New Construction vs. Resale Homes: Pros and Cons
RH Business Marketing Solutions
So, you've decided to purchase a home and whether it's your first or tenth, there's one big thing you have to decide - having one built or buying an existing one. While there are numerous factors you have to consider when investing this magnitude, this decision is the heart of the entire thing.
Average maintenance costs and upfront expenses aside, there are pros and cons to both new and resale homes and in this article, we're going to try to help you make the choice that's best for you.
New Construction
Benefits:
• Customized Floor Plans: Building a new home allows you to collaborate with the builder to design a floor plan that caters to your specific needs, whether it's a traditional or contemporary style.
• Efficiency: You can incorporate cutting-edge appliances such as a smart refrigerator as well as superior insulation and windows that further improve the overall energy efficiency.
• Lower Maintenance: Every fixture and system, including appliances and the HVAC system, are brand new and untouched.
• Warranties: You'll have coverage for various aspects, safeguarding you from the costs of repairs or replacements for a considerable time.
Cons:
• Higher costs: Your Virginia mortgage will typically be more expensive compared to resale homes.
• Inflexibility: Future changes may be limited or costly.
• No landscaping: Trees, plants, and lawns can take years to establish.
Resale Homes
Benefits:
• Existing landscaping: You get an appealing yard from day one without having to wait for it to grow.
• Established Neighborhood: Established playgrounds, reliable cellular and Internet service, parks, and access to community events.
• Faster Move-In Time: You avoid the waiting period of a newly constructed home because it is ready for immediate occupancy in most cases.
• Negotiable Price: You may be able to haggle for a lower price.
Cons:
• Rooms may need renovation.
• Appliances, systems, plumbing, and fixtures may be outdated and require replacement.
• Costly surprises: The inspection may not reveal all issues and you could be left with unexpected expenses.
Statistics
• According to the National Association of Realtors, the median sale price of a resale home in June 2023 stood at $410,200.
• In May 2023, HUD reported the average price of a newly constructed home as $487,300.
• HomeAdvisor suggests that labor costs constitute approximately 40% of the total expenditure for new construction. Materials account for about 50% and building permits range between $1,200 and $2,000.
Costs
No matter which you choose, several factors will affect how much you're going to pay.
• Initial Deposit: Typically falls between 3% and 20% of the total price.
• Finalizing Costs: Usually 2% - 5% of the mortgage loan and include costs incurred by the lender.
• Mortgage Protection: Between 0.58% and 1.86% of the initial loan amount.
• Property Insurance: The national average is approximately $1,428 annually for a coverage of $250,000.
• Property Tax: The median annual cost in the U.S. is $2,578.
• Homeowners Association Fees: On average, around $170 per month as per estimates from the U.S. Census American Housing Survey.
Before you make a decision, carefully consider all these factors and assess your budget. In the end, the decision between new construction and resale homes hinges on your personal preferences, financial situation, and long-term goals. It's crucial to weigh the pros and cons of each, considering factors like upfront costs, maintenance expenses, location, and your lifestyle needs, to make a choice that best suits you.