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What Is a Spec Home

If you want a new house but need to move in ASAP, a spec home might be right for you.

If you want a custom-built home this year, don’t expect to move in anytime soon. “Right now, (building) a new house can take 12 to 18 months,” says Jeff Taylor, founder and managing director of Mphasis Digital Risk, a firm providing technology services to mortgage lenders.

However, there may be a way around those long wait times. Many builders have what are known as spec homes, which could shorten the move-in period to weeks rather than months. As prices for existing homes surge, they can also offer good value.

The term spec home stands for speculative house, but they can go by other names.

Like new construction, spec homes are built with the latest materials. “When that house is done, it’s 2022 everything,” Taylor says. “The downside is that you’re buying for that brand new premium.”

Even if spec homes cost more than existing homes on the market, they may offer good value to homebuyers who don’t want to deal with the surprises that can come with an older property. Plus, many come with builder warranties.

“The supply chain is bottlenecking the housing market,” Taylor says. He notes that while it used to take eight weeks to receive windows and doors, it can now be as much as 24 weeks before orders are filled. Building a home is taking about 30% longer and costs for materials are up 18% compared to the norm, according to Taylor’s estimates.

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