On the surface, buying an existing home seems like the most affordable route to go. After all, the median cost of an existing single-family home is $223,000. On the other hand, the average cost for building new construction averages $289,415.Obviously, there is quite a bit of variations in sorting out those costs. Plus, the price you pay upfront is only part of the equation when deciding to buy an existing home or build a new one.
A recent article at realtor.com® laid out some of the pros and cons financially of buying a new versus an existing home. Make some of these considerations when weighing the best financial decision:
Square footage: New-homes tend to be more spacious than existing ones at a median size of 2,467 square feet. As such, when you take the average cost of a new build, it breaks down nationally to about $103 per square foot, which is actually lower than the cost of existing homes.
Finishes: With an existing home you inherit all the features and finishes, even if you don’t want them. That may mean you need to budget in some renovations if you’d like to redo anything. With a new home, you’ll be able to choose all the features and finishes yourself and have it set in the price from the get-go.
Maintenance: Older homes tend to require more maintenance. The cost of upkeep can be pricey too, depending on what needs to be done. For example, the average furnace tends to last about 20 years. When it needs replacement, expect to pay about $4,000. Not to mention, that shingled roof will likely need replacement after about 25 years at a cost of at least $5,000. On the other hand, newer homes tend to need less maintenance because all of the major appliances are brand new and under warranty.
Energy efficiency: Older homes tend to have dated windows and appliances, which can result in less energy efficiency and pricier energy bills. New construction tends to nearly always trump older homes in energy efficiency. Homes built post-2000 consume 21 percent less energy for heating than older homes.
Landscaping: Older homes tend to have mature landscaping already in place. And that landscaping can up a person’s property value by thousands. Further, those trees can save an estimated 56 percent on your annual air conditioning bill, according to the U.S. Forest Service. With newer homes, you’ll have to likely pay thousands to install landscaping and may have to wait years to get it to the point you desire.
Appreciation: With an older home, you can see the trajectory of prices based on previous sales prices and of comps nearby. New homes can be a gamble since they do not come with a proven track record of plentiful comps that have been tested over time.
Source: realtor.com® (Jan. 5, 2017)
Scott Snyder with Welles Bowen Realtors cautions; when you decide to sell your newly constructed home, hope that other vacant lots are not available as your house may serve as a model for buyers that may ultimately decide to buy a vacant lot and build a house to suit their needs.