Navigating the world of homebuying is an exciting but daunting task. Whether it’s your first time in the market, or you’ve literally already been around the block with homebuying experience, comparing your options is always crucial.
Most relevant information on the prospect of buying vs. building assumes that if you are buying, it will be an older pre-existing home. In our cost comparison we’ve included the option of buying a new construction home as well. Let’s take a look at the costs below so you can start to weigh buying an older home, buying a newly constructed home, and building.
Calculate the costs
According to the National Association of Realtors, in 2019, the median price of a new home was $329,750 and the median price of a previously owned home was $245,000. Since these median prices vary based on location, you can search to find the median listing home price and price per square foot based on your zip code.
The costs of building a home will go towards the construction, the land, foundation work, to smaller costs including building permit, land inspection, and maybe even an impact fee from the government. The Balance, a personal finance resource, gives the following cost breakdown of building a home from National Association of Home Builders’ data:
Foundations. Excavation, concrete and retaining walls: $25,671
Framing. Sheathing, trusses, etc.: $41,123
Site work. Architecture, permit fees, inspections, etc.: $15,903
Exterior finishes. Roofing, windows, and doors, etc.: $33,066
Interior finishes. Drywall, flooring, insulation, paint, lights, appliances, etc.: $67,939
Major systems rough-ins. Electrical, HVAC and plumbing: $32,746
Final steps. Driveway, landscaping, clean up, etc.: $16,591
What else goes into the equation?
Even though numbers don’t lie, there’s no hard truth about whether buying or building a new house versus buying an existing home is more cost effective for you personally. As the homebuyer, you are the one that ascribes value to different features like the square footage, the property size, the availability for customization, upgraded finishes, and on and on. Comparing the cost is all about your priorities and needs.
While new homes are generally more expensive than existing homes, the reasons why are well-worth considering; 1) The upfront costs of buying versus building might outweigh ongoing maintenance costs of older homes; 2) Factors like maintenance, landscaping, energy efficiency, and appreciation affect the value; 3) New homes are more expensive because they have significantly higher square footages and more convenient modern features; 4) If you already know what you want, it might cost less to build a new home where you can make all the decisions instead of facing the restrictions of renovating an older home.
While the national averages place building a new home at a significantly higher price, at True Homes, we strive to personalize your experience so that you can find the right home in the right place, for the right price. This is why we offer six dynamic home collections ranging from the mid-100s to the low 300s. This is why we offer a supportive homebuilding process all the way from due diligence to contract, planning to permits, construction to delivery.
In addition to our on-your-lot home building services, True Homes is proud to offer quick move-in homes that are an interesting middle ground between buying an older home that may be carrying some baggage and entirely building your own which can be a more expensive and extensive process. We believe in giving you all the options for your personal home buying or home building process.