Associated Cost
A top concern for a majority of home buyers is cost. There is a sizable gap between the price of a newly constructed home and that of a resale property. According to Home Advisors, the national average cost to building a new home is roughly $300,000. That average assumes you are leaning towards the basic model and not opting for the expensive or extravagant upgrades. And you most certainly can’t forget about the cost of construction.
In contrast, the average sale price of an existing home is approximately $278,000, roughly $22,000 less than the cost of new construction. Depending on the terms of your mortgage, this can add up to significant savings over the life of your home loan. Something to note, there is a greater opportunity for negotiations when purchasing an existing property, which can often result in an even lower sticker price. When you buy a house move-in ready, you’re less likely to juggle multiple payments during your move.
Repairs and Renovations
You most certainly can’t forget about the cost associated with the repairs and renovations of buying an existing property. Often times, older homes may need repairs or renovations, which ultimately increase the total cost of the purchase. Hopefully, the repairs are minimal and most buyers can address the issues as time and budget allows. Regardless of the age of the home, it should be properly inspected before buying.
New homes are unlikely to need any significant repairs for at least seven years, and in most instances, those should be covered under warranty. The opportunity to customize your home during the building process (i.e. changing the floor plan, adding in closet space, or upgrading to state-of-the art appliances) also reduces the need for any major renovations.
Other Cost of Ownership
The costs of ownership should be factored into the purchase price. New homes tend to be more energy-efficient than older houses, having been built with newer building materials, better insulation and state-of-the-art tech. On the other hand, older homes are typically less energy-efficient, and have higher monthly expenses. Also to note, with an older home, you’ll never know when the hot water heater will need replacing, or if the old pipes under the house need to be replaced.
When preparing to buy any home, it would be wise to look at the property tax. Older homes tend to be less expensive and fall into a different tax base than newer homes. This could mean a lower tax burden for owners of older homes. This probably isn’t the deciding factor for you, but it could be helpful when comparing current rates in an area to see how they have changed over time.
Lastly, there is the question of insurance. Insurance cost can dramatically influence the overall cost of homeownership. Insurance on older homes is usually more expensive, and depending on the location and condition of the property, may be more difficult to obtain. Homeowner's insurance on a newer property is often less expensive, because the building is new and up to current standards.
Location
A home’s location has a direct impact on its property value. With an older home in an established community, you can review the history of the property's value, tracking its rise and fall to determine if it is a wise investment. New builds are dependent on future construction and the influx of new buyers, to establish property value.
Whether you’re looking for a house with unique architectural charm or you want to design it from the ground up, we want to help. Contact one of our trusted Mortgage Loan Professionals today. Buying any property is a major financial commitment, and we want to help you invest in your family’s future. At the end of your home buying journey, you should be more than comfortable with the price, location and style of your home – it should enhance your family’s lifestyle.
Have you weighed the pros and cons of buying or building a home? What was your deciding factor?
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