Should You Buy a Pre-Existing Home or Build a New One?
The answer to whether you should buy a pre-existing home or build a new one depends on several different factors.
If you’re thinking of buying a home in the Miami Valley area, should you purchase a pre-existing home or build a new one? There are several factors you must consider before making a decision.
The first is your budget and the cost of the home. The median sales price of a new home in the U.S. was $322,500 in December 2016, according to the U.S. Census Bureau. During the same month, the median price of an existing home was $232,200, according to the National Association of Realtors.
With home prices increasing and mortgage rates remaining low (for now), the time might be ideal for buyers to secure a new deal on a pre-existing home or build considering all the costs of building a new home, which is the better investment between the two.
If you’re thinking of building a new home, though, there are three main factors to take into account.
The first is that the average cost of new construction is $160 to $260 per square foot, whereas the average price per square foot of a pre-existing home is $104. There are many deciding factors within those numbers, too. One of which is the fact that the cost of construction materials is not a stagnant cost. Roofing, lumber, labor, etc. have all increased over the years.
The second factor is the time frame necessary to build a home. From the removal of the first shovel of dirt to the date of delivery, if everything cooperates (including no inclement weather or acts of God that would delay the process), every bit of the materials necessary to build are delivered on time, and every selection made for flooring, cabinets, hardware, etc. is in stock at the time needed, it would take you a minimum of five months. If you have a home to sell in order to build, you’ll likely move at least twice too.
“The time might be ideal for buyers to secure a new deal on a pre-existing home or build.“
The third factor is landscaping. This is an area buyers often neglect when considering the building process. Most non-custom homes come with sodding in the back and seeding along the sides and in the rear yard, and I can tell you that you’ll need a lawn service just to kill the weeds. They may also offer a bush or two or a small tree. Custom homes don’t even offer these basics in the price.
If you’re thinking of buying a pre-existing home, there are also three main factors you must consider.
First, although the initial cost to build may be higher, a pre-existing home isn’t new. There will be some initial added costs in having the property inspected in the very beginning before you purchase. Even with inspections, it’s likely something can be missed.
Second, what will be the overall monthly maintenance costs? What do you need to do to budget for them? If you’re buying a 20-year-old home, it’s safe to assume that the roof is 20 years old too. The average lifespan of a roof is 20 to 30 years, and the average cost of a roof is $10,000 to $15,000. Do you start saving now?
Lastly, think about the utility bills. This is subjective based on the age of the home, but it’s obvious that with new homes, the materials used will be more efficient and likely lower your utility bills.
There are numerous other things to consider when deciding to build or buy, so if you have any questions, don’t hesitate to reach out to us. We’d be happy to help you.