Sacramento first-time buyers need a strategy, not just a pre-approval

With every first-time buyer, I start with three questions: What can you qualify for? What payment are you comfortable with? And how much money do you want left after closing? I build the strategy around those answers, not around an underwriting system’s ceiling. Buying a home shouldn’t force anyone to stop saving, investing, traveling or maintaining an emergency fund just because the system says they technically qualify for it. 

Builder incentives carry a resale risk buyers rarely price in 

New construction plays a much bigger role across Greater Sacramento than it once did, and builders can get extremely aggressive. Nationally, 66 percent of builders reported using sales incentives in September, more than in any month since December, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. Discounted rates and closing-cost assistance can make a new-home payment look very attractive, and sometimes new construction really is the better opportunity. 

But I want first-time buyers to see the other side of that decision. If there’s a reasonable chance they’ll need to move within the next few years, they should think carefully before buying in a community where the builder is still actively selling. 

I’ve watched homeowners try to resell a relatively new home while the builder competes down the street: They cannot match the incentives that drew them into the community in the first place. If a buyer can get a brand-new home from the builder with a reduced rate and help with closing costs, why would that buyer pay the same price for a one- or two-year-old resale without those benefits? In some cases, I’ve seen sellers cut their price significantly or take a loss just to compete. 

None of this means buyers should avoid new construction. It means how long a buyer expects to own the home needs to be part of the decision, not an afterthought. Someone who plans to stay for many years can largely set the short-term resale risk aside. Someone who expects a job change, a growing family or a relocation within a couple of years needs to understand that risk before a builder’s financing promotion makes the choice for them.