Buying a home in new developments

Buying into a new home community may seem riskier than purchasing a house in an established neighborhood, but any increase in home value depends upon the same factors: quality of the neighborhood, growth in the local housing market, and the state of the overall economy.

One survey by the National Association of Realtors shows that resale homes do have an edge over new homes. The trade group's figures show the median price of resale homes increased 7% between 1998 and 1999, compared to 2.8% for new homes in the same period.

It can be difficult to negotiate the sales price with a developer because they may claim their prices are based on fixed construction costs. Experts say builders are more likely to be flexible on price at the very beginning and the very end of a development project. Early on, most developers want to move people quickly in to new developments so the project picks up momentum. Later, developers may be more inclined to accept lower offers when only a few units remain.

If negotiating the price doesn't work, buyers commonly negotiate for better amenities