You’ve been diligently saving and budgeting your money for years. You’ve kept a watchful eye on the real estate market, and your streaming channels are an assortment of home improvement, home buying, and DIY renovation shows. Religiously checking Zillow, Trulia, and Realtor.com are more important than any of your social media. These are all indicators that you’re ready to buy a home.
Whether it’s your first or fifth, the prospect of purchasing a home is always exciting. For many, it represents the American Dream. However, before you get lost in the minutia of the number of bedrooms, bathrooms, square footage, and every other parameter in the search for your dream home, take a step back and consider if you want to buy a new construction home or a resale (existing) home.
What you should know about New Construction Homes
The allure of new construction homes seems obvious. It’s NEW and appears to come with mental images of unwrapping a shiny, glittering present on some special occasion. However, as the adage goes, “all that glitters is not gold.” Below are some of the benefits and disadvantages that preside with new construction homes.
New construction homes offer more customization
For those with a clear vision of what their dream home looks like, having the freedom to choose the design features is crucial. From flooring to crown molding, taking control from the start is the best way to harness your dream into a reality. Starting with your own design is far more economical and less intrusive than renovating. In addition, those personalized features lend towards making your new home feel like yours instantly.
Smart technology and modern features offer convenience and class
New construction homes tend to incorporate smart technology options that allow you to automate and control your home’s systems. A well-planned smart house offers convenience and efficiency from day one, from your home entertainment center to changing the thermostat.
Interior designers and builders stay current with the latest trends in home decor, and the results of their efforts culminate in a touch of class that your home has when you take ownership.
Environmentally friendly and energy-efficient homes benefit everyone
New homes often use low- and zero-VOC (volatile organic compound) paints and building materials, improving indoor air quality. Energy-efficient appliances and better insulation materials, such as windows and doors, translate to less drain on municipal resources and a lower utility bill for the buyer.
Less maintenance costs to worry about
A newly built home requires less maintenance since everything from appliances to the HVAC system is brand new; Meaning you can better predict monthly homeownership costs since you’ll likely spend less to maintain your home. Warranties can protect your new home for years before you need to undertake any major repairs. Lastly, newly built homes benefit from having new roofs, which is the cherry on top of new home buying.
Newer community amenities for better living
Buying new construction often means buying a lifestyle. Master or planned communities often include amenities like parks and community spaces close to schools and transit. Another advantage of being in a new community with your new construction home is that the roads and sidewalks will be newer (fewer potholes for a while).
The downside to new construction homes
Although the advantages of new homes are numerous, some disadvantages may lead you to choose resale housing instead. Keep these in mind before finalizing your decision about which option is right for you.
New construction homes tend to cost more
According to a Trulia analysis, new construction homes cost approximately 20% more than resale homes. The market value of existing homes is based on square footage, location, and quality, but when you buy new construction, you’re not only paying for those things, but you’re also on the hook for additional costs known as “specials.” “Specials” are the costs of having utilities, driveways, sidewalks, and sewer lines installed and can increase your monthly mortgage payment by $200 or more.
The “cookie cutter” approach look for homes
New construction homes may differ slightly in floor plan options but even less so in exterior aesthetics giving homes a “cookie cutter” look. Creating roughly identical homes allows builders to save money on materials since they can purchase in bulk. Also, houses similar in appearance create a unified, cohesive look for the entire development.
Longer timeframe to move in
Buying a new construction home means waiting. New construction can take anywhere from a few months to a year to complete as numerous elements are involved in the process. Starting from city approvals to break ground, actual construction, plumbing, electrical work, finishing touches and landscaping, and delays due to inclement weather.
May have a longer commute to work or schools
New construction tends to take place in areas where land is in abundance. The potential for commuting to work or driving into metropolitan areas is much higher in these areas. Spending extra money on gas, adding miles to your car, or even dealing with the hassle of rush hour traffic can make or break your decision about where you want to live.
What you should know about Resale or Existing Homes
Now that you’ve heard the arguments for new construction homes let’s examine the facts about buying resale homes and what that entails.
Resale homes generally cost less
The cost for a resale home compared to new construction is generally lower than new construction. According to Lending Tree, “The national median sales price for an existing home in July 2021 was $359,900, according to the National Association of Realtors, while the median sales price of a new home that same month was $390,500, according to the Census Bureau.” Construction costs and the economics of simple supply and demand are the primary reasons for the price difference.
Resale homes are move-in ready
Along with the lower price tag, resale homes are move-in ready. In addition, taking occupancy once all the closing requirements are complete is an obvious perk for those needing to relocate quickly, starting a family soon, or simply wanting more living space.
Established neighborhoods with more character
For some, their homes are a reflection of themselves, both inside and out. Finding a home that is beautiful but unique and full of character is a huge selling point for some buyers. Moreover, the established neighborhoods allow you to talk to your neighbors to understand what the community is like before making a significant financial commitment.
Larger lot sizes are ideal for several reasons
Resale homes often have larger lot sizes. Ideal for those who love gardening, have pets, or prefer to have a little more breathing room from the nearest neighbor. Generally, homes with larger lots have a higher property value than similar houses on smaller lots in the same area.
Lower property taxes on resale homes
Taxes play an essential part in deciding which type of home you want to buy. Having the money for a down payment and your monthly mortgage isn’t enough. Being able to afford the recurring property taxes is worth taking into consideration. New construction homes tend to come with higher property taxes, and given that property taxes generally rise over time, this means you could end up with a more expensive home than you thought.
Better predictability for monthly and annual costs
Resale homes have documented history on taxes, insurance, utilities, and homeowners association dues, enabling you to budget your finances throughout the year accurately.
The downside to resale homes
If you’ve ever seen the comedy, The Money Pit, then you’ll know the nightmares and headaches that purchasing a resale home can harbor. While the movie offers a lighthearted and hilarious look at the problems resale homes can have, rest assured you won’t be laughing should you find yourself in the same situation.
Extensive and expensive repairs
Whether brand new or existing, no home is immune to needing repairs, things break or wear down from use over time. Regardless of how well the previous owners took care of their property, time is not on your side with resale homes. Therefore, if you consider purchasing a more than 20-year-old home, you should be aware of costly repairs that may be lying in wait. The average lifespan of roofs, septic systems, pipes, and plumbing is typically around 25 to 40 years. A small leak left unchecked can amount to extensive water damage and mold, creating a domino effect of issues that will cost you money, time, and peace of mind.
What you see is what you get
When considering a resale home, the house’s existing layout and floor plan are virtually unchangeable. Certain elements such as vaulted ceilings or open floor plans may not be possible without going through extensive and messy renovations (and may even require permits from the city). Adding to that, the need to find a reputable and experienced contractor to perform the work correctly.
Minimum efficiency and high utility bills
Older homes were constructed using different techniques and materials than today. Before the middle of the twentieth century, most homeowners couldn’t rely on today’s technology for controlling or automating the heating, cooling, and insulation systems because they did not yet exist. As a result, these early systems and appliances are considerably less efficient than today’s technology. This means higher monthly utility bills and taxing the city’s energy resources.
The bottom line
Now that we’ve covered all the ins and outs of new construction and resale homes, you have a better understanding of what to expect. The natural ebb and flow of the housing market means that buyers should keep their options open, and in this instance, there is no right or wrong answer. Knowing the benefits and disadvantages of both and what is best for you and your family will help you find your dream home.