When it comes to buying a home, the decision of new vs. existing can be a tough one. In the past, the choice was easier since the cost of building a new home far exceeded purchasing an existing one. But with the recent surge in home sales, it’s no longer clear-cut. That is why having as much data as possible and a firm handle of the trade-offs is critical.
Take California for example; real estate trends show a resurgence in the construction of single-family homes. So far we’ve seen an impressive 16% increase in new builds over the previous year, which is expected to rise another 10% by the end of this one. In fact, this upcoming year is predicted to be the biggest for new homebuilders in over a decade.
A major reason for this increase? Rising demand. Across the state, year-to-date home sales have increased by 2.7%, with both Bay Area and Southern California showing even greater gains.
Southern California’s rise is despite an over 10% increase in median single family home prices to $566,240 for Los Angeles County, and a 6.9% increase to $785,000 for Orange County.
All trends aside, buying new or existing will boil down to your specific wants and needs. Here, some things to consider.
PROS: Buying New / Building from Scratch
• Customization: With a new home, you can often work with a contractor to tweak the layout and amenities to your specifications, so that you’re tailoring the home to fit your lifestyle—rather than vice-versa. Sure, you can remodel an older home, but sometimes there are restrictions regarding what you can do. And let’s not forget the stress that inevitably comes with renovating, especially if you don’t know the right zoning info from the get go.
• Energy Efficiency: New insulation, windows, and appliances translate to better, and less expensive, heating and cooling. And things like solar panels and geothermal heating will further lower those dreaded utility bills.
• Minimal Maintenance: Contrary to existing homes, where it seems like something is always on the fritz, just-built homes require far less maintenance for the simple reason that everything is brand spanking new (warranties included!). That means you can better predict monthly costs.
• Peace of Mind: Like buying a car or clothes, sometimes you just want to know that what you’re getting has never been used. Owning something new instantly puts to rest any concerns over what true or imagined horrors it might have endured before ending up in your hands.
PROS: Buying Existing
• Price: According to the National Association of Home Builders, in August 2017 the median price of a new home in the United States was $300,200, while the median price of an existing home was $255,500. Simply put, buying old is typically less expensive than buying new. And if you’re building that home yourself, you’ll have to tack on additional costs like the price of the land and landscaping.
• Quick Turnaround: Once you’ve made the decision to buy, you don’t want to wait months, or sometimes even a year, to move in while a developer finishes building the home. Time is money.
• Sellability: As much as you might not want to think about selling a house before even moving in, resale value should always be a consideration. Customized homes are great, but not everyone will appreciate your particular tastes after you leave. Maybe you loved that funky bathroom tile, 12-foot aquarium wall, or David Hasselhoff’s face carved into the bedroom ceiling. But chances are, highly specific additions like these could lower resale value.
• Old-World Character: While an existing home certainly doesn’t assure good character, and it doesn’t necessarily mean old, history is one thing guaranteed never to come with a new home. Existing homes are often imbued with character and details that tell a story.
• Location: It’s common for newer homes to be located in underdeveloped neighborhoods, further away from city centers and in areas where zoning changes are more likely to occur. This is especially true for new housing developments, where you’ll not only be foregoing a well-established community, but you might just be living in a construction zone for the foreseeable future.
Overall, the decision between buying new or existing comes down to location, price, convenience, and customization. Another critical consideration? Knowing how big a home can be, regardless of its age. This is one of the biggest drivers of resale value.
Few ever think about this, due to the confusing nature and inaccessibility of zoning ordinances . Here’s where UnderBuilt steps in. We specialize in showing exactly how big a home can be by instantly analyzing the zoning requirements of a property and revealing any design bonuses permitted for it.
So if you’re considering an existing home but it’s not quite the size you want, look at the property’s UnderBuilt report to see what can be added. And if you’re buying new, obtain an UnderBuilt report to ensure you’re maximizing the potential of the property and getting the most bang for the buck right from the start.
To snag a zoning report, visit underbuilt.com and type in your address or APN.