“Is it better to buy or build a house?” is a question I’ve been asked by homebuyers many times over the years. It’s the biggest investment most of us will ever make, so there’s a lot at stake and it seems these days like everyone wants to sell you THEIR house, whether it’s new construction or a resale home. So today, I’ll be taking a few minutes to help you determine if it is better to buy or build a house FOR YOU as I compare the process, affordability, and your wants and needs

The process

First, let’s compare the PROCESS of buying a new construction home to that of a resale home. Purchasing a resale, an existing home can be very stressful. It should take 20-45 days to close a home, at least here in Central Florida where my team help homebuyers and sellers. But if things go awry, it could take 60-90 days, depending on what sort of problems arise.

A homebuyer’s home inspection could uncover a faulty septic tank, a bad roof, or maybe there are foundational issues that could delay closing. Maybe the sellers put their home on the market, but they’re having trouble finding a home that meets their needs in another area. The point here is that buying a resale home can be problematic. You’re potentially taking on someone else’s problems and there are a hundred reasons for delays.

HOWEVER, purchasing a new construction home can be even more stressful. I utilized a custom builder for my home on private land and was told that my home would be ready in 90 days, but it ended up taking over 6 MONTHS. I thought I was going to lose my mind! It was a constant battle. It seemed like he NEVER showed up to work, and when he did, only half of his crew was present.

As of today, some builders are telling their customers that it’ll take 6 months, and I’m always hearing of those waiting to have their homes built with continued extensions well beyond those six months. These time frames for a new construction home are usually AFTER you’ve already purchased the land, which has stresses of its own, too, so don’t overlook that. It’s also worth noting that new construction communities sometimes have spec homes, so they’re already built, or soon to be completed, and ready to move into just like a resale.

It’s important to note that purchasing a new construction home in a planned community is typically much more streamlined that than of a custom home outside of a community. So, you see, both processes can be stressful and can take longer than planned. The resale home route, though, is usually MUCH easier, especially if you have a good, experienced Realtor® helping you navigate the process.

Most single-family residential homes close in between 30 to 45 days here in Central Florida. Even when things go well, it can be stressful, but that stress can be managed, and the headaches are usually over quickly. The process is typically more pleasant from an overall perspective with resale homes as the title companies and lenders tend to be more customer focused when compared to their new construction counterparts with most major builders.

I’m probably painting an ugly picture of the homebuying process, but purchasing a resale home seldom has these types of delays, and purchasing a new construction home in a community can significantly improve the overall process as well. In fact, I don’t think I’ve had a resale closing take anywhere near 90 days in several years and, although delays with new construction are common, there aren’t always delays. Delays are usually the exception, not the rule.

Your budget

Next, let’s talk about your budget. Here in the Central Florida area, the median sale price of a 3/2 new construction home was nearly $10/square foot higher than that of a resale home of ALL YEARS (including those 1920 ratholes!) in the last 6 months. I suppose it’s expected that a resale home is less expensive, but I’ll address some OTHER considerations for this cost here in a bit.

One significant financial advantage of buying a new construction home in a community is that large builders often offer incentives. They’ll sometimes buy down the buyer’s interest rate by one or two percentage points and sometimes will even offer $10,000 or $20,000 of incentives or upgrades. This can be a game changer for your budget, and you just don’t get this with a home that’s been already built and lived in.

As a whole, buying a resale home gets you better bang for your buck. There’s an emotional advantage to having a home that’s never been lived in, but that’s often an expensive advantage. For instance, the installation of a swimming pool as I record this may run $40,000 to $80,000 for an average swimming pool, but it may cost you just $15,000 as part of a resale home’s purchase.

Older homes tend to be on bigger lots, can have established trees in established neighborhoods with less of that “cookie cutter” look that seems so prevalent these days. Because resale homes were built first, they’re often in better locations, too.  Yes, a custom-built home on a private lot might get you EVERYTHING you want in a home, there’s a cost for that, and you may be able to get at least MOST of those wants in a resale home. One often-overlooked advantage to new construction is that the utilities and insurance expenses are usually significantly less, like, less than half of that of an existing home each and every month.

When purchasing a resale home, or even a new construction home inside a community, like with DR Horton, Toll Brothers, or many others, you usually know the price you’ll be paying at closing with relative certainty. However, when you’re building a custom-built new construction home, say on a private lot, things can change drastically.

Over the time it takes to have your home built interest rates can rise significantly, altering your ability to be able to afford that home. Your life situation can change. Maybe your job situation changes, or there’s a death of a loved one or a change in your familial situation. Supply chain issues can significantly delay closings.

Trying to get out of a contract with a builder during the process could be problematic, but so can trying to sell a half-built house!  Of course, we never think these things will happen to us, but I’ve seen these things happen firsthand, and it’s not always pretty.

Builders offer some great upgrades to improve your home, and most homebuyers end up adding these upgrades as they go along. Most homebuyers end up adding thousands, or tens of thousands of dollars upgrading their home, so don’t think it couldn’t happen to you too. I’ve seen it happen more times than I can count, and I did it myself when I had my home built.

If you’re looking for help with the purchase or sale of any home here in Florida, give us a call. Before you take one step inside any new home community, give us a call so you’ve got an advocate fighting for you. Waiting until after you’ve done so could leave you out in the cold.

Wants and Needs

Next, let’s address your wants and needs when determining if it is better to buy or build a house. We might think that having a home built on our own lot will meet more of our wants and needs, but that’s not ALWAYS the case. Often, existing homes are in better locations with better features. They aren’t making any more land, so what’s available may not be in an ideal location as a well-updated resale home at a lesser price. You may get an existing home in a BETTER location at a LOWER price than with new construction.

If you want a home on your 40-acre parcel in the country, then your options may be limited, and resales may not meet your needs. Maybe you want a newer home in an area where only older homes are available, so maybe tearing down an old home to rebuild is a better option for you. There may be dozens of other reasons that new construction may be better than a resale.

You may think that I’m 100% against building new construction, but that’s just not the case. Remember, I had a home custom built for my needs, and I absolutely LOVE my home. From a headache and affordability perspective, yes, maybe I do favor an existing home. But if you can find the right land, and the headaches and affordability aren’t an issue, and you simply want a new construction home, then there are plenty of great options for new construction homes available. Here’s a video we did about a new neighbor in Sanford, Florida. Check it out!

 

Published on September 27. 2024 / no comments.