While looking for a new house to live in, you might have asked yourself, “What’s better, buying a newly constructed house or an existing one? Both new construction house and an existing home offers distinct features and certainly, your answer boils down to your personal preference. But before we briefly discuss the advantage and disadvantages of buying a new construction versus an existing home, let’s define what’s new and existing.
A new construction home is a newly constructed house, which means you get to be the first one to live in the property. If you’re interested in buying a new home, you need a real estate agent to help you get the most value of your money, oversee the home inspection and negotiate with the builder’s agent for some extra perks or features for your new home. On the other hand, an old home is an existing home. For the purpose of this discussion, we’ll simply refer to existing homes as pre-owned homes regardless if these properties were built in the 1920s, 1980s or early 2000.
Whether you’re a first time homebuyer, starting to build a growing family, or a retiree looking for the best place to enjoy your golden years, you’ll be faced with a number of critical decisions when it comes to homebuying. It may seem like a simple decision, but there’s more to a new construction home and an existing home than meets the eye. So, here’s what to keep in mind when you’re trying to decide which type of house is right for you.
Facts First!
- U.S. median home price was $340,000 both for newly built and existing homes. https://www.ramseysolutions.com/real-estate/housing-trends
- Housing prices are expected to climb 8.0% next year and 5.5% in 2022.
- In 2020, the median price for a new home was $334,000, while a previously owned home was $260,000.
- The typical home value of homes in Houston is $209,512.
With the facts presented, it’s fair to say that preferring a new construction home is one thing and being able to pay for it is another. Cost is just one of the many factors to consider when you’re on the fence between a new and exciting home. Think of your home as an investment, both old and new might appreciate in the next few years but it doesn’t mean that the former or the latter will still have future market appeal. It can also be a gamble as prices could either shoot up or plummet.
If you’re in the market for move-in ready home, the average single family home on the Texas housing market was built in 1990. This means they have more stories to tell compared to the new homes that almost always cost more.
So what exactly do homebuyers get when they purchase a new construction home vs. an existing home? Let’s briefly look at the pros and cons of both options.
Which is Right for you – New Construction or Existing Home?
Benefits of Buying a New Construction Home
- No major repairs for at least 7 years as would still be under the builder’s 1-2-10 warranty.
- Being able to enjoy modern conveniences as appliances and other home features are new and standard.
- Built to conform to current building codes.
- New homes are generally built to be energy efficient so they’re equipped with new appliances that use less energy.
- The opportunity to personalize your floor plan, as well as the interior and exterior areas of your home.
Drawbacks of Buying a New Construction Home
- Builders are flocking to suburban areas, which could mean longer commuting to downtown areas.
- It takes several months, or up to a year before you can actually move into your new home.
- The interior and exterior might appear too similar to your neighbors.
- Some builders or constructors don’t include landscaping.
- Buying new homes can cost you 20% more than a similar old home.
Benefits of Buying an Existing home
- Being able to live in a property with ‘history’ and built by genuine craftsmen.
- Larger lot size as land back then was cheaper.
- The landscaping has matured – trees and vegetation.
- The neighborhood is already established and more likely closer to downtown areas.
- Depending on the old home’s condition and location, you’ll probably pay less compared to a new house of the same size and in the same area.
Drawbacks of Buying an Existing home
- Costly repairs might be needed before and after moving in.
- The layout or design of your home might be difficult or costly to alter.
- You might pay more for insurance since older homes tend to have more issues.
- Older homes typically are not as efficient
- Outdated building code compliance
Why Consider a New Construction Home over an Existing Home
There are other factors to consider aside from the actual cost of home ownership to make sure you get the home of your dreams with as few problems as possible. Before deciding between buying new home vs. an existing one, let’s take a look at a few important points to help you decide which option is best for you.
- Resale Value
A house is an investment and while it might seem premature to think of the resale of the property even before buying it, it is a necessary factor to consider when buying a home. You might say, resale value is never promised. That’s true considering the economy and other factors like the current health crisis have a large effect on the housing market prices and home values; but there are also indicators that suggests a property is a good and a smart investment like type of neighborhood, the schools, and the community, just to name a few.
- Ease of Purchase
Another important factor to help you decide is how easy it will be to qualify for a mortgage when buying the property. While a good credit score and availability of cash for down payment are the best ways to secure a home loan, a resale home might have an existing mortgage. Always conduct due diligence when buying a resale home. Secure the original documents of the property because if not, it may mean the lender still has the documents.
- Customization
New home buyers often have the opportunity to participate in the designing process of the property, selection of the flooring, wall colors, or even decide the lot they like the best. You may also be allowed to do some upgrade tailored to fit your lifestyle. This kind of flexibility in customizing a new home can be hard or challenging to do on a resale home. Buying a resale home without proper assessment of the costs involved in the repairs and renovation might result to cost you more than you have prepared for.
- Builder’s Warranty
Current Texas law states that there are two implied warranties in connection with new residential construction: warranty of good workmanship and warranty of habitability. That’s why Luminous Homes offers 1.2.10 warranty to give homebuyers peace-of-mind- about their investment. Our 1.2.10 warranty provides coverage for workmanship and materials; defects in major systems like plumbing, heating, cooling and wiring to name a few; and major structural defects. Within the warranty term, any defects that occur in your home will be repaired, replaced, or paid.
So, which is right for you – A New Construction Home or an Existing Home?
New homes and old homes have their own unique characteristics, their own pros and cons. That being said, It’s important for home buyers to better understand most if not all the advantages and disadvantages of owning a new home vs. an old home. After all, buying a house is probably one of the biggest investments you’ll ever make and surely, you want to make sure that whichever you choose, it will fit not just your finances, but also your lifestyle.
There’s more to think about when buying a new home than simply the cost of ownership, building safety features, architecture or home warranty. Location is important too! So if you’re looking at brand new homes for sale anywhere in Texas, Luminous Homes will assist you in designing and building the home with all the characteristics and comforts you desire.
Build with Luminous Homes
Luminous Homes provides exceptional single-family residences committed to exceed expectations by capitalizing on over 23 years of combined experience in residential real estate and high end custom home design. Each home we design and build are held to a higher standard of quality, ensuring that our clients move into a home that exudes superior craftsmanship, insightful design, and coveted features.
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