Does it cost more to buy or build a house?
One way to solve inventory issues – build new homes! But that is proven to be easier said than done. “New Home Sales” is a key economic indicator which measures signed contracts on new homes. New Home Sales are at 708,000 annualized pace which is down on a year over year basis but up 1% month over month for July. It speaks to the difficulties builders are having with putting up lower priced homes with the cost of material and labors increased this year. Looking at the mix of sales, there are big increases on the number of sales on the high end also dragging up the median home price. – Information is from MBSHighway 8/24/2021
What does this mean? Unfortunately, there is no clear cut answer and it turns out to be a case by case basis. We’ve provided some important pros and cons as you start to dig deeper into the building a home option if you find it is more cost effective or only relatively more expensive.
Pros to building a home
Pro - Building a home can sound like the right way to achieve the home of your dreams.
Pro - You can create the exact space you and your family desires right down to the layout of the rooms, doorways, fixtures, and outlets.
Pro – Newer means less maintenance!
Pro – you get what you want!
Pro- you can pick any location
Pro – less competition to build a home than there is to buy an existing home
Pro – Lower energy costs since you’re using new materials and state of the art energy efficient items
Cons to building a home
Con – buying raw land may mean lots of work on the land such as clearing trees, bringing in fill to level the land, locating the right spot for a septic and/or well system, bringing in utilities and the site work can be expensive
Con – picking out all the details can be extremely overwhelming
Con – new landscaping can be hard to maintain
Con – Building usually costs more than buying – especially in today’s market
Con- getting a construction loan usually requires a larger down payment than buying an existing house
Con – building a home takes usually around 6-12 months if you don’t have time to wait around
Con – you may have to pay two house expenses at once – you’ll need a place to live while you house is being built
Happy Medium
Happy medium – did you know you can buy and renovate an existing home with a renovation loan? This might be a way to take an existing home that is in the location of your dreams and has many qualities you love, and fix the qualities of the house that don’t meet your standards such as updating the kitchen or bathrooms.
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