Should You Build or Buy a New House?
Homebuying season is here! And with interest rates at great levels, many families are considering the pros and cons of building versus buying a home. A couple of the early questions on the minds of most potential home buyers are how much does it cost to build a house and if it’s better to build from scratch than to buy an existing home. The answer to these questions depends on a number of factors including the family’s financial readiness to build, specific design needs, and the availability of housing materials throughout the construction period. All of these factors should be considered to determine if you should build or buy a house.
What are the benefits of building a home?
When searching for a new home it can be difficult to find an existing property that has exactly everything you want and need for your family. Factors including your preferred location, unique family needs, family budget, and lifestyle choices. These factors may make it harder to find the right match in an existing home that has what your family needs and wants. Perhaps the biggest advantage of building a house is that you get exactly what your family wants and can afford in your price range.
In addition to the satisfaction of getting exactly what you want, you can expect to have fewer maintenance concerns. Older homes have more wear and tear and as a new homeowner, you should expect repairs or replacement costs at any time. Building a home with new appliances, HVAC, plumbing and electrical systems and a new roof should significantly reduce these concerns. It also has the added benefit of making sure that there are limited issues with home safety, repair and code enforcement matters in your area.
Another benefit often overlooked when deciding to build a home is the increased efficiency of new construction homes. New homes are generally more energy-efficient than older homes. Advances in technology in building materials, appliances and other home features can help reduce your carbon footprint and result in lower energy bills when you finally get to occupy the home.
What are the disadvantages of building a home?
Despite the unique advantages of building a home, there are definite disadvantages as well. Depending on how specific your plans are you will have to find a custom home builder to help you with construction. Construction of a new home can take significantly longer than buying an older existing home. According to the US Census Bureau, it takes almost 12 months for owner-built construction to be completed in the United States. That is significantly longer than the average closing time of about 45 days on an existing home.
Other challenges when building a home include unexpected costs or increases in costs of construction materials and the limited ability to negotiate the price like you would with a standard purchase. Because of the length of construction time and the fluctuation in the availability of construction materials, many families may not have the capacity or patience to handle the unknown but expected surprises that are common with new construction.
How much does it cost to build a home?
Generally, it is cheaper to build a home instead of purchasing an existing property. The National Association of Realtors reported in 2020 that the median cost of building a home was reported as $331,000. This cost is influenced by several factors and many of those fluctuate over time.
The cost of building a new home is influenced by the type of home you build. After selecting and preparing your plot of land to build your home you must select the type of home. Options include a manufactured home that is built off-site then moved to your plot of land, a modular home that is also built off-site but in pieces and then assembled on-site with a permanent foundation and finally a site-built home that is constructed on the plot of land you select.
Once you have decided on the type of construction your costs are then determined by the required professional fees and design choices. This includes fees for your architect and engineer, the interior finishes like the floors, paint and countertops, and the mechanical costs for the electrical, heating and plumbing systems. Additionally, the kitchens and bathrooms are the most expensive to build can and significantly increase your cost based on your design selections and unique family needs.
Can I get help building a home?
Before getting started you should make sure you are financially ready to begin the home-building journey. You can use mortgage calculators to help you do the math to consider these factors when determining how much house you can build. If this is your first time considering building a home, you should consider getting professional help. You could benefit from the help of a licensed and qualified realtor in your area and a mortgage professional to help with financing. These professionals can help you with your search, understanding current trends in the market, and help find the right loan products for you and your family.