New Build or Existing Home: Which One Is Right for You?
Homebuyers today are facing a huge dilemma.
There simply aren’t enough homes for sale.1
Nationwide, there were 1.27 million active
listings in September, down 13% from the previous year. According to the
National Association of Realtors, that’s about 2.4 months of inventory, which
is far less than the six months that is generally needed to strike a healthy balance
between supply and demand.2
Given the limited number of available
properties, if you’re a buyer in today’s market, you may need to expand your
search to include both new construction and resale homes. But it can feel a
little like comparing apples to oranges.
Let’s take a closer look at some of the
factors you should take into account when choosing between a new build or an
existing home.
TIMEFRAME
How quickly do you want (or need) to move into
your next home? Your timeframe can be a determining factor when it comes to
choosing between a new build or resale.
New Build
If you opt for new construction, you may be
surprised by how long you have to wait to get the keys to your new digs.
Currently, many home builders are dealing with unique challenges brought on by
the COVID-19 pandemic, including rising costs, labor and material shortages,
and shipping delays. While historically it took around five to six months to
build a home, many builders are now reporting construction timelines closer to
a year or more.3
These issues have led some builders to cancel
contracts or raise the price on unsuspecting homebuyers long after agreements
were signed. Unfortunately, this scenario can throw a major wrench in your
moving plans and significantly delay your timeline.
To minimize these types of surprises, it’s
crucial to have a real estate agent represent you in a new home purchase. We
can help negotiate better contract terms and advise you about the potential
risks involved.
Existing Home
If you're in a hurry to move into your next
residence, then you may want to stick to shopping for an existing home.
You can typically move into a resale home as
soon as you've closed the deal. The average time it takes to close a home
purchase is around 51 days, but it can vary based on loan type and market
activity.4
If you need to move even sooner, it’s
sometimes possible to close faster, especially if you’re a cash buyer. In fact,
many sellers prefer a quick closing, so it can give you an advantage in a
competitive market.
LOCATION
From commute to construction to amenities,
there’s a lot to consider when choosing your next neighborhood.
New Build
With a brand-new home, you're more likely to
move into a neighborhood that's located on the edge of town and is still
undergoing development.5 This could mean a longer commute and
ongoing construction for some time.
However, new developments can also offer a lot
of amenities that appeal to modern homebuyers. Water features, hike-and-bike
trails, tot lots, and dog parks are just a few of the enhancements we’re seeing
pop up in master-planned communities across the country. And some feature new
schools and their own urban-like centers with restaurants, retail, and office
space.6
Existing Home
An existing home is more likely to be located
close to town in a neighborhood with mature trees, established schools, and a
deeply-rooted community. As a result, you may find the neighborhood's
trajectory to be more predictable than an up-and-coming area.
But the amenities may be lacking and the
infrastructure dated when compared to newer communities. And while some
homebuyers love the charm and eclectic feel of an older neighborhood, others
prefer the sleek and cohesive look of a newer development.
MAINTENANCE
Are you a DIY enthusiast, or do you prefer a
low-maintenance lifestyle? Set realistic expectations about how much time,
effort, and money you want to devote to maintaining your next home.
New Build
When you build a home, everything is brand
new. Therefore, in the first few years at least, you can expect less required
maintenance and repairs. A 2019 survey found that millennials' homebuying
regrets often came down to maintenance issues, rather than other concerns.7
So if you would rather spend your weekends exploring your new neighborhood than
fixing a leaky faucet, you may be happier buying a turnkey build.
That doesn't mean, though, that a new home
will be entirely maintenance-free. In fact, depending on the builder, you could
find yourself repairing more than you expected. Some home builders have
reputations for shoddy construction and subpar materials, so it's important to
choose one with a solid reputation. We can help you identify the quality
builders in our area.
Existing Home
No matter how good a deal you got when you
purchased it, you could come to regret buying an older home if it costs you
heavily in unexpected maintenance and repairs. According to HomeAdvisor's
yearly True Cost report, home renovations have grown more expensive in recent
years. For example, installing a new HVAC system could cost you $5,371 on
average. And you can expect to pay nearly double that amount ($9,375) for a new
roof.8
Fortunately, there are ways to prepare for
these large expenditures. We always recommend that our buyers hire a certified
home inspector, whether they buy a new or existing home. Once we have the
inspector’s report, we can negotiate with the seller on your behalf for
reasonable repairs or concessions.
ENVIRONMENTAL IMPACT
On a quest for greener living? If so, there
are several factors to consider when deciding on your next home.
