Pre-Owned Property or New Construction? Decisions, Decisions

man, woman, and dog on front steps of house

When you’re in the market for a new place to live, there’s no shortage of decisions to make. From location to size to style, the choices are seemingly endless. One great starting point is deciding whether you want to buy a pre-owned property or if you’d rather build your own home.

This is one of those questions to which there’s no right or wrong answer, but there probably is one answer that’s better at meeting your needs. There are upsides and downsides to each one. Being able to look at the pros and cons of each situation helps you make the decision that you’re happiest with.

Counting the costs

If your decision hinges on how much a different home may cost, typically an existing home can give you more options while meeting your budgetary needs. According to the National Association of Realtors, the average sale price of an existing home in June 2018 was $276,900.[1] In contrast, the U.S. Census Bureau reports that, during the same month, the average sale price of a new-construction home was $363,300.[2]

Part of the disparity in pricing, according to the National Association of Home Builders, is that many of the homes being built today are larger and have more luxurious finishes and features than existing homes.[3] For example, in 1979, the average home size was 1,645 square feet. The most recent data show that today, the typical new single-family home is nearly 1,000 square feet larger, with an average size of 2,641 square feet.[4]

Larger homes require more materials, so they cost more, and the features you add to customize the house can also increase the price. However, if you’re more concerned about getting certain elements in your home, such as upgraded finishes or solar power, it might cost less to build a new home with those features than to buy an existing one and try to renovate it to suit your needs.

When timing is everything

Another consideration when weighing whether to buy an existing home or build a new one is how quickly you need to move in. Imagine you’re moving to a new area and you want to be in your new home in three months. If that’s the case, you likely don’t have time to build a new home unless you choose something that’s already being built and primarily select the finishes.

There are several steps that you typically need to take when building a new home that you don’t have with existing homes, such as hiring an architect, finding the right plot of land, choosing your floor plan and determining what finishes and appliances you want. It takes at least several months to complete all these steps. If you’re moving to an area with a robust housing market, there may be more delays due to fewer contractors and workers being available for hire. If timing isn’t an issue and you don’t have an immediate need to move into the house, then building a new home might be right for you.[5]

What condition do you need your home to be in?

Moving into a pre-owned home means that you could be inheriting someone else’s problems. There could be issues with flooding or leaking around the windows, or maybe there are plumbing or electrical problems that the current owner didn’t disclose. You’ll hire a home inspector to look for major issues, but you may still learn that your home has some quirks you weren’t aware of once you move in.

Of course, when you move into a new home that’s been custom built, you expect everything to be perfect. Be aware that that’s not always the case; some things might not have been done exactly as you’d requested, or some of the wrong materials may have been used. It’s still prudent to take a “buyer beware” approach to your new home before you move in. Hire a licensed home inspector to make sure that all the work has been completed to satisfaction. Also, walk through the property multiple times before moving in to ensure that the home looks the way you want.

Choosing between buying an existing home or building a new home is a decision to make based on what you want from the home and what you consider most important. No one else can decide what’s right for you, but once you weigh the advantages and disadvantages of each, you may find it easier to make a decision.

As you’re considering your options, learn more about common home styles. Knowing what you prefer can help guide your decision, whether you choose to build something new or search for a pre-owned house that works for you.

[1] https://www.nar.realtor/sites/default/files/2018-06-ehs-infographic-3840w-2367h.png

[2] https://www.census.gov/construction/nrs/pdf/newressales.pdf

[3] http://eyeonhousing.org/2015/08/the-aging-housing-stock-2/

[4] http://eyeonhousing.org/2018/05/single-family-home-size-increases-at-the-start-of-2018/

[5] https://blog.nationwide.com/building-vs-buying-a-home/