Every home buyer faces one big question: Do I buy something new or something used? Obviously, most of us would rather have something new. However, those who are operating on a tight budget will often buy a pre-built home in an attempt to save money. But are older homes really that much cheaper? Are newer homes really that much nicer? In this article, we will attempt to answer both questions.
The Pros Of Buying New
Let’s start with customization. When your home is being built to your specifications, you have the opportunity to design a living space that perfectly suits your lifestyle. Whatever your activities, you can customize your home to facilitate those activities. You don’t get the chance to do this on a pre-built home.
We should also consider the importance of energy efficiency. For a long time, people didn’t care much about this factor. Until utility bills begin to get outrageous, most people have no reason to care about energy efficiency. However, people are definitely paying more on their electric bills than ever before in American history.
As this problem grows, more and more people are becoming concerned about making their homes more energy-efficient, and building standards have changed to fit this concern. The end result: Newer homes tend to be much more energy-efficient.
A lot of new homeowners don’t stop to consider the crucial factors of maintenance and repair. Buying a “fixer-upper” might seem like a good idea if you’ve never tried it before, but it usually doesn’t work out very well. Depending on the extent of the work required, you could end up spending more money than you save when you buy a used home.
New homes, on the other hand, offer the prospect of not worrying much about maintenance for at least a couple years. Everything is shiny, new, and freshly inspected. Therefore, you can put that worry out of your mind for a few years.
Cleanliness is another good point to be considered. With a new home, you are getting something that has never been used. Thus, you don’t have to worry about fixing whatever messes or problems may have been left behind by previous occupants. In this case, there are no previous occupants. Be honest; we all love that “new house” smell anyway.
The Cons Of Buying New
First, let’s consider the most obvious factor: The price. If all home prices were equal, everyone would probably want new homes. Of course, the prices are not equal. We know that new homes cost more, but how much more? Let’s look for some data on the subject.
Based on this data, which comes from the Bureau of the Census, the median price for a new home (in the United States, anyway) is $310,400. We were unable to find government statistics for existing home sales, but we did find some very good data from a private source.
According to the data cited above, the median price of a used home in the United States is about $280,000. If we take these numbers as being completely accurate, a used home will save you an average of $30,000. This does put a checkmark in favor of buying a used home.
However, older homes will usually require some degree of maintenance and/or repair. These repairs might be crucial for your comfort (like a modern HVAC system), or they might simply be matters of code compliance. Either way, older homes have several hidden costs, and compliance costs are definitely one of the biggest ones.
Another little problem with a new home is the fact that you might not be moving into an established community. In fact, you might essentially be moving into a construction zone if there are other homes being built in the area. This can be a maddening situation, as the sounds of power tools disturb your ability to enjoy your new home. The situation becomes much more frustrating because there isn’t really anything you can do to address the problem. If you go with a new home, we recommend that you avoid large-scale construction neighborhoods so that your home will actually feel like a home, rather than a half-finished construction site.
Points To Remember:
In general, we would say that a new home is the better option if you can afford one. Although an older home will save you some money, it could end up costing you a lot more money to fix the home up until it meets both your specifications and those mandated by law. But, as we have already established, new homes have some unique problems which should not be ignored. Here is a handy quick-reference list of points to remember as you go through the process:
- Choose your builder wisely. Not all of them are honest, and not all of them are competent.
- Consult the local Homeowner’s Association for advice on choosing a builder
- Always have an inspection done when the house is completed. Even if the law doesn’t require it, it’s a good idea.
- Be very careful about those extra options. They can add up very quickly.
- Check the average home prices for your area.
- Don’t be afraid to haggle a little bit when talking prices. It is perfectly acceptable.
- When asked to sign anything, make sure you read every single word carefully (including the fine print).
- Make sure you get a new home warranty
- Don’t close the escrow until the house is built.
As we have already said, a new home is generally the better option. To be fair, this also depends on your situation. You might happen to find a used home that is perfect for you and which is available at a reasonable price. However, the odds are against you on that one.
The big problem is this: Used homes only have one significant upside, which is a lower price. However, there are so many potential hidden expenses (code compliance, maintenance, repair, and higher utility bills) that you aren’t really saving a lot of money in most cases. Thus, the only real benefit of a used home is greatly diminished. If you have enjoyed this article and you would like to encourage our work, please fill out the contact form below.