Call it the return of spec homes. They’re back and apparently quite popular, but why? Here’s a closer look at how the current market has led to its revival in California and elsewhere in the country.

We are facing a housing shortage, particularly in California, that can be found in different areas across the nation. As the demand remains high, many builders are being hard-pressed to increase their production.

In such a situation, you might expect builders to finish house before someone has even purchased it. These houses, called “speculative” or “spec” houses, have seen some increased popularity, but it really boils down to builder preferences and market conditions according to the article “In a time of high demand and limited inventory, spec houses are making a return.”


The danger of spec houses for builders is that they are fronting the project before they have a buyer. This makes for a riskier investment, which is why many builders prefer not to go this route. However, many builders are taking the risk because the risk itself is currently reduced due to how quickly homes are being sold. But this begs another question, why would anyone buy a spec house, to begin with?

A spec house is a purchase where the buyer gets what they get. They do not have any input into the building of the house and have to go with whatever the builder has already put together. This may seem like a less popular purchase, but in fact, spec houses offer an immediate solution to those that need to move at a second’s notice.

The situations where one a spec home would be the ideal choice include those who are relocating, whether it be for work or some other reasons, or their home sold faster than expected. Rather than going into a temporary house to find the home they want, many would rather move into their permanent residence immediately.

Although many of us would probably rather choose what sort of things are going into our home, more often than not, the builder already will use the latest and upgrades for the average price in the neighborhood. At the end of the day, people are still getting a new home that will have a lot of the things that they would probably want.

Bad connotation?

However, the term spec house itself is a slippery slope. Traditionally, it is a completed home that is ready to be moved in immediately one it is purchased. However, many builders may extend the workout, such as pouring the foundation and moving slowly to complete the house so that they can buy time for a buyer. I have seen this first hand where a family moved into a home that was semi-complete.

The other catch as well that many people forget is that once their house has been purchased, the urgency to complete the house also diminishes. The builder has already made the profit, and they are usually trying to sell the rest of the homes in the neighborhood. I witnessed this first hand with a client of mine. After a year of living in their home, their house is still incomplete. However, they now have a home that is on the same street as other family members. Although it is inconvenient for the time being, they decided it was worth it for the sake of being closer to family. Consider the value of such a scenario before you dive head first into something that in the long run you may come to regret.