The Economics to Build a House vs. Buying a Used Home
Investing in a home is typically the largest investment you will ever make. Buyers often rigorously research location, marketing trends, price, taxes and more during the pursuit of finding the perfect home to fulfill a unique set of wants and needs. One of the first decisions you will encounter during the process is if you should shop for an already existing home or build a house from scratch.
Is it cheaper to buy or build a house? What’s the cost to build a house for your zip code in 2019? Is your head spinning yet?
While these are all valid questions to consider during your house hunt, there are going to be advantages and disadvantages to both sides. It’s important to evaluate your current lifestyle and the goals that your future home will help you achieve.
The Great Homeownership Debate: Build a House vs. Buy an Existing One
While buying a home may have a shorter process, building a house gives you endless customization. How do you determine if buying or building a home is right for you? Let’s take a look at the economic reasons behind both options.
Buying an Existing Home
While there are many benefits to buying a used home, it all boils down to convenience and cost. Once you know what your budget or approval is for your mortgage, you have the flexibility to shop and tour around for different houses until you make an offer. While there are many steps between financing, home inspections, and closing—it’s possible to close and move into your home within 45 days. The quick turn time is especially relevant for those who are relocating or on a tight schedule.
Additionally, when you purchase an existing home, you may have better options for living in your ideal location and the process involves a quicker move-in, but can come with unforeseen repair costs. And, if you’re looking to remodel a used home to make it your own, you can expect to pay up to $46,205 on average.[/vc_column_text]
According to the latest data from NAR, the median price of buying an existing home is $260,500, which has increased 7% from 2017. However, many buyers don’t account for the closing costs that are involved in the process as well. A few additional costs include:
- Appraisal fees
- Underwriting and origination fees
- Credit report fees
- Title insurance and more
Beyond that, a homebuyer will also need to consider the real estate agent commission, private mortgage insurance, and HOA fees. Remember, that’s on top of your mortgage payment.
Building a House
Many homebuyers may feel like the ability to build a house is out of reach; however, it’s a great option for those looking to customize a home while staying on budget. While the cost to build a house varies widely, between $149,515 and $443,279 depending on location, customizations, land, and excavation costs.
When you build a new home, you hire a home builder who specializes in designing a space that fits your current lifestyle and where you see yourself in the future. Do you want 3 bedrooms and an open concept kitchen overlooking your backyard? Done. Are you looking for a modern design that’s equipped to entertain guests? No problem.
New builds are also more energy-efficient, have fewer health concerns, and can be built with materials that are sustainable for the environment.
However, the average construction takes about 6.5 months to build a new home, which isn’t convenient for those ready to move quickly. You will also need to consider the major expenses that come with building a house beside the mortgage payment, such as:
- Interior finishes
While building a house takes longer, you will establish a deeper emotional connection by living in a home that you created and designed to match your future vision.
Whether you build a new home or buy an existing one, it all depends on what your priorities are in your new home. It’s possible to embark on a daunting house search and find an existing house that is a perfect fit or opt to build a new home that has exactly what you are looking for. You need to first determine your budget, a list of needs and wants, and a location before you make the final decision.
If you’d like to build a house in the Central PA, Southern NY or surrounding areas, Fine Line Homes is here to provide the expertise you need to design a home of your dreams. Whether you’re looking to build on your own land or join one of our communities, contact us today to learn how we can help.