What would you rather buy: a brand-new home or one that’s been lived in for a while? You might even want to entertain the idea of building a new home from the ground up.
There’s a lot to consider before making a final decision.
While new homes can benefit owners through energy-efficient materials and advanced building standards, older homes can be in more desirable neighborhoods and offer more space at a lower price.
Of course, there are many other advantages of buying a new home, just as there are many other advantages of buying a resale home. A professional real estate agent is always the best source of information about the newer and older homes in the community you’re interested in. But it helps to know the pros and cons of each home type before you launch into the home buying or building process. Here are some differences to think about:
According to the National Association of Home Builders (NAHB), the median price of a new home in the United States was $326,000 in February 2018, while the median price of an existing home was $243,400. That range can be explained somewhat by the notion that those who build new are often investing in larger and more luxurious homes.
The median size of an existing, owner-occupied home built in the U.S. around 1979 was 1,645 square feet. In 2014, the median-sized new home rose to 2,453 square feet. So a home nearly twice as large is bound to cost more.
Here are a few things to ponder when analyzing the equation.
Building “green,” or environmentally friendly homes, can boost a home’s price. Many newly built homes come with energy certifications covering everything from the roof to appliances, while many existing homes were originally built to lower standards. But paying for an energy-friendly home could be a better long-term investment. They might cost more upfront to build, but they could save the owner lots of money on energy bills in the long run.
The list of items above is by no means complete. When weighing the pros and cons of building or buying a new home or purchasing an existing home, talk about your options and potential costs with a real estate professional.
If you want to build a new home, start by searching homes on the market. Once you find one you like, look for available lots where you might be able to build a similar home. Discuss with a contractor the idea of having it built in a style similar to the one you like. Find out the price per square foot of the construction, add in the cost of the land, and then compare the total to the cost of similar existing homes. Be sure to take into account everything that might be involved, including those hidden and unexpected expenses people don’t always plan for.
Don’t rely on anyone who says one way is definitely cheaper than the other. With so many factors in the mix, it’s impossible to know with any certainty. Building a cheaper starter home might be less expensive for one person while buying an existing home and then adding custom upgrades could cause another person’s housing budget to explode.
Whether building or buying, the best decision you can make is an informed one.