Are you one of the millions of Americans who think that buying a new construction home is financially out of reach? In the same way that used vehicles are more affordable than buying brand new, maybe you’ve decided that a resale home is all that your bank account can handle? We have good news for you. If you find the right builder, a new home will not only meet your needs but also fit your budget and in most cases, SAVE you money! You heard that right, if done thoughtfully, a new home could mean more money in your pocket - and not just in the long term, but almost immediately. Check out the 5 ways buying a brand new home over a used home can save you money.
Homeowner’s Insurance
Your homeowner’s insurance will have a significant impact on where your monthly house payment ends up. You may have a lower mortgage payment with an older home, but if it’s more of a liability, your insurance payment could be through the roof! Most insurance companies can offer discounted rates when you purchase a new construction home. This is because new structures are built up to the latest safety codes.One thing that insurance companies consider when quoting a home is the exterior of the home - is it built with siding that will rot and could be ripped off in a storm, or brick that can withstand heavy rain and wind? Homes with solid concrete foundations will also be a stand out, as opposed to crawl spaces that can easily flood and carry mold.
Shelly Kraft of Kraft Insurance Services shared, “When we provide a quote on a new home, it is 30-40% lower than on used homes because of the quality of homes built in a competitive market.”
If you’re deciding between similarly priced new and used homes- always go with the new home. You can count on your insurance payment being much less and reduce your overall bill for housing!
Remodeling
According to a new survey from Trulia, 90 percent of all American homeowners plan to remodel their house at some point. Nearly 40 percent of those homeowners are planning a renovation in the next two years. We all want our homes to be a reflection of our personalities, but you certainly don’t have to spend upwards of $20,000 to do that. Hold the phone- $20,000?! Yes, you heard us right. The average kitchen remodel will cost you $21,751. Were you wanting to remodel that 70’s-style bathroom in your charming retro home? Overhauling even a small bathroom will cost you a pretty penny, at around $14,975.
So, when should you consider a new home versus a remodel? If the cost of your remodel is going to outpace its resale value, or you want changes that can’t be added to your current home, a new home is a better option for you. You can add your personality into every detail of your new home by selecting your own floor plan, colors, fixtures, countertops, flooring, and more. When you buy a new home, you get the added excitement that your home has only ever been your home. No one has leaked oil in your garage, stained your carpet, or taken a bath in your tub!
Repairs and Maintenance
Most home builders include a 1-year warranty with their homes, and some even include a 2-year warranty. This takes a lot of the worry out of purchasing a home, especially for first-time homeowners who are used to having a landlord to depend on! I mean, everything has a lifespan, right? This includes the hot water heater, the roof, the HVAC and any appliances When you purchase a used home, you often have no idea how old those big ticket items are. According to a survey from the Department of Housing and Urban Development American Housing, the average used home for sale in the United States is around 35 years old. Are you willing to gamble on these necessary parts of your home?
A 10-year-old home will cost around 580% more in annual maintenance than a newly built home would, according to New Home Source. When Murphy comes to visit, everything that can go wrong, will go wrong; and you could end up paying $2,000 for a new water heater, $5,000 for a new HVAC system, or even $15,000 for a new roof.
New city codes and standards for building are always improving and result in homes that produce overall better quality homes. In fact, used homeowners have spent about $1,452,337,869 more on repairs and maintenance this year than owners of newly built homes, according to research done by homluv.com. Yikes!
Energy Savings
When you create the budget for your next home, it’s important to keep in mind how much you want to spend on energy bills each month. The building materials used and the age of the home have a huge impact on the amount you’ll be paying to heat and cool your home.Newly built homes are up to 30% more energy efficient than homes built just 10 years ago. What exactly does that mean for you? Well, in your new home you could save 3,449 KWH a year on average. That’s enough to power your coffee maker for 32 years! With all the money you save on energy, you can spend that on family vacations, kids’ college funds, retirement, and anything else your heart desires. Sound worth it to you yet?
Here’s another thing to sweeten the pot on a new home- about 15 years ago, most HVAC systems were between 8 and 10 SEER (Seasonal Energy Efficiency Ratio). Today the federal minimum SEER rating is 13, but can even be up to 20 SEER. This means that the higher the SEER rating, the more energy efficient the home’s HVAC system is- saving you hundreds of dollars every year, and even paying for itself over time.
As the years go by, technology and materials keep improving, and city code requirements have higher standards for home building. If you’re choosing between a brand new home that could cost the same or even less than a used home, you should be educated about what a big difference energy efficiency makes. From the hot water heater, to energy efficient windows and even the way that they are installed could impact your overall budget by hundreds, or even thousands, of dollars each year.
Resale Value
When you’re in the process of purchasing a home, selling that home is probably not the first thing on your mind - but it should be. Not to get ahead of ourselves, but it’s important to consider whether the property will hold its value when it comes time to sell again. Rochelle Fitzgerald , Sales Associate for Coldwell Banker says, “In 10 years, a new home purchased today is likely to have more value simply because you own a newer home designed to meet today's standards.”
It’s no secret that the homes built today are very different from those built in the 70’s or 80’s. The average new home built today has higher ceilings, twice the bathroom space and three times the closet space (hello, shoe collection!) just to name a few.
The good news is that with reselling a formerly brand new home, time spent on the market is much less than it would be with an older home. To really get buyers to bite though, there are a few things that today’s homebuyer is looking for in a home, and you might consider adding to your new home to get more bang for your buck. The first place potential buyers will be looking is the focal point of your home- the kitchen. Consider the upgrades your builder has to offer such as taller cabinets, under cabinet lighting and enhanced can lighting to brighten up the space. Another thing to consider in your new home is a bigger garage. Have you ever heard anyone complain about having too much garage space? No chance. If your lot allows a 3rd car garage, go for it! Your builder can explain all of your upgrade options and suggest a few key things that most buyers swoon over.
Building a new home isn’t for everyone, but many builders today make it easier than you think to create your dream home from the ground up. Do your research to find the right fit for you, keeping in mind how much you can handle financially- and mentally. Custom built homes and remodeling can be quite the headache when it comes to picking out every detail and managing your own projects. If that doesn’t sound like a walk in the park to you, turn to a systems builder! This type of builder will have set floor plans to choose between, and from there you will simply choose a few paint colors, fixtures and boom! Your new home is just a few months from completion. Buying a spec home, or a “quick move in” home is also a great option if you’re working with a tight timeline. You get all of the money-saving advantages of a new home, without having to go through the build process if you don’t want to.
Making the decision to build a new home or purchase an older one can be a really difficult choice. Don’t let it stress you out! We have New Home Advisors ready to answer your questions - big or small.
