Historical significance or customized for you? Shiny and new or established with personality? Individual values play a major hand when determining a major life investment. Many would argue the question of new or existing is one of the most important decisions when buying a home.
Often, personal preferences make way for what looks like the more affordable and practical option. Recent numbers from Fannie Mae show that of the nearly 6 million homes sold in 2017, only 640,000 were newly built. However, a separate study conducted by Trulia reveals that 41 percent of Americans prefer a newly-built home.
And yes, often existing homes are going to be more affordable than building a new home. However, depending on a variety of factors, this isn’t always the case. New or existing home, we’ve provided a list of important pros and cons to determine your best option.
Pros and Cons: Existing Home
An older home is almost guaranteed to bring a quaint abode with an established community. You’ll also find a prime location that often includes larger lots and shorter commutes. Combine that with affordability and it seems like a win-win.
And, studies show the median age of an American home is around 40 years or older. This is great, especially for those looking to invest in a property chock full of character and charm. Sounds perfect, right?
A more in-depth summary that analyzed the age of homes based on state, show those looking for a traditional or historical home could end up disappointed. A study conducted by the folks at Zillow show the stark contrasts when it comes to average ages of single-family homes based on individual states.
Turns out, larger southern states stood out as the youngest and most youthful group. Barely even hitting their adult life, these homes average birth years range between 2000-2010. Meaning, if you’re looking in the Texas market, you’ll find the majority of affordable older homes are basic ranch, split-level or two-story models.
And yes, many older, more historic homes are still standing due to a strong framework of materials that have granted the ability to weather the storm. Regardless, when it comes to the general aging process, it’s almost inevitable things will go wrong periodically. Proper maintenance on these types of repairs often require a specialist, and tend to be costly and more frequent.
This is why it is crucial to always do your research. Yes, a seller’s disclosure may offer some protection. But it is always best to know whether or not your great investment is a money pit sooner than later. Potential repair expenses are one of the greatest considerations when considering if you should by a new or existing home.
Pros and Cons: New Home
On the flip side, a brand-new home almost always guarantees a larger floor plan, in a quiet, suburban community, with the most energy-efficient tools and state-of-the-art appliances.
This means, unlike older homes, the required maintenance is far less of a worry, since everything from appliances to the HVAC system and roof are brand new. Most builders offer a robust home warranty program to give you that extra cushion of protection against costly maintenance repairs. D.R. Horton, the nation’s #1 builder, offers a comprehensive warranty that covers everything from carpets and sinks to foundation and roof.
New appliances and home systems are the most energy efficient. Improved efficiency translates to lower utility bills. There’s also the appeal of the latest hookups for “smart technology.” That means hassle-free internet and cable connections.
Location is often a major drawback, especially for those who prefer a more centralized location. New neighborhoods are mostly constructed in the suburban areas of a city. This means longer commutes, little outdoor space and the potential of having to deal with the new construction in your neighborhood.
Builders in planned communities will more often than not make you wait for any updates to the home’s exterior façade. This is to attract potential homebuyers to a certain design style and finish. This also means waiting a few years for your community to build out before standing out from your neighbors. This also includes landscape options, which are restricted to certain types of grass and smaller trees and bushes.
Then there’s the overall process of waiting. There is often a five to six month waiting period for new homes, versus older homes that are basically move-in ready. Or, if you’re interested in the luxuries of a new home versus personal design, a D.R. Horton Quick Move-In (QMI) Home could be a perfect fit. Convenience and security can be an important factor when choosing a new or existing home.
Pros and Cons: Fixer Upper Home
The fixer upper is a new category. If done right, purchasing a cheaper home with the intention to renovate and increase property value can provide major returns.
And, based on basic commerce and money-making strategies, it makes complete sense. Obviously, this is a subcategory of existing homes, but it’s a definite option when deciding to buy new or existing.
You are investing in a run-down home at a bargain price and saving money on costly repairs by making them yourself. Not to mention you’ll gain valuable experience and further your education in a variety of useful areas. This includes construction, market research, proper budget and real estate in general.
Seems pretty easy and straightforward, right? Not so much. Just like the rule of math, “if it seems too easy, you’re doing it wrong.”
First, it’s all about determining the right property location. More often than not, you’ll have no problem with the number of affordable homes in your market. The issue is searching for one where the price is below its value in the market. A general rule of thumb is to always aim for the worst house in a great neighborhood, versus the best house in a lousy neighborhood.
Another potential setback when it comes to location is not knowing your local government’s code enforcement regulations. Meaning, your allotted expenses could wind up going to the thousands of dollars spent on paying off fines.
Then there’s the actual amount of time and money you’ll have to put into renovating the home. Depending on your goals and the extent of the renovations, experts agree to double the amount of budgeted time and money allotted for the project.
In the end, this type of investment can provide the perfect fit for those interested in doing a bit of legwork. If interested in a home requiring renovations, make sure you look at it from a practical perspective. A fixer-upper can be a great investment, and is an important consideration when choosing new or existing.
The Bottom Line
Ultimately, your decision whether to buy new or existing boils down to a combination of personal preferences and the local housing market.
If you’re new to a certain area, or are struggling with weighing pros and cons, you can always reach out to one of our marketing specialist located in your area. Or, visit the D.R. Horton website for an up-to-date map to see what communities are available in your market.
Most importantly, always conduct in-depth market research in order to determine what works best for your situation. At the end of the day it’s up to you to choose the best home and neighborhood for you!