Have you considered buying a NEW house? Not sure if you can?
It may be closer to your budget than you think, but it’s important to consider all the pros and cons.
What should you consider?
ADVANTAGES for New Construction:
- Home and appliances are all brand new and come with a warranty.
- You have more options to design the layout and style to suit your lifestyle.
- Many new development neighborhoods have extra amenities like resort-style swimming pools.
- Price: Many people think buying new construction is too expensive. However, if you calculate the per square foot cost of new vs. existing home, it may be very close in cost. You should also factor in the purchase of new appliances and HVAC that you won’t have to replace for a long time.
- Resale value within the first few years will yield a higher value due to the age of the home.
DISADVANTAGES for New Construction:
- The traditional cost of the house closing is shifted to the buyer. Contracts are in favor of the builder and are harsh if your closing falls through.
- Long wait periods to complete construction, close the sale and move in.
- You may need to find temporary housing while you wait for your new house.
ADVANTAGES for Existing Home:
- Faster move-in time. It’s ready to live-in.
- You may prefer a historical home style or neighborhood.
- Price: with a home that has been well-maintained, you may spend a lot less.
DISADVANTAGES for Existing Home:
- You can’t easily change major style choices without a full-remodel.
- Older homes may need more repairs and extra TLC. (An old house is charming until you have to replace the plumbing!)
Don’t forget to calculate taxes, CDD and HOA fees when making your budget.
Why are the taxes, CDD, and other community fees high in some of the newer developments?
The idea behind a CDD (Community Development District) is to cover the concurrency costs (impact of a new community as it relates to needing new schools, fire, police, roads, etc.). This cost is shifted to the buyer in the way of a CDD fee. You need to know what is included in the CDD and how those costs are allocated. It’s not only the bonds to cover the concurrency costs, but may also include additional amenity centers, parking, lake and ground maintenance.
Home Owners Association (HOA) fees can also be part of a new community. These are typically reduced fees and this association is geared toward managing the individual properties rather than the communities.
Which is a better investment for the home’s appreciation?
New Construction is a better investment in the sense that in resale, in an average home owner’s time period, the new home will hold it’s value longer. Existing homes may have older appliances, HVAC and roofs that are coming close to the end of useful life.
An existing home may hold more value if it is located in a desirable neighborhood. You will want to look at the historical home values for the neighborhood and consider the changing market conditions.
Which is better for you?
The decision you make depends solely on what you value more when looking for a home. If you like the least amount of home repairs and have the budget and open-ended timeframe for buying new construction, then that would be the best choice for you. On the other hand, if you can’t wait for a new construction home to be built, you may rather buy an existing home.