New Construction vs. Older Homes in Today’s Market
When deciding to buy a home, one question you may ask yourself is whether you want new construction or an older home. Are you one of those people who love the new paint smell? Or are you looking for a home with “charm” that’s close to everything?
Every home you see will have its pros and cons. Choosing what’s important to you and creating a checklist of “must haves” will help you decide. For instance, is it more important to have a larger home with a more modern layout or a shorter commute? Or, is your dream having a home in a more established neighborhood?
Here are some pros and cons that hopefully will help you decide what type of property you’re interested in.
The Pros and Cons of New Construction
- Layout. Newer construction is usually done with modern families in mind. For instance, most have a family room adjacent to a spacious kitchen in order to accommodate the need of having one large room where families can spend time together.
- Amenities. Some newer developments have amenities such as a pool and a gym. This is nice since you don’t have to worry about driving to your closest health and fitness facility.
- Fewer Repairs. Because it’s newer construction, you typically have fewer repairs to do, especially the larger ones like a roof repair or a new furnace.
- More Energy-Efficient. Since new homes include new, energy-efficient appliances, new windows, and insulation, among other things, your home will stay warmer during the winter and cooler during summer.
- Warranties. With new construction comes new appliances, new equipment and their warranties. Some builders also have extended warranties on their newly built homes, which can give a buyer peace of mind, especially first-time home buyers.
- Higher Price. Typically, all these modern layouts and conveniences come with a higher price. However, if you compare a new construction with an older home in a city, you may find that the cost per square foot is less for a new home.
- Potential HOA fees. Since newer neighborhoods tend to have amenities such as pools and gyms, you may have to pay Homeowner’s Association fees to maintain these. On the other hand, having HOA fees may also help keep the neighborhood looking good and therefore help raise your home’s value.
- Typically less charm. Builders obviously want to increase their profit margin. One way to do it is by limiting the number of floor plans they offer. This means that a newly constructed neighborhood may look like a “cookie-cutter” one, meaning that a lot of the newer homes look the same. Also, unless you choose certain updates, it may not have the detailed work that you see in older homes.
- May have longer commute to work and schools. Again, since builders want to save as much money as possible, they may choose to buy land outside of a city. If they offer new construction inside a city, this may translate into a higher price.
- Limited or no negotiating room. Your timing is very important, if you approach a builder at the right time (e.g. at the end of their fiscal year), then you may be able to negotiate price. However, most of the time, builders don’t allow for negotiating room when selling a home. You may be able to negotiate certain upgrades, but the price most likely won’t change.
The Pros and Cons of Resale Homes
- More styles to choose from. Even though there are some older neighborhoods that have homes that look very similar, established neighborhoods have many different floor plans and, therefore, have less of that “cookie cutter” look.
- Typically have lower prices. Since older homes tend to need a little TLC, or some updates (or maybe even some major repairs), you may be able to get a lower price for the house to entice buyers.
- Established neighborhoods. One of the nice things about choosing a home for resale is the fact that it would be in a more established area, with a stronger community feeling.
- If home was maintained, many repairs have already been made. Some may argue that resale homes are money pits, but others may feel some peace of mind knowing that the house has been “lived-in” and any major issues would have surfaced by now.
- Smaller. It’s interesting to see how floor plan size has increased with time. According to the National Association of Home Builders, the average home size in the U.S. in 2009 was 2,700 square feet, compared to only 1,400 square feet in the 1970s. The main complaints of older homes are storage space, bedroom size and the lack of having a “master suite.”
- Less energy-efficient. Think about it–windows and insulation are older, some homes were built with older materials, some homes may even have additions that tampered with the home’s structure, or maybe even construction with code violations…there are many ways for an older home to truly become a money pit when it comes to energy consumption.
- More maintenance. Again, you may have to change the roof, or furnace, or carpet, etc. There are just changes that you need to make on a home every so many years.
- Older appliances. Unless you find one of those older homes that has been completely updated, you may need to also replace appliances. This is not only to update your home, but it also helps when trying to resell the home.
Whether you decide to buy a new construction or an older one, buying a home is a dream that can become reality with plenty of research, patience and, sometimes, even many compromises.