When looking to move into a new home, many people first consider the option of buying a home. Of course, buying an existing house comes with some advantages and disadvantages, as does building a house.
We’ll lay out the facts about both options so you can come to a decision based on what matters most to you.
Pros Of Buying An Existing Home
Below are the upsides you should be aware of when buying an existing home.
Move-In Condition
If you’re hoping to move quickly, buying an existing home is probably your best option. Construction projects will require some time to complete, and that’s the same whether you’re building a home or buying a fixer-upper.
In general, you’ll likely find it cheaper to buy an existing home, but market conditions always affect home prices. A home loan is less risky than a land loan and typically comes with a lower minimum down payment and a better interest rate.
Home Renovation Options
Purchasing a home rather than building one doesn’t mean you’re necessarily going to be stuck with a home feature or two that fails to meet your needs. You can make upgrades and customizations to the home when you have the time and money, creating a house that’s your ideal abode or somewhere close to it.
Established Landscaping
An existing home will likely have some landscaping, eliminating that expense. If you like mature shade trees and rhododendrons for days, you might want to stick to buying a home over building one. It could take years for new landscaping to match the beauty of mature plantings.
The Room To Negotiate
There’s not much negotiation you can do when you build a home. When you’re purchasing an existing home, however, you have the opportunity to negotiate with the seller on a different home price. If it’s a buyer’s market, you’re likely to have some real negotiating power.
Of course, buying a home also has some drawbacks, which we’ll discuss next.
House-Buying Stress
Searching for the right home can be time-consuming and stressful. Depending on when you buy, the real estate market could belong to the sellers, who could field multiple clean offers above asking price within days of listing their home. In that case, buyers could face high prices, bidding wars and multiple rejected offers.
It’s not necessarily going to be easier to buy than to build. If you do choose to buy an existing home, working with a good real estate agent can help make the process easier and quicker.
The Need To Compromise On Home Style
Finding a home you like and that reflects your tastes can be tough even when you have a wide variety of choices. When there are few homes for sale versus the demand for homes, you’re unlikely to find many options that meet all of your desires.
Possible Maintenance Issues
With older appliances, plumbing and electrical systems, you may run into major maintenance issues sooner rather than later. One possible solution? Consider a home warranty. With a home warranty, you know exactly how much to budget for home repairs and who to call if a problem arises.
Older homes are more likely to be less energy efficient, which can lead to higher energy costs. You’ll likely not be able to achieve the same energy efficiency you could get with a new, sustainable home, but you can take various steps to reduce your older home’s carbon footprint.
The Potential For Hazardous Materials
An older home may present health hazards from years back, and it’s possible the owner may not even be aware of them. Homes built prior to the 1970s, for example, might contain lead paint. If you have children, you’ll want to take this into consideration before buying an existing home.
It can be cheaper to buy land and build a house from the ground up, but it depends on where you're buying land, the types of improvements that need to be made to the property, and the type of home you want to build. In some areas, it may be cheaper to buy in a new development.
Some factors that influence the cost of building a new house include: Size/square footage: The smaller the house, the more it costs per square foot (to a certain extent). Conversely, the larger the home, the less it costs per square foot. Design and layout: Design and layout also influence the cost of building a house.
By 2024, prices could be 25% to 28% higher than they would've been compared to a pre-2020 trajectory, which will make building a budget-friendly home a real challenge for some. Material and availability cost predictions for 2024 include: Roofing: Availability will decrease, but pricing should remain stable.
Building a foundation is often among the most costly items on this list. Home foundations are built underground and support the structure's weight. A strong foundation must: Assist in support of the above structure.
I'd say, you're more likely to find a better deal by finding off market land to buy at a deep discount and then build on that land. You'll acquire more equity in this situation. Anything (land or a house) is going to have a mark-up, if not already at market value, when it's on the market.
That's significantly more than the cost to move an existing house. While the cost of land may increase the total cost to move a house above that $200,000 average, in most cases, it will be more affordable to physically move a house you love than it would be to build or buy a new one.
In general, building up tends to be less costly than building out. When you factor in things like digging and pouring a new foundation, building out typically carries a higher price tag (though this isn't always true, and certainly depends on the size of the room and its purpose).
A-frame homes are cheaper to build than traditional homes since they are smaller. A traditional house costs $100 to $200 per square foot to build but is typically about twice the size of the average A-frame house. A-frames are popular for vacation homes due to their compact size and easy construction.
Another way to keep costs low is to buy pre-fabricated kits or plans for tiny houses that come with all of the necessary components and instructions needed to complete the build. These kits usually cost less than buying all of the materials separately and they provide an easier building process as well.
To estimate costs for a new project, multiply the home's square footage by the average cost per square foot. For instance, a 2,400 sq. ft. home estimated at $124.16 per sq.
In a study of a dozen cities including SF, the Upjohn Institute's Evan Mast also concluded that more high-end housing decreases competition for previously existing homes, and thus “new market-rate housing construction can improve housing affordability for middle- and low-income households, even in the short run.”
On a per-square-foot basis, pole barn houses and barndominiums are the most affordable at around $50 to $160 per square foot. Other inexpensive home types include modular homes, tiny homes, shipping container homes, and standard one-story ranch homes.
Building a house adds costs for land purchase, the permitting process, and multiple inspections. The farther your plan strays from a standard model, the more costly it will be. Buildable lots in urban areas can be prohibitively expensive.
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