You’ve searched locations, checked prices, watched market trends, and evaluated property taxes on several different areas where you are considering buying a home. You’ve also considered the items that you need and the items you want in your next home. With limited inventory you’re having trouble finding a home that meets all of your needs. Maybe it’s time to consider building a new home. Or maybe you should wait it out and see if an existing home becomes available. The home-buying process involves many important decisions but the first decision you should make is whether you want to build a new home or buy an existing home. Here are the pros and cons of each type of home to help you decide.
Building a New Home
So you want a home that is brand new rather than one that has been previously lived in. Great, now you need to decide if you want to self-build your home or purchase a new construction.
Home building is not as complicated as it once was. In fact, there are many companies that will ship an entire home for you to put together piece by piece. Of course that takes a bit of know-how and a piece of land, someone to connect sewer and water, installation of gas lines and electrical, as well as an inspector to sign off on the build when it is complete. If you are confident in your ability to find someone to do all of the above, you can build your own home for anywhere between $8,500 and $360,000. Price range varies based on square footage, energy efficiency, and the level of DIY. Many self-built homes are tiny homes or container homes which are easier to build and much cheaper.
Many DIYers are perfectly happy to build their own home because it allows them to customize the house to their exact desires. If for instance you are a retired homeowner who would like to dedicate three-quarters of their home as a plant nursery and greenhouse, then a self-build home allows this to happen. New self-built homes are also more energy-efficient than older homes and cost less to maintain because everything is brand new.
While self-built homes have many pros, they also have several cons. A self-built home will take more time to complete than outright purchasing an existing home. You will also have to handle all expenses during the building process. Land costs, foundation, permits, HVAC, plumbing, electrical, appliances, roofing, fixtures, etc. are all purchased by you. With material costs such as lumber and plywood at high levels the costs to build can be rather high.
New Construction Home
If you want a new home but don’t want anything to do with the building process, you can opt for a new construction home. The average sales price of a new construction home is $496,900 while the median cost for an existing home is $357,300. However, a new construction home does have some benefits that may be worth the additional cost to many home buyers. Unlike a self-built home, a new construction home developer will manage hooking the house into the sewer system and the electrical grids. New build homes are more costly upfront, however they have fewer repairs initially than an existing home. They also come with a warranty. While a new construction home may be costly upfront, it will hold its value and even increase in value after your buy, which makes it a good real estate investment.
On the downside, new construction homes might mean less control over building options. Customization will be limited to what the contractor is willing to do which will give you less freedom especially if the developer is on a tight schedule. In general, new construction homes have customizations available but these are considered upgrades to finishes or appliances and may cost extra. Finally, new construction homes generally come as an entire subdivision. You will be dealing with ongoing construction around you for a bit until the entire development is completed.
Purchasing an existing home is by far the fastest way to get your foot in the door of homeownership. Not only is the upfront cost lower than a new construction home, the wait time to move into your new home is much lower. Most existing homes are prepped and ready for sale so the landscaping will look better and an inspection will show what repairs or possible problems you could find in your new home. You can negotiate these repairs with the seller and negotiate the price of the home. Existing home inventory is low but doesn’t mean the home of your dreams won’t be available soon.
The downside of purchasing an existing home is the chance that it could need to be repaired sooner than a new construction because of the wear and tear that occurred before you purchased. In addition, you won’t be able to personalize your home unless you renovate or upgrade. Your home may also be less energy-efficient than a new home.
What Option is Right for You?
Buying an existing home is almost always cheaper than purchasing a new build, though it may not be for everyone. If you are interested in designing your home to meet exact specifications you may want to consider a new build or self-built home. These will allow you more freedom with square footage, layout, and upgrades. Your best option is to speak with a trusted real estate agent. He or she can point you in the right direction and help you find the option that will save you both time and money.