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What Are Tract Homes?

October 4th, 2023 at 11:00 am

Moving into a new home comes with plenty of choices, from furniture to backyard accessories to fresh paint. Before you even get to move in, you have to choose the type of home that you want.

In addition to understanding the housing market—such as, what is a buyers market and what is a sellers market—a couple questions you will have to consider are, how long does it take to build a new house and how much does it cost to build a new house. Some people go for a spec home with pre-chosen floorplans determined by a homebuilder, while others go all out on a custom home that is built to their exact needs and specifications. A spec house is a house that’s already constructed for a prospective buyer.

Many other buyers decide on tract homes. They have their charm and, much like any other home, offer their own potential benefits and drawbacks. Read on to learn more about tract homes and why you might want one. And remember: there are many reasons to use a real estate agent throughout the entire house-buying and selling process, whether you’re just starting your homeownership journey or are looking to sell.

What is a tract house?

The type of home you get comes down to the homebuilder. Some home builders purchase large areas of land—or tracts—that they can divide into dozens (or sometimes even hundreds) of plots of fairly uniform size. They can then build identical houses, called tract houses, on these plots. These tract houses typically come in the same three to five floorplans. While prospective buyers can choose from the floorplans and potentially make minor customizations, they are generally stuck with those options.

Tract homebuilders are often local to your area, but numerous national corporations build tract home communities throughout the country. Tract homes can include:

Comparing home types: tract, custom, and spec houses

Understanding the differences between tract, custom, and spec homes can help you make an informed decision when buying your next house. Each has its unique attributes, and while some buyers may lean towards the customization of a custom home, others may find the consistency of tract homes more appealing.

Tract houses

What are tract houses? Homes are built on divided plots of land or tracts, often in large developments or communities.

Key features:

Custom homes

What are custom homes? Houses are built according to the specific desires and specifications of the buyer. A custom home builder works directly with an individual buyer to buy a plot of land and construct a home using a completely custom blueprint.

Key features:

Spec houses (speculative homes)

What are spec houses? Homes built by builders without a specific buyer in mind. Typically, a spec home builder purchases the land, builds one or two homes on it, and then sells it to prospective buyers.

Key features:

The choice between tract, custom, and spec houses comes down to a balance of personal preferences, budget, and desired timelines. Each offers its blend of advantages and compromises. By understanding the nuances of each, you can navigate the housing market with clarity and confidence. Remember, whichever route you choose, our team of California realtors is here to guide you every step of the way.

The benefits of a tract house

While some people may see tract houses as boring or too rigid, they actually come with many benefits of owning a home for prospective buyers and new homeowners.

A lower price tag

If you are on a budget but still want a home that has everything you need, a tract house is a great choice. Of course, the exact price will vary based on the region or municipality, but tract homes typically have a lower price tag per square foot compared to other non-tract houses in the area.

Tract homes tend to be more cost-effective than other options specifically because they are designed and constructed in bulk. That also means purchasing materials in bulk at a cheaper market price. Tract homebuilders also rely on the same construction teams and contractors for each home. That allows them to build mutually beneficial relationships with supply companies that allow for lower costs. For example, a tract homebuilder can purchase all of their wood for every home on the tract from one lumber company.

Adding to those savings is the cost of labor. Labor costs tend to be lower because every home uses the same blueprint. There may be different option packages, or some homes may be reversed, but each home is largely the same design constructed over and over. That means that the amount of time and work necessary for any individual build is already a known quantity. That reduces any wasted hours and increases overall efficiency.

Solid quality

Don’t let a lower price tag fool you into thinking these are rickety shacks. Tract houses still offer good quality construction and proven, reliable, and durable materials, simply because they have to. They are building dozens or hundreds of the same home. Skimping on parts or using low-quality materials would mean problems for the entire tract and the construction teams involved.

Quick timeline

As mentioned, tract homebuilders have to build the same home design over and over. That also means they have a set timeline that is typically quicker and more efficient than other types of home builds. The exact amount of time to build any home will obviously vary based on an infinite number of factors, but the U.S. Census Bureau and most expert builders give a timeline of about seven to eight months, from planning and obtaining permits to the final walkthrough of the property. A custom home built from new blueprints will take a little over a year.

