5 reasons to include new builds in your search
As you search houses, you may find yourself with limited options. Should you build a home instead?
Have you pressed pause on your home search because inventory is low, and you can’t find the right house? If existing homes seem like a dead-end, you may have more options if you build a home.
The good news is that more inventory continues to become available. The bad news is that levels of housing inventory are historically low, so you may still find listings to be limited in your price range. One contributor to low inventory is more than a decade spent underbuilding. As a result, there aren’t enough new homes to satisfy buyer demand.
Thankfully, tides are starting to turn, providing more opportunities for today’s buyers. “While existing-home inventory remains limited, the silver lining for homebuyers is that new-home inventory is on the rise, and a new home at the right price is a pretty good substitute,” Mark Fleming, First American Chief Economist, says.
Buy or build a home? 5 big differences
Here’s what you can expect when you build a home versus buying an existing one:
1. Cost.
New build: There’s something extra-sweet about getting to move into a brand-new home that no one’s ever lived in. Plus, you can typically customize much of the design, depending on the builder—including size, floor plan, cabinets, countertops, colors, and other features.
Still, customization has a cost, one that isn’t found in an existing home. Builders mark up their wares, just like any other business. But builders also keep an eye on the changing market.
“Fifty-seven percent of builders are using incentives to bolster sales, including providing mortgage rate buydowns, paying points for buyers, and offering price reductions,” Alicia Huey, National Association of Home Builders (NAHB) Chairman, said earlier this year.
Existing home: An existing house’s price is based on the local market and what other homes are going for in that area. While housing prices have increased over the past few years, prices are no longer surging.
If you build a home, it’s usually more expensive than buying an existing house. But presently, both options are worth looking into in light of builder incentives.
2. Location.
New build: Many times, new homes are built farther from city centers, which can increase travel time to work and other attractions. Still, this could work in your favor. Distance might translate into a lower cost for that new construction house. (You may also be eligible for a no down payment USDA Loan when building in an approved area outside city limits.)
Existing home: Older houses around the heart of city centers can be beautiful to own and live in, provided that’s what you’re looking for. However, if you want to purchase in an in-demand neighborhood, existing homes may still be in short supply—or may not be available in your price range.
When you run into a roadblock like this, you have a few options: Search in a different part of the city or buy a fixer-upper in your desired area and use an all-in-one Renovation Loan to make updates. You can also look at new construction.
We’re here to make your dreams of homeownership possible. Get in touch with an Academy Loan Officer near you.
3. Time.
New build: There are instances when moving in quickly may be possible with a new construction home, such as with a move-in ready build. But more often, you’ll find a builder and a location, then wait as each phase of the project is completed. The construction process can take six months or longer, subject to demand and individual factors.
Existing home: It isn’t unheard of to find the (existing) home of your dreams, file the paperwork, and get into the house in a month or less. With an existing house, you may lose some of the ability to customize, but you usually get to move in right away.
4. Energy efficiency.
New build: A newly built home has all-new windows, appliances, roofing, and more. Having these brand-new components eliminates drafts and leaks and can help to reduce utility bills. A new construction home is also likely to be built with smart features, like thermostats, lighting, security, and entertainment. Strategic smart controls can further help lower energy costs.
Existing home: An existing home is less likely to be energy efficient and may not have smart home features. It’s often said that older homes sacrifice energy efficiency for charm and character. When shopping for an existing home, it’s important to understand which energy upgrades may be needed.
5. Maintenance.
New build: When you build a home, it not only comes with that brand-new feeling. It often doesn't require costly maintenance for several years. Water heater, roof, and furnace/AC replacement are distant concerns when you move into a new build. Many builders also offer warranties, some as long as 10 years.
But if you’re one of the first to purchase in a new development, you might live in a construction zone for months or years as the rest of the homes are being built. This impacts your yard, which may not be landscaped and can create an extra cost to consider.
Existing home: With existing homes, on the other hand, there’s an element of unpredictability. It can be disheartening to have a major issue crop up right after moving in—though you can guard against many unpleasant surprises by having a home inspection.
There’s an easy way to find out which home is right for you.
Connect with your local Academy Loan Officer for personalized guidance.
Please consult a trusted professional as personal circumstances may vary. No specific results are guaranteed. Not all applicants will qualify. MAC324-1486083.