New Construction vs Existing Home: Which is the Better Buy?

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 construction home from the ground up.

There’s a lot to consider before making a final decision and starting to take advantage of the benefits of owning a home.

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. Dianne 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. 

Pros and cons: new construction vs. existing homes

Pros of new construction homes

• Customization: Buyers often have the opportunity to work directly with the home builder and select finishes, colors, and sometimes even floor plans if they buy during the early stages of construction.

• Modern standards: Built to current building codes, often with newer technology and energy efficiency in mind.

• Maintenance: Fewer repairs and maintenance required in the early years.

• Warranty: Builders often provide warranties on their homes, giving homeowners peace of mind.

Cons of new construction homes

• Price: Typically, new construction homes come with a higher initial price tag, though there is significant cost variation between the different types of home builders.

• Waiting period: If purchased during early construction stages, buyers might have to wait for months before moving in.

• Landscaping: With a new build, yards might not be fully developed, and it might take time for neighborhoods to grow and mature.

• Hidden Costs: Upgrades and customization can add up, increasing the final price.

Pros of existing homes

• Character & charm: Older homes can offer unique architectural features not found in newer builds.

• Mature landscaping: Established neighborhoods often come with grown trees and developed gardens.

• Immediate availability: No waiting for construction; once the purchase is finalized, you can move in.

• Potential for appreciation: Buying in an established and desirable neighborhood can offer solid returns on investment.

Cons of existing homes

• Maintenance: Older homes might require more immediate repairs or updates.

• Efficiency: An existing property might not meet current energy efficiency standards, leading to potentially higher utility bills.

• Older systems: Plumbing, electrical, and HVAC might be outdated and in need of an upgrade.

• Less flexibility: Altering floor plans or structures can be challenging and expensive.

Having considered the distinct advantages and challenges of both new and existing homes, it’s clear that there’s no one-size-fits-all answer. The right choice depends on individual preferences, immediate needs, and long-term goals. However, beyond these foundational considerations, there are nuances tied to specific locations, pricing, and finer details that can further influence your decision. Let’s delve deeper into these subtleties to ensure you’re well-equipped with all the information needed to make an informed choice.

Location: city vs. suburbs

• Buyers who look at older inner-city homes in desirable neighborhoods will find, on average, larger lot sizes, but the homes will cost more than entry-level new homes being developed in new subdivisions outside the city.

• If you hate your commute, city living could be right for you. You might be able to avoid rush-hour traffic if you live in an older home near your place of employment. Saving on fuel costs is another bonus, and biking or taking mass transit to work could be an option as well.

Price considerations

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.

The finer details

Here are a few things to ponder when analyzing the equation.

• Window coverings usually come with an existing home, but can costs add up quickly if you need to cover a lot of windows, especially if they are custom-sized.

• As we mentioned earlier, most new homes either don’t include landscaping or only include front landscaping. Depending on the size of your lawn and the details desired, landscaping can add thousands of dollars to the purchase price.

• Upgraded finishes can be among the biggest hidden costs in building a new home. Many builders use the least-expensive paint, plumbing, and flooring. If you want to upgrade those finishes now or in the future, you’ll have to pay for them somehow.

• Building a fence could be a necessity if your neighbors’ homes are close by and you want some privacy. Depending on the type and size of the fence, it can add several thousand dollars or more to the cost of a new home.

• Driveway maintenance and upkeep is the most common unexpected expense for many homeowners. It usually costs far more than buyers anticipate, and is often taken for granted until it’s reached crisis stage.

Energy efficiency

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.

Where to start

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 Dianne.

If you want to build a new home, ask Dianne for homes currently 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, so reach out to Dianne today at 323.432.0719.