New Build
There’s a growing demand for energy-efficient
housing, and many builders are rising to the challenge. Nearly 1 in 4 homes
built in 2020 received a HERS (Home Energy Rating System) Index Rating by the
Residential Energy Services Network. A HERS rating provides an index score that
compares the newly-built home to those that were standard in 2006. The more
energy-efficient the home is, the lower the score it receives.11
The average home rated in 2020 was 42% more
efficient than those built in 2006 and 72% more efficient than a typical home
built in the 1970s.11 So if energy efficiency is a top priority, a
new home with a low HERS rating may be a good choice. You can also look for one
that’s ENERGY STAR Certified, which means it meets a series of strict
efficiency guidelines set by the Environmental Protection Agency. In 2020, only
7.9% of homes built in the U.S. received this designation.12
Existing Home
Of course, a basic tenet of sustainable living
is: reduce, reuse, recycle. And since a resale home already exists, it
automatically comes with a lower carbon footprint. Research has also shown that
remodeling or retrofitting an older home is often greener than building one
from scratch.13
With some energy-conservation effort and
strategic upgrades, environmentally-conscious consumers can feel good about
buying an existing home, as well.
DESIGN
Open floor plan? Kitchen island? High
ceilings? Must-have design features could drive your decision to build or buy
resale.
New Build
With a new home, you can bet that everything
will look shiny and perfect when you move in. Builders tend to put a lot of
emphasis on visual details and follow the latest design trends. For example,
newly-built homes are likely to feature an open floor plan, central kitchen
island, and 9+ foot ceilings, which are must-haves for many modern buyers. They
are also unlikely to feature carpet
on the main level or laminate countertops, both of which have lost mass appeal.14
However, some buyers complain of the
cookie-cutter feel of new homes since they are often built with a similar
aesthetic. That doesn't mean, though, that you can't incorporate your own
style. We can help you negotiate custom features and upgrades to personalize
the space and make it feel like your own.
Existing Home
In some of the most coveted neighborhoods, an
older home with classic styling and character can be highly sought after. But
unless the previous homeowners have invested in tasteful updates, an existing
home is also more likely to look dated.
While some buyers prefer the traditional look
and character of an older home, others crave something more modern. If that’s
the case, we can help you find a resale home that leaves enough room in your
budget to renovate it to your liking.
WHICHEVER PATH YOU CHOOSE, WE CAN HELP
When it comes to choosing between a new build
or an existing home, there’s no one-size-fits-all answer. There are numerous
factors to consider, and you may have to make some compromises along the way.
But the homebuying process doesn’t have to feel overwhelming.
We’re here to help.
Some new-construction homebuyers make the
mistake of visiting a builder’s sales office or even purchasing a home without
their own real estate representative. But keep in mind, the builder’s agent or
“sales consultant” has their best
interests in mind—not yours.
We are knowledgeable about both the new
construction and resale home options in our area, and we can help you make an
informed decision, negotiate a fair price, and avoid mistakes that can cost you
time and money. So give us a call today to schedule a free, no-obligation
consultation—and let’s start searching for your next home!
Sources:
1. Reuters -
https://www.reuters.com/world/us/us-existing-home-sales-fall-august-inventory-declines-2021-09-22/
2. National Association of
Realtors -
https://www.nar.realtor/newsroom/existing-home-sales-ascend-7-0-in-september
3. KFVS 12 -
https://www.kfvs12.com/2021/09/22/covid-19-pandemic-affects-delivery-rate-building-materials/
4. Rocket Mortgage -
https://www.rocketmortgage.com/learn/time-to-close-on-a-house
5. Real Assets Adviser -
https://irei.com/publications/article/master-planned-communities-changing-u-s-housing-trends-favor-investors-can-benefit/
6. Builder Online -
https://www.builderonline.com/land/development/5-master-plan-trends-home-buyers-gravitate-toward-today_o
7. Bankrate -
https://www.bankrate.com/real-estate/homebuyer-regret-survey-may-2021/
8. Home Advisor -
https://www.homeadvisor.com/r/true-cost-report/
9. Roofing Calculator -
https://roofingcalculator.com/news/how-long-do-roofs-last
10. Plumbing and Mechanical
Engineer -
https://www.pmengineer.com/articles/94873
11. National Association of Home
Builders -
https://nahbnow.com/2021/10/nearly-1-in-4-new-homes-in-2020-was-hers-rated/
12. EnergyStar -
https://www.energystar.gov/newhomes/energy_star_certified_new_homes_market_share
13. Advanced Materials Research - https://www.researchgate.net/publication/271358381_Comparative_Study_of_New_Construction_and_Renovation_Project_Based_on_Carbon_Emission
14. National Association of Home
Builders -
https://nahbnow.com/2020/04/most-likely-and-unlikely-features-in-a-new-single-family-home/
