Make sure he/she has the experience necessary to guide you through the buying process. There are fantastic deals out there right now, with the right guidance you may find one yourself!!! Good luck!

Builders are offering all kinds of incentives to buy right now! It's a great time to buy a new home. Have a buyers agent help you negotiate the best deal for you.

Hello John. Are you talking about existing homes in a subdivision in which builders are still putting up new homes or are you talking about existing homes outside the area where new homes are going up?

While I think new is not always better, in the end buyers will buy where they think they'll get the most for their money. If you have a resale and a new home in the same subdivision, you are definitely competing with builder incentives. Builders are in a better position to lower the prices than individual home owners are. Unless the resale has something to offer that the new home does not have, a buyers will probably lean towards the new home. They can also look to the builder should problems arise after the close of escrow whereas it's more difficult to try to get a private owner to take care of a post-escrow defect. Builders have warranties that private owners do not have. On the other hand, an existing home may have landscaping that the new home does not have.
There are definitely areas where the builders are no selling new homes for less than what buyers paid for the same model a year ago and those builder sales do affect the resale values of the existing home inventory. My recommendation would be, don't sell if you don't have to while the builders are still selling their new homes. I would also recommend to buyers of new homes to think about how future sales of homes by the builder might affect the values of the new homes they are buying today from the builder. A lot of buyers of new homes do not think about that when they make their purchasing decision. I know this is going on in one of the master plan communities in my area and I see how this trend affects valuation in that area as I am having trouble coming up with comparable sales that make sense. The same model that sold for $500,000 a year ago, may now be sold for $400,000 less, which of course hurts those who are trying to sell the house they bought a year ago for $500,000. Another problem is that many builders do not report their sales through the MLS, which makes it more difficult for agents representing buyers of new homes to research values. I have even seen $100,000 price differences among new home sales of the same model within less than 6 months.

In some cases, it will be very difficult for sellers that have bought in recent years to lower their prices unless they plan to bring money to the closing table. Both new and existing homes have their advantages. New homes often offer modern amenities (like central air) that older homes do not and older homes offer classic amenities (like original trimming and woodwork) that new homes do not. So you really must ask yourself what you are looking for. So what are you looking for in your next home? What is important to you?

What was norm in the past has now become ancient history. There was a time when new build homes increased the price of the existing home values. This topsy turvy market has changed the rules somewhat - to where there are no rules to gauge what will happen.

If your market does not have a glut in inventory - new build or resale home - one should compliment the other. However, in a glut (genuine buyers market) the new build can make for a better deal to the consumer.... I'm not speaking in terms of price alone. If a resale home needs work; it cannot compete with the "like" new build homes.

Each market is unique - from neighborhood to neighborhood. A good agent in your market can tell what your "variables" are.

In some cases sellers of existing home will not be able to drop below a certain level because their sales price may not cover their loan amount. Some lenders will allow short sales in lieu of foreclosure. In general homes have to be at the market price in order to sell. If people can buy new homes for a lower price than existing homes, they will buy the new homes. Even if you end up buying a new home, make sure you have a good buyers agent working on your behalf. If you have not selected an agent, feel free to call me.