Those timelines can change because of unforeseen circumstances or holdups with inspections and permits. Tract homes must be easily repeatable by nature, which also means minimizing all of those variables to push up the timeline. A tract home can typically get constructed within five to six months. Given the fast turnaround, you may consider what is a bridge loan for real estate if you anticipate needing short-term financing before securing a mortgage. 

Consistency

Consistency is the keyword for tract homes. Consistency of cost, materials, labor, and even standard of living. That means that value is typically easy to measure because each home in the tract generally has the same value over time. This also means that tract homes tend to maintain value based within the tract community instead of the larger area or neighborhood that surrounds the development.

Desirable locations

Tract homes are most often built in high-demand neighborhoods. As these neighborhoods can be so desirable, most other homes in the area might have a steep price tag. However, tract homes have a lower barrier to entry, allowing you to live in your favorite neighborhood for generally less money.

Potential drawbacks to tract homes

Depending on your specific needs and tastes, tract homes may come with some drawbacks that could have you second-guessing yourself.

Excessive uniformity

While you might be perfectly comfortable in your own home, seeing the same three or four home designs in your entire neighborhood can be tiring or even boring to some people. You may want your home to stand out from the crowd, but that can be difficult given the distinct “cookie-cutter” nature of tract homes.

A lack of customizations

Most tract homebuilders allow you to choose from a handful of plans, and within those plans, you might find option packages that will enable customizations to interior and exterior finishes and colors. However, if you are looking for customizations or amenities beyond that, you might be out of luck.

Even if you want to add something or make some changes later, you may not be allowed to. HOA rules or other community regulations typically prevent tract homeowners from making any changes, particularly to the exteriors. You can typically still add potted plants or holiday décor, but any permanent fixes are out of the question.

Standard features

You can still expect plenty of quality out of each tract home. The actual frame and foundation of each home are perfectly durable and pass all the local inspection requirements. However, some small touches and standard features might not feel like the highest possible quality. For example, you might notice that the standard cabinets and drawers in your kitchen are what you might find off the shelf at your favorite big box store. If you want to change or upgrade from those standard features, you. 

Resale woes

It is true that tract homes can maintain value within the tract without much influence from the surrounding neighborhood, but that can be both good and bad. Your home may not depreciate compared to homes around the tract, but if the whole tract development begins to lose value, you do not have any realistic options for increasing your home’s value. You can’t differentiate or upgrade your home.

Furthermore, if or when you decide to move, you might have to compete with other people in the development selling their own homes. As every home has the same value, that can lead to small, uncontrollable factors affecting the sale. For instance, your neighbor might just have a slightly better view that makes their home just a fraction more desirable to buyers.

Even worse, if there are newer homes still being built in the tract development, you would have to compete with those new properties. Considering the same price tag, most buyers would rather go with a new home that has never had an owner.

There is also no guarantee that you will make back what you spent on the home initially. This depends on numerous other factors, like whether you are in a seller’s market or buyer’s market, but any upgrades you paid for when construction started may not result in a better resale price.

Construction problems

This mostly applies to new developments, but if you are one of the first to purchase a home in a tract housing development, expect plenty of construction noise and interference around you as the homebuilders put up the other homes in the tract. If you are one of the initial buyers in the development, make sure you talk with homebuilders in charge to understand their overall development plan and timeline.

Who should purchase a tract home?

Even with the potential drawbacks, there are plenty of positive reasons for purchasing a tract home. They are still sturdy homes that licensed contractors build with quality materials. They are a great option for just about any prospective homeowner, but tract homes are particularly ideal for first-time homeowners. The low barrier to entry allows first-time homeowners to live in desirable locations without breaking the bank. Although tract homes lack as many customizations as other homes, that can be a plus for first-timers and homeowners who don’t want to be inundated with options or deal with the anxiety of making a ton of difficult design decisions.

Tract home developments can seem overly uniform to many, but they offer big benefits in both price and construction timeline. If you need help finding the right home, tract, or otherwise, consider consulting with the team at Berkshire Hathaway HomeServices California Properties. With extensive knowledge of local markets, our team can navigate you through the ins and outs of real estate, educate you on the processes, and ultimately help you find the perfect home for your specific needs.

Sources: Home Décor Bliss, Project Perfect Home, Zillow, Home City

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