Homeownership is on the rise, and the benefits of owning and building equity can make a dramatic impact. With a shortage of available existing and new homes, is homeownership possible this year? Don’t be discouraged! There are alternate ways to find the perfect fit for you, including building a new home entirely. Does it make sense for you? Let’s see how building new can potentially be cheaper or more beneficial versus buying an existing home.
Buying a home is often the biggest investment you will make in a lifetime. The reality is that most people don’t have enough money saved to buy a newly constructed home. However, if you ever considered building from the ground up then there are many benefits that may outweigh the costs of buying.
Realtor Magazine shared what may determine the costs.
The median sales price of an existing home was $309,800 in December 2020, according to the National Association of REALTORS®. The average cost of building a new house was $302,817, according to HomeAdvisor. However, recent run-ups in lumber costs may be adding considerably more to new home costs.
If the buyer takes steps to limit construction costs and omits custom finishes, building a house may be about $7,000 cheaper than buying an existing home, according to a new analysis from Bankrate.com.
The operating costs for a new home may be cheaper in the long run, according to the National Association of Home Builders. Homes built after 2010 tend to have operating costs of about 3% of the home’s value. The operating costs of homes built prior to 1960 are more than 6%, according to the NAHB’s analysis. But when buying new, homebuyers may face extra costs for upgrades, landscaping, and appliances than they may not have in purchasing a resale home.
Buying a house is a major decision. The first thing you need to do when considering building a new home is to determine your goals. Do you want everything custom-made? Or, would you be more comfortable with an already built model that has some upgrades made to it? Maybe the location will sway your opinion on whether or not buying an existing home versus building one makes more sense for you. Lastly, how much of the work do you want/can handle doing yourself and who will help if needed?
If you are making a list of pros and cons to help you decide, here are a few points on the benefits of building your own home.
Energy Saving and Efficiency
Homes built today are more efficient and energy-saving than ever before. With new technology, health-focused and eco-friendly amenities have become a priority in new model homes. Features like solar panels, automated and energy-efficient lighting, high-efficiency or tank-less water heaters, eco-friendly materials, and proper insulation are all ways to save in the long run. Advanced house framing, also known as Optimum Value Engineering (OVE), is becoming more popular in new construction. It is a special framing technique where a house is built using less wood, which saves energy and environmental footprint.
Building new allows you to customize your home to fit your specific needs and taste with the latest designs, materials, layouts, colors, sizing, and more. You call the shots! New construction can offer more affordable options for buyers. This can also mean less maintenance and upkeep costs and expenses. You can obtain more value for you money because you get what you desire on all fronts.
Homes have been flying off the market quickly. Existing homes were on the market for an average of 22 days in August 2020. A new house means you are not competing with other buyers for inventory. Demand for new construction has grown each year due to the lack of supply. If you already own the land you won’t have to worry about other buyers winning the bidding war.
If you are in the market to buy a house, but not finding much that meets your needs and budget, consider building one instead. There is a lot to consider including research, land lots, specific loans, tax advantages, and planning. Talk with a real estate professional to help you clarify the best options for your situation and come up with a strategy. Talk with a lender to figure out what you can afford and if building new is the most feasible decision for your budget. You might find building new rather than buying an existing home can provide you with more advantages.
This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was written by Sparkling Marketing, Inc. with information from resources like Realtor Magazine, NAHB, and BankRate.com.