Building vs Buying a Home

As a prospective homebuyer, one of the most difficult initial decisions you’ll face is whether to build a custom home or buying an existing unit. Each option offers a range of advantages and drawbacks. You’ll want to carefully consider them before moving forward.

There are two primary considerations in determining your best option in building vs. buying a home. One is convenience. The other is cost. Buying an existing home is quicker, so it can be more convenient. But you may be wondering if it’s cheaper to buy or build a home.

So, is it better to build or buy a home? There’s no easy answer. No hard or fast rule applies to choosing between building a custom home vs. buying. It comes down to weighing the benefits.

We’ll take a look at some pros and cons between these two choices, but first, let’s look at some statistics that indicate how others view building a new home vs. buying one already built.

The latest Trulia survey found twice as many people preferred buying a new home over purchasing an existing one. By “new,” they meant brand new properties including having a custom home built or purchasing a model or stock home from a builder’s inventory and then putting their custom touches on it.

“Existing” homes referred to resale homes or previously lived-in properties. These could be recently constructed homes that come back on the market or ones that were built decades ago and were maintained in good condition. Trulia found that, for the same price, a sizeable amount of the American home-buying population strongly preferred building a home vs. buying a home.

That raises the question of whether it’s cheaper to buy or build a home. Recent studies done by the National Association of Home Builders, the National Association of Realtors, the U.S. Census Bureau and the U.S Department of Housing and Urban Development show the costs for each option continue to rise at an alarming rate.

In February 2016 the median price of a new house in the United States was $301,400 while the average price of an existing home was $212,300. By December 2016, those figures changed to $322,500 for new and $232,200 for used. That’s an increase of 7.0 percent for a new home and 9.4 percent on the existing market in a 10-month period.

The disparity between the cost of newly constructed homes and previously built and occupied properties isn’t a fair comparison of dollar-to-dollar and size-to-size. The finished area of most new homes compared to existing ones has grown significantly as well.

According to the National Association of Home Builders, consumers building a house vs. buying are often investing in more luxurious and larger homes. The NAHB reports that the median age of an existing American home is 37 years old. When these were built around 1979, their average size was 1,645 square feet. Today, the average American home is 2,453 square feet.

This astounding size increase of 49 percent accounts for much of the price difference when comparing current new and existing market inventory prices. It’s not a fair “apples-to-apples” balance of costs. Today’s new homes are not just larger. They’re better built in many ways, being more energy efficient and having more advanced mechanical systems.

With there being no set formula or precise way to compare new and used homes solely on size and price, the best method of determining value is to weigh the positives and negatives in building a home vs. buying. It’s not so much a matter of it being cheaper to buy or build a home. It’s a matter of what’s the right choice for you and your family.

Let’s look at the main advantages and disadvantages of building your own home vs. buying.

Building a custom home is an exciting way for you to get the perfect home built exactly to the needs of your family while showcasing your unique aesthetic vision. It’s a statement of you, your lifestyle and your values.

There is nothing like the emotional reward of living in a home you’ve had built especially for your needs and tastes. Whether it’s a sentimental reflection of a character home your grandmother had or a contemporary custom design, a return on the dollar can’t be measured in the satisfaction and pride a new home delivers.

There’s more than the pure excitement of being involved in the process of designing and building your home, too. There are practical advantages in starting from scratch and constructing from the ground up. Consider these benefits of a new home:

• New, up-to-date technology. Today’s homes use the newest in materials. Many outperform old methods and materials in delivering superior performance at a lower cost. Frameworks in homes are superior with composite, engineered materials that keep the home straighter and stronger. New tools allow faster construction that saves on time. Mechanical and automated systems also deliver lifestyle benefits in comfort and entertainment.
• Variety of choices. There are endless arrays of finishing materials available to new home builders. For the outside, there are façade designs and accents that let you build true to a historic theme but take advantage of excellent products. Interiors can be finished in simple form that builders offer as cost-effective options, or you can expend as much as you want on custom cabinets, counters, millwork, flooring, and baths.
• Low or no maintenance. Most new homes are built with durable products requiring little if no maintenance. Gone are the days of touching up outside paint or polishing floors. Mechanical components need little care except for cleaning. Automated systems help in vacuuming and filtering air. Even eaves troughs or gutters can be leaf-free. And those time-consuming, expensive renovation projects needed in existing homes are gone.
• Energy-efficient, healthy and safe. New EnergyStar homes are excellent in providing low-cost heating, ventilation, and air conditioning. Appliances are less to operate, yet they deliver better control on cooking, cleaning, and cooling. Air exchangers allow tightly sealed homes to have naturally fresh air, while still recovering heat or preserving coolness. New homes are safer across the board, too. Pressure valves in showers, security alarms, and fire suppression systems are just a few benefits found in new homes.
• One known payment. With a new home, you’re going to wrap everything into one monthly payment. There’s no need to set a contingency aside for unknown and unexpected expenses like that blown hot water tank or a leaky roof. For years after occupying a new home, you’re going to benefit from long-lasting products that are covered by warranty.
• Warranty. Every reputable new homebuilder provides a comprehensive warranty on their products. This includes a general builder warranty as well as individual manufacturer coverage. The value embedded in a new home’s warranty policy is significant and is one more reason to consider buying new.

