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Whats Better A New Or PreOwned Home
Dated: October 25 2018
Thinking about moving? One of the questions you’ll need to consider is whether your next home will be a brand-new build or an older home that’s been around for a while. There are advantages to both, so the choice isn’t always an easy one. Here are some points to consider when deciding which route is best for your current situation.
Price and maintenance cost differences. According to the National Association of Realtors, new homes cost up to 40% more than existing homes. This significant price difference can be blamed on construction costs, increasing land prices, and high demand. Like a new car, that new home smell and the option to customize will come at a premium. A previously owned or resale home will typically sell for a lower price point per square foot overall, so they are more budget-friendly payment-wise. Plan to set aside funds for maintenance and repairs for any home, but a new home will be under warranty for the first 1 or 2 years, depending on the builder, and will be less likely to require expensive repairs for a few years. Warranties on individual appliances and systems last for several years after the initial builder warranties expire, so repairs may cost very little until the home is about a decade old.
Energy efficiency. While energy efficient features can be added to any home after the fact, new homes are built to meet the latest standards, and will be more energy efficient than existing homes from the start. New appliances, radiant barriers, more insulation, smart technology, etc. all make new homes perform better while consuming less energy. In addition to lower energy costs, the air quality is often better due to higher quality filters and air-tight construction. One caveat to that, however, is that new construction materials can have some preservatives and volatile organic compounds that will end up in the air and dissipate over time. Be sure to voice your concerns early on if you’re requesting that your builder use materials without these chemicals and be prepared to pay extra for those.
Amenities. As more and more new home communities pop up, developers constantly work to create the newest and greatest neighborhood amenities to attract home shoppers. Some of the newest communities in DFW are offering community farms, water parks, and even a lagoon! Of course, these amenities aren’t free, these communities also tend to have high HOA dues to cover the operation and maintenance costs of these bells and whistles. Still, if you’re going to the community amenities every weekend instead of paying for admission to local amusement parks, the costs may be worthwhile. If you’re not going to use the community amenities often, however, that’s money that may be better spent elsewhere.
Customization and upgrades. One of the biggest perks to building a new home is that you can get what you want and choose everything from the faucet handles to the ceiling color. There’s not a whole lot about a home that can’t be changed, however, so the question is how much are you willing to spend and when? When you’re building a new home, you’ll choose the layout, exterior elevation, and the décor scheme inside & out. With an existing home, you get what’s already there and will need to DIY or hire professionals to make any changes. If you find an existing home with a layout that’s a good fit, the costs will be a fraction of what you’d spend to make a structural change, and you can do things slowly over time to spread out the costs. When building a new home, you’re still going to pay for customization, you’ll just pay for it in the higher cost of the home. Volume builders will charge change fees if any floor plan changes are made aside from the few select options they offer. In addition, there are usually few “standard” materials in the design center. The nicer flooring options, counter tops, light fixtures, etc. will come at an additional cost and may require additional earnest money deposits. There are often upgrade charges to add fireplaces, covered porches, double sinks, and more. Since decorating trends change frequently, those initial design center choices likely won’t remain popular for the entire time you own the home, and others will not withstand daily wear and tear. So, you may find that you’ll need to spend money again on new flooring and trendier cosmetic finishes when it comes time to sell the home you spent thousands upgrading anyway. Either way, you should enjoy the home while you live there, so consider your comfort level with a dated appearance, dealing with renovations, and hefty mortgage payments to choose the better fit.
Location, established communities, and growing pains. One of the main things you cannot change about a home is where it is located. Cities tend to begin as smaller, central clusters, and then expand outward to form the suburbs. Once land close to the city is all developed, it’s gone, so new home communities tend to be on the outer suburbs with longer commute times. If you work from home or in one of those suburbs, that’s not as big of a problem as it would be for those working downtown. It can still put a damper on social and cultural events, though. Occasionally lots are available close to town, but they will be more expensive than the same sized plot of land further out. If you want to live closer to the city, chances are you’ll be looking at older homes. Older neighborhoods are also more established, with tree-lined streets, thriving schools, stores nearby, etc. Neighbors tend to know each other in older communities, while new communities are made up of all new people. Homeowners in new communities can expect some growing pains as their areas expand, too. Road construction, businesses, and new schools tend to follow residential development by a few years, so there may be a bit of a drive just to grab a gallon of milk or a loaf of bread until stores are built closer. Once open, these will be nice new stores, though. Attending new schools can result in redistricting and can also impact the school experience for kids as sports programs take time to develop and begin winning games, traditions are established, and new clubs are formed, despite the shiny new technology and clean campus. A new school experience will differ dramatically from the experience a student will have in one that’s been around for decades.
Charm and quirks. One of the best things about old homes over new is the character. Old architectural elements like stained glass, original columns, antique fireplaces, etc. give an older home a unique charm that’s hard to replicate. Some older homes have interesting “quirks,” too, like rooms or elements that no longer serve a purpose, like telephone nooks and transom windows. It’s true what they say, “they just don’t build them like that anymore.” These features no longer serve a purpose in modern homes since technology has replaced their former function. Still, they add character and make
Resale potential. Consider your short term and long-term plans and how long you anticipate staying in the home, and how much longer the new communities you’re looking at will take to be completely built out. If the chances are good that you’ll need to sell and move, you might have a harder time selling a home in a community where construction is still plentiful for 2 main reasons- competition, and construction noise. Home shoppers will often choose a brand-new home over a newer pre-existing home in the same community, even at a slightly higher price. They’re attracted by the same opportunities that attracted you to build new- customization, warranties, etc. Others may move on altogether because of the noise and litter that comes along with most construction sites. Construction is short-lived, so the impact will fade as the community nears completion. Once builders are down to a limited number of lots, the competition impact can be worse as the builders offer “close-out pricing.” Until the community is finished, or the builders increase prices dramatically enough, it can be tough to recoup the money you spent on your home. In more established neighborhoods, homes may not come up for sale often, and when they do, they don’t have the builder as a competitor to worry about.
No one option will be a perfect fit for every person, so consider the factors that matter most to you when weighing the pros and cons. If you need help, your favorite Realtor is a great source of information and advice!
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Scott and Tammy Watson are the Owners and Team Leads for GroupWatson, Keller Williams. With 53 years of combined real estate experience, a "Client First Philosophy" is exemplified by providing excepti....