• New Home or Resale?
• Where Are You Moving?
• How Much Does Quality of Life Matter? 

New Home or Resale? 

One of the first questions I'd probably ask myself in this scenario is, "Am I targeting a new construction home in 2023 or a resale home?" Because economics and logistics are going to vary quite a bit when it comes to this different situation, basically. So if we talk about new construction just for a minute, what you have to look at is, realistically, it's taking about 14 to 18 months to build these homes right now. So if you just say logistics first and you go to sign today, you're talking, that's maybe guaranteeing yourself a 2024. But as time passes, this might be a 2025 or 2026 conversation. So just purely on that timeline alone, how much does that matter? And then if we go more on the economic side, which is where my heart kind of leans most of the time, is a simple fact is you were making a decision relatively early and trying to see, "Do I know enough information to be okay with that decision if in nine months from now, something happens that altered the way I felt about this deal and I still have nine months to go on the contract without any recourse or very little recourse?" Because that's typically the way these contracts are written. Now, it's give and take with that, right?

So two years ago, when builders let someone sign a home and these folks that in certain situations got these huge equity positions from this crazy one-time market, when they signed a contract, there was a lot of times where the builder would've loved to go back and be like, "Hey, nevermind. This house should be way more expensive than that." But there's no price escalation clauses for the most part in the contract. So the builder can't necessarily raise it in most contracts, right? This isn't a across the board, but if something changes on their end, but also the same reason that typically if they lower your neighbor's house next to your house while you're six months into a build, you can't go back and be like, "I want the same price." I've seen shades of gray with all this kind of stuff.

But all that to say, you basically have to make a decision so early that you almost need to get yourself around a no-regrets model of what information do I need to know. And the other thing I might do is I might actually dive into the worst-case scenario. You built a house, your four months into a contract and they're still building it, right, and you got a while to go. But then the house three doors down, the builder comes and they list that home for $80K, and you look at it and you're like, "That's my same house." And you go to them and you say, "What can we do with this situation? This is my home." And they're like, "It is what it is. We didn't know at the time, they're working off a margin." Obviously, they would try to get more money if they could. They don't feel like they could, and maybe they'll throw you a bone and give you $15K or give you incentives to something. But you can't really do anything because contractually, it's very stern. So then, I would maybe look at your personal situation. Aside from anything that's happening, the noise around, because most likely those one or two one-off comps aren't going to kill your equity position. It's looking at your particular situation and what are the actual negatives, because you got to look at when are you going to sell? Are you actually in the red when you close this just because of that one home?

What about the other million of comps around the area? Are you actually in the red? Also, when are you going to sell the home? Do you actually think it's not going to be worth what you need by the time you sell? I get you could've made more money, but if we knew all that information in advance, we'd all have a trillion dollars, right? So I get no one wants to get screwed, but this is a volatile market anyway, so you got to kind of balance that. You could get down to the economics of it pretty minute. You could find out the actual financials of interest rate changes and equity position changes and all that kind of stuff.

The other big thing to look at, because this is a big balance of juxtaposition, is the cost of waiting to sign. Say you don't want to be in this situation I'm describing, and you wait and you're like, "I'm hearing all this stuff about price drops." So by waiting, what is the gain and what's the risk to you? Now, I think, thankfully right now, I don't know how much risk you would have in actual price differences by waiting, but I don't know how much gain you have either. So if you wait, what if you don't get this windfall of $150,000 decreased price of a home? What if it's 10 to 15 to 20? Then was it worth it by losing the time to wait to start your build? I don't know. I mean, I'm just asking these questions, devil's advocate.

Also, the big thing here is this is a big pot of money. What you gained on this side, did you lose in your home state by paying what you're paying to live in your current home state or whatever your financial situation is there, did that net out in a way that benefited you enough to go through another winner or whatever this may be? So I'd really look at the whole end of the spectrum. This is with running homes in between, interims, liquidating a home, buying a new one, building versus resale. All this stuff comes into play. I'd really look at that hard. And just to bring that all full circle, if none of what I just said sounded remotely attractive, or you're just not romantic about new construction or you need a quicker timeline, resale homes would inherently give you much more control in general. Just being able to wait, wait, wait, wait, wait, wait nine months and then buy home and be in there on month 10, it would be quicker than any build anyway. And also, just like when you pick a price and you negotiate, you at least know that at that time, within a 30-day gap, I knew all the information that I could've known. But resale would be an alternative if the volatility of a too long of a gap of floating liquidity is really an issue, then you could just wait and get real picky about resale homes.

A second major question I'd ask myself on this topic is where am I actually moving, which metro? Because if you ask me, "Should I buy a home in 2023?" And a lot of my problem with people making a blanket statement about definitely no or definitely yes, is no, I want to buy a home everywhere, but everywhere's not equal. Every city is not equal. There's inherently more safety in certain cities because of a myriad of different economic reasons. This is all about hedging and risk mitigating to me. Some of the issues with a really price-competitive market or a seller's market is that simply maybe some of the safest cities to move to for long-term volatility are also the ones everybody else wants to move to.

So the same things that create a struggle to try to buy a home are the same things that might create safety in your equity position over the long term, right? So if you were in the cheapest city in Florida, then there might be reasons for that being a factor. It could be geography or industrial commercial viability. If they shot up in price at one point, what would be the chance that it sustains that pace or that enough people flood into the market to kind of keep it that level of competitiveness?

So you could work through additional exercises. Is the market I'm targeting, do I think it's really on an upswing? Do I think it's on a downswing? Do I think this is still going to be a popular city but it went up so fast that it has room to kind of come down just a bit? Is there an opportunity there? Something you could look at. You could also look at, maybe you're more on a macro conversation if you're not as deep as targeting one city yet. So then you could look at what cities or what metros in the state of Florida have a better chance of doing well, and go by size or quality of life or whatever.

So say you're looking at big cities, you came from LA or New York or Seattle or something. So you can't go small. So you can look at, is Tampa better than Miami and Jacksonville because, or Orlando, because it's coastal, but it's on the Gulf Coast. It's more central to the others and it's not on a fringe, but it still, it has beach parts like Pinellas County, and it has the full-on metro parts. It's not so big that it's overwhelming. Maybe it's at a price position where it's 5 to 10 years behind Miami as far as the escalation of its popularity. So if you had to pick one, is it better? Is Sarasota better than Boca Raton for similar reasons where it's much more of a play first, work second town, it's not as industrial as Tampa? But if you picked amongst other ones, even a Naples or the Panhandle versus Sarasota, is the central nature of it being like, if you had to go to one place, is it more viable? And then also, at a simple factor, either you're down further in your search or maybe you're like, "I'm not going to pick any city that just numbers-wise works for me." Maybe you want to live in a certain place.

So then, you could go within that place and look at micro opportunities. In Tampa Bay, right, is Wesley Chapel an emerging suburb? So you're still within the Tampa Bay region. Wesley Chapel versus [inaudible 00:08:33] or Brandon. If you're in Sarasota, do you go after a Wellen Park being less, or a Parrish being less mature than a Lakewood Ranch? That still doesn't change the metro, but it changes how you can navigate within it. So that's just a couple of things I'd work through on topic number two.