Our local real estate market is still in an inventory drought. This causes home values to rise, which is great for sellers, but poses a problem if you’re looking to buy. This, coupled with the plethora of new subdivisions popping up in our area, has piqued interest in building new homes for many families. It’s important to decide whether building or buying a home is the right choice for you.
What’s the difference between building and buying?
One benefit of building over buying that’s overlooked most often is the savings that come with a new home. You see, when you close on your newly built haven, you also receive lengthy warranties from the builder that you wouldn’t get with an existing home.
Another benefit of building over buying is that if and when it’s time to resell your home, you’ll be marketing a home that offers more modern design elements. A newer home will be better received by potential buyers than an already outdated existing home would unless there have been renovations and updates.
However, there’s more up front “work” involved in building a new home versus buying an existing home. This includes finding a lot, designing a floor plan, and interior and exterior material selections, just to name a few. Those up front decisions means you’ll have more control and less compromises for your home.
How do I know what I can afford?
It’s necessary for you as a consumer to do some research to see if building new in your local area is feasible for your family’s lifestyle goals. Since newly built homes are designed to your specifications, you’re in control of the budget, which is a bonus.
Talking with a local mortgage lender who specializes in new construction is the best way to get started. They’ll know the local market, have products specific to your needs, and provide tools and expertise necessary to take you through a new construction transaction.
That same mortgage lender can walk you through what you can reasonably afford to spend on an existing home as well.
However, buying or building is about more than just money; there are many other facets involved. Building a home is a large time investment, which can be a detriment if you’re ready to move in now. Most homes on the market are perfectly livable, even if they might be outdated. Once you have the keys, you can move in immediately, while building a home takes months and can go beyond your projected move-in date depending on a variety of factors outside of your control.
Renovations are an option for existing homes, and they take less time than building a home from the ground up. Depending on what you are updating, you may be able to continue living in the home while the work is being done. You can still get a designer kitchen or master bath without the hassle of building an entire home.
Things to consider when building
Whether your budget is large or small, having the latest safety features, newest appliances, and up-to-date electrical systems is something that cannot be overlooked.
Low cost of ownership
Your new home will require less maintenance than an older home and will be much more energy-efficient to boot. Issues that may come up are most likely covered in your builder’s warranties. This means that owning and maintaining a new home provides some savings.
Designed for the way you live
Building a new home doesn’t necessarily mean that you’re increasing or decreasing the space in your home. Instead, the focus is to make the space functional for your family’s lifestyle needs.
A combination of higher construction standards, better appliances, and more efficient systems makes a new home more energy-efficient than an existing home. Not only will you leave a smaller footprint on Mother Earth, but your monthly utility bills will be lower.
There are hundreds of decisions you will need to make as you build your home. Everything from which lot to purchase and deciding on a builder to paint colors for each room and hardware for the kitchen, bathrooms, pantry, etc. If you’re not ready to tackle the time investment, now might not be the right time for you to build.
Things to consider when buying
Buying an existing home is a great option for many but may come with surprises. Since you don’t know the entire history of the home, it’s highly recommended that you order a professional home inspection prior to buying an existing home.
Does the floor plan meet your needs?
There is a level of compromise that has to exist when buying an existing home. Sure, you may find the perfect home for your family, but that doesn’t always happen. Oftentimes, you’re sacrificing your dream mudroom for larger closets elsewhere, or that fifth bedroom for a sunroom.
Remember that renovations are always an option and can often solve the problem. Sometimes a simple coat of paint can do wonders for making you feel more comfortable while you build up savings for the updates you really want. Plus you can spread out the cost of renovations over time, rather than paying for everything up front.
An existing home may or may not have had updates. It’s best not to expect brand new windows, roof, appliances, or electrical systems. It’s fine not to have state-of-the-art systems or the newest appliances, but it’s good to know how long they’ve been around. That will give you an idea of when you will need to replace or update them. Updates may vary: maybe half the windows have been replaced, along with the furnace and water heater, but the washer and dryer are older. You may be able to work something into your offer to offset the purchase of newer systems or appliances.