When you think about your dream home, you probably have every little detail stored away like a snapshot in your mind. Sometimes that picture perfect home is already out there waiting for you, and sometimes you have to build it yourself. In times when inventory is tight, it’s sometimes hard to know what to do. Do you settle for what’s out there? Do you wait until the market leans toward buyers? Or do you build your dream home yourself? Let’s take a look at some pros and cons to help answer these questions.
BUILDING A HOUSE
The Pros:
Everything is new. Obviously if you’re building a brand new house, you’ll be the first inhabitants, which means you’ll be moving into a sparkly new home meant just for you. This is great for those homebuyers who get kind of creeped out thinking about taking a bath in someone else’s old tub.
You can go custom. You have complete control over design and detail. Since you dictate everything you need from the get-go, there won’t be any renovating, additions, or knocking down walls once the house is yours. Even if it’s initially cheaper to buy a pre-existing home, you’ll save thousands of dollars by not having to renovate and customize.
New homes, new trends. Open floor plans are de rigueur in today’s homes. Older homes often have floor plans or design choices that don’t make sense for modern life. Architects and builders know what’s popular now and what’s coming down the pipeline, and they can deliver a thoroughly modern plan fit for your family.
Energy-efficiency equals mega savings. Building codes and standards for energy-efficiency are much higher now than in the past. Buying an older home might mean you have to invest in new Energy Star windows and appliances—maybe even a whole new HVAC system—to keep your home green and save money on utilities. Building a new home means having new, energy-efficient features right off the bat.
The Cons:
It takes longer. If you have a strict timeline, building a home is probably not the best option for you. The building process can take up to six months (sometimes more, depending on weather and other conditions), so if you know you’ll need a place in three months, it’s probably best to buy a pre-existing home.
Financial limitations. Pricing can be tricky sometimes. Let’s say you find the absolute perfect plan for a house with the layout you’ve always dreamed of. Except it’s missing a few things, like a fireplace or a front porch or some other upgrade that isn’t included in the base price of the home. Once you start adding upgrades and special requests, the price of your dream house keeps climbing. Making changes and additions can end up being pretty expensive.
You might be living in limbo. If you have to move out of your previous home before the new one is completed, you’ll have to find temporary housing. This means moving twice, putting the majority of your belongings into storage, and living in a sort of uncertain state while you wait for your new house to be ready.
Financing is tougher sometimes. Obtaining a construction loan may be more difficult than getting a traditional mortgage loan. Construction loans involve more risk and complexities, and you’ll typically need more money up front. They’re also harder to qualify for than traditional mortgages. On the other hand, if you’re building a spec home in a planned development, a traditional mortgage will work, as you’re buying the completed product from the builder.
BUYING A HOUSE
The Pros:
You have the opportunity to make instant equity. Buying an older home and making much-needed upgrades could mean that you gain a good bit of equity early on. In a brand new house, you’re the high man on the totem pole. You can’t go much higher, especially if developers are still building in your neighborhood. In an older home, there’s lots of room to move up and make more equity earlier.
Costs can be deferred. There’s nothing that says you have to do all of your renovations and upgrades at once. When you buy a pre-existing home that’s in livable condition, you have the ability to take your time and spread costs out over time without breaking your budget.
You can move in immediately. There won’t be any living in limbo like you sometimes have to do with new construction.You won’t have to work with the timelines of builders and inspectors and flooring installers. As soon as you close on your new home and get the keys, you can move in right away.
You know the area and its amenities. Buying in an established area means there’s pre-existing knowledge about the history of the neighborhood, property values, nearby amenities, and what goes on in the area.
The Cons:
The layout is the layout. There’s no customizing the floor plan of an existing home without a lot of construction, money, and hassle. Sure, you can knock down a wall or two here and there, but the bedrooms and bathrooms are where they are—unless you’re willing and able to take on a major renovation, that is.
Design and decor costs can add up. It’s not too often that a buyer moves in completely happy with an older home. Most of the time, you’ll need to paint, remove wallpaper, change flooring, add window blinds or shades… It can really add up, both time- and money-wise.
Buyer’s remorse might set in. Moving into a pre-existing home means learning about the little quirks and issues you didn’t see during the homebuying process, which sometimes leads to buyer’s remorse. This is especially common in a seller’s market, when buyers have to act quickly and can’t take much time to really think about a purchase.
Insurance rates could be higher. Older homes don’t have some of the newer safety features and quality assurances that come with new construction. This means your insurance costs could be higher than they would be in a new home. There are certain things you can do to update your home and help lower insurance costs, but again, those take time and money.
There’s really no right or wrong answer to the build-or-buy debate. It all comes down to the buyers their wants and needs. Every buyer has different tastes. Every buyer has a limit of what they’re willing to put up with. Every situation is different. Whether you plan to build a new house or buy a pre-existing one, we’re here to assist you in finding or building your dream home.