Although there are many advantages to building a new home vs. buying an existing property, there are a few drawbacks to consider as well:

• Construction time length. Regardless of your builder’s efficiency, it’s going to take a lengthy period to have your new home built. It could take six months or more depending on the complexity of the design and factors like weather or material and labor shortages. During this time, you’ll possibly have interim expenses like rent, storage, and multiple moves.
• Delays and cost overruns. There are many variables in new home building. Most of these already occurred when existing homes were first constructed. However, they’ve already been absorbed, and they’ll never affect you if you purchase an existing home. The uncertainty of whether your new home will be delivered on time and on a budget may be a stressor you might find difficult.
• Interim financing. New homes require construction loans that are converted into mortgages when completed. Interim financing can be expensive and will add to the cost of a new home regardless if it’s being paid directly by you or wrapped into the builder’s contract.
• Personal time commitment. Having a custom house built requires a considerable amount of your personal time dedicated to the project. Even if your builder handles all the general contracting tasks, you’re going to need to make selections on finishes as well as be available for periodic inspections.
• Living in a construction zone. Quite likely your home will be built in a new development area where other homes are yet to come up. Construction generates noise and traffic, which you might find challenging once you’re moved in.
• Missing necessities. Unless you’ve entered an all-inclusive contract with your builder, there’s bound to be living necessities that’ll be extra. Think of additions to a new home like window coverings, appliances, furnishings, utility connections, and even landscaping. New developments can often take several years to mature with established trees and hedges.

Don’t let possible drawbacks turn you off from having a new home built vs. buying existing, though. New homes are constructed and purchased all the time with the vast majority of owners being highly satisfied with their choices.

If you don’t think building your own home is the best option for you, there are still several advantages to purchasing an existing unit. Let’s take a look at the main ones:

• Convenience. This is the number one reason why people choose an existing home rather than building new. It’s often much easier to move into something already built and previously occupied. Even though there might be repairs to do or upcoming renovations you see needed, the peace of mind in knowing most things are done is a convenient comfort for many.
• Cost. For the most part, the initial purchase of an existing home is less than a custom-built, new home. Existing homes may fit into your budget well. You’ll compromise the satisfaction and pride of owning new, but it will likely be more economical.
• Established, mature neighborhoods. There’s no taking away from the majesty of some established American neighborhoods. Some of the character homes in historic districts are beautiful. The years it took these areas to develop are far ahead for new construction zones.
• Low or no risk. With an existing property, what you see is what you get. That’s provided you’ve had a competent inspector go through before signing the deal. There’s little risk as long as the deficiencies are identified and above board. With a new home, there can sometimes be unknowns that drive up costs or cause delays.

As with building a new home vs. buying, though, there are a few disadvantages to buying existing. Some things to think of are:

• Not getting exactly what you want. It’s highly unlikely you’ll find everything you need or want in an existing home. Even spending a lot of money in renovations or upgrades may not bring an older home up to the standards you’d expect in a new house — especially a new home where you’ve had input in the design.
• Dated layout and décor.Today’s new homes are much more open and brighter than homes built in the past. In buying an existing home, you might be forced to settle with outdated floor plans and outdated décor. Buying new solves this problem, whether you buy a builder’s stock plan and add your input or build an entirely custom design.
• Maintenance costs. Regardless of how attractive the purchase price of an existing home might appear, they are going to be associated with maintenance costs. Expensive maintenance is deferred far into the future with a new home. With buying an existing home, you’re going to have to set aside additional monthly funds for care, maintenance, and likely renovations.

There’s no simple answer to the discussion of whether it’s better to build vs. buy a home. There are so many variables that it’s impossible for anyone to know with certainty without weighing the pros and cons and deciding what’s best for them.

When considering the cost of building a home vs. buying, building an entirely custom home is certainly going to cost more than buying an existing home. However, some builders offer an option for a semi-custom build using established floorplans that can be highly customized. This can significantly lower your overall costs and help provide the best of both worlds – a new home customized to your preferences, without the high cost of a fully custom home.

SK Builders is an established homebuilder in the Greenville, SC area. Teaming with McAlister Realty, we offer new homebuyers semi-custom design-build services as well as the existing homes for sale.

Some of the many options available to customize your new home include:

• Hardwood flooring instead of vinyl or carpet
• Granite or quartz countertops
• Higher grade appliance packages
• Ceramic and porcelain tile
• Spray foam insulation
• Parking pads
• High efficiency and tankless water heaters
• Sprinkler systems
• Full and finished basement
• Bay windows
• French doors
• Additional windows and skylights
• Rock accents
• Hot tub wiring
• 10-foot ceilings
• Crown moldings
• 5 ½” baseboards
• Hardwood floors
• Pan ceilings

Whether you’re in the market for a custom new home or are interested in buying a unit that’s ready to go, SK Builders can help. We’re partnered with McAlister Realty and offer a wide selection of home building and home buying options to meet your needs. Check out our semi-custom home build options or find a home for sale. If you need help deciding between building a new home vs. buying already built, contact SK Builders for assistance.