August 19, 2011 — You are in the active adult community’s sales office, pen in hand and ready to sign. You’ve toured multiple active communities and you just know this is the one. The unit you’ve fallen for is just being framed now; there is still time to put some custom touches in, like built-ins for the room you would rather have as an office than bedroom. All the amenities are right, and so is the price. This could just the moment when panic might set in – “why am I buying a new unit in this new community when right down the road I could pick up a comparable unit (albeit with a few miles on it) in a community that’s been around for 10 years or so.” A similar, but less complex conundrum is whether to buy new or used in the same community.
This article will explore the former question- are you better off buying a home in a new development or an existing one. What are the pros and cons of each, and what might you trade off with each choice? Given the complexity of the topic we are sure we will not cover every important issue in this pro and con format. Luckily, we know we can count on our experienced members to fill in the blanks with their astute observations in the Comments section below.
Pros of Buying in a New Community
Overall: You are starting off fresh
– All the units are shiny and new
– The amenities are up to date (pickleball instead of shuffleboard, kayaks instead of golf course, etc.)
– There is an experienced sales staff to help you, including possible help with financing
– You will normally get a warranty and resolution of any problems
– Many opportunities to customize your unit to just your specs
– Average age in the community might be closer to your own
– You can be reasonably confident if the developer has a solid reputation and finances.
Cons of Buying in a New Active Adult or 55+ Community
Overall: Unfortunately these days there are so many deep and treacherous waters that could await you
– Some or all amenities not built out yet, if they ever will be
– The transition from developer-managed to HOA-managed can be rocky
– There is no guarantee that vacant lots and unsold homes will sell in a timely fashion
– Uncertain finances – does the developer have the resources to finish the job, and what liabilities and obligations might pass to new owners? What sinking funds have been set up?
– The community could change direction before it’s finished. For example, the developer might change from single family homes to condos. Or, it could be sold to a new developer with a different vision
– Uncertain future – who will own the common facilities and amenities, and under what terms?
– You will pay more for a comparable resale unit
– What an inexperienced HOA doesn’t know about finances, establishing rules, procedures, and management could sink your new community.
Pros of Buying in an Established 55+ or Active Community
Overall: The biggest advantage is you get to evaluate the community’s track record
– You can examine the state of their finances (sinking funds, past expenditures, budgets, etc.)
– Foreclosure information and dues delinquency information is available
– You’ll know if the amenities are built and open and running the way you want them to
– You can read what the HOA rules are, and how they are enforced
– You can determine if the HOA is well managed
– There are plenty of neighbors to meet so you can get a feel for the community
– Will probably get better value for your dollar by buying a resale than in a new community
Cons of Buying in Established Community
Overall: What you see is all you are going to get
– Your unit will probably not be new – retrofitting to your preferences will be limited and expensive
– The longer the community has been around, the higher the average age of your neighbors
– Compared to a newer community, it might not have the latest and greatest in amenities
– The community has been shaped; it will be hard for you to influence its direction
– Expensive and contentious repairs are waiting to happen: roads, elevators, roofs, painting, structural problems, clubhouse improvements, etc.
– Even very established active communities can still get new problems. The Villages in Florida has been around for years, but there are still issues to be resolved about the status of its tax-free bonds and the fees paid to the developer.
For Further Reference:
10 Questions to Ask Before You Buy in an Active Adult Community
What Sandy Learned from 8 Years of Visiting Active Adult Communities
100 Most Popular Active Communities: 2011
What could you add? Would you rather live in a new, or an established active community? Do you see different pros and cons? Let us know in the Comments section below.