Is it cheaper to buy a house or to build one? Today I’ll discuss.
Many future homebuyers have asked whether it’s cheaper to buy a home or to build one. Today I’ll lay out everything a buyer needs to consider about buying an existing home as it compares to building one from scratch or having one built by a contractor.
First, consider the upfront costs for each option. According to the latest figures, the median cost of buying an existing single-family home is $223,000 for the average 1,500 square-foot home built before the 1960s (approximately $148 per square foot). The exact price can vary widely based on where you live.
The figures show that the average cost to buy or build new construction is $289,415, which is about $66,000 more than buying an existing home. Still, you’ll get a lot more for your money for a new construction home; they’re usually more spacious, with a median size of 2,467 square feet. The cost to build per square foot is $103, which is lower than that of existing homes.
Another advantage to having a builder create a custom home for you is that you pay for only what you want, whereas existing homes may have interior and exterior features that you’ll need to pay a premium for, even if you don’t want them. However, if an older house happens to be your dream home the way it is, that may be the more bargain-friendly route for you.
“New construction almost always beats older homes in terms of energy-efficiency.”
The next consideration to make is maintenance. If you buy an older existing home, they tend to have more wear and tear, which means that certain things may require more maintenance. Don’t forget to check the age of the appliances—if they’re 10 years old or older, you may need to open your wallet for new ones sooner rather than later.
If you build a home, there is considerably less upkeep involved (at least in the beginning). Everything from the major appliances to the HVAC system is new and under warranty; that can make up for some of the home construction costs that you paid by opting for a custom home.
Additionally, the latest US census found that the median age of American houses is 36 years. Older construction means dated windows and appliances, which in turn means money flying out the window due to wasted energy expenses.
If you build your own home, however, know that new construction almost always beats older homes in terms of energy-efficiency. Homes built after the year 2000 consume an average of 21% less energy for heating than older homes, mainly due to the increased efficiency of heating equipment and building materials. This translates to reduced energy expenses every month, even with the higher square-footage in many newer homes.
If you find yourself trying to decide between buying a new construction home or an existing home, don’t hesitate to reach out to me. I’ll be happy to help you decide which option is best for you given your unique situation.