A few years ago my husband and I started talking about selling our house because it getting too small for our family of seven, so we started looking at bigger homes that were available in our area and price range. I got discouraged pretty quickly. We’d replaced all the flooring in our home, painted every wall, re-landscaped much of the yard, updated the cabinets, and just generally done a whole lot of work, and I really, really didn’t want to do it all again somewhere else. Most of the homes available in our area were going to take a lot of updating to get them where I wanted, and wasn’t looking forward to spending a lot of money on a house that would still need a lot of work.
My husband suggested we look at building a new home, and I immediately rejected the idea because I thought it would be way too expensive. Well, fast forward to the present and our new home is halfway through construction! I really couldn’t be more thrilled with how things have worked out, but it’s been a long process and I’ve learned a lot along the way. Today I’m sharing the pros and cons of building a new home vs buying an existing home to help you decide which option might be best for you.
NOTE: Our home is not a custom build, rather it’s semi-custom, where we were able to choose from a variety of builder provided floorplans that we could customize as desired. We were also able to design the interior, such as colors, carpets, countertops, etc. As such, this post is a more descriptive of this process than the custom build process.
Since I’m excited about our new house, I’ll start with the pros of building a brand new home as opposed to buying an existing house. What’s so great about building?
Well, for starters, when you build a new home, it’s yours. No one else has lived in it, and because you get to choose the floorpan and design the interior, it truly feels like your home.
- You get to choose what’s important to you. You know what you’d love to have in a “dream home” – you’ve probably already pictured yourself in it, and trying to find an existing home that matches up to your list of wishes can be difficult. When you build a new home, you can pick and choose the features that are most important for your family and your lifestyle. I’m not talking about extravagant luxuries; I’m just talking about things that will make your life a little easier.
- I was picturing a pantry big enough that I wouldn’t have to store half my food in the basement, where I’d forget it existed until after it was expired.
- I pictured a mudroom: a place to corral the shoes and backpacks and coats that always ended up right next to the front door in our old house, embarrassing me every time someone dropped by.
- I pictured bathrooms with enough room in them that I didn’t have to walk around the door and close it completely before I put a child in the bathtub.
- I pictured a half bath that none of my children would be allowed to use. Ever. So it would always be clean, and flushed, and stocked with toilet paper.
When you build, you can choose the floor plan that’s right for you, and then you can adjust it until it’s JUST RIGHT for you.
The other huge advantage to building over buying existing is that after you go to the trouble of moving, you can relax. You don’t need to spend the next six months (or five years!) painting over the lime green walls or tearing out purple carpet or gutting the bathrooms. Instead, you can spend that time enjoying your brand new home
Finally, surprising enough, building a new home can even be pretty cost effective compared to buying an existing home. Obviously many factors affect home prices, but I was really surprised (and thrilled) to realize that in our area the cost of building a new home wasn’t really any higher than buying an existing home. Now, part of the reason that’s the case is that existing homes generally come with landscaped yards, fences, etc., which you may not get with a new home. But if you’re willing to add those things along the way later, you might be able to end up in a nicer, newer house for the same house payment by building. (This is especially true if you live in an area where new homes include unfinished basements and you’re able to pay to have the basement finished before you move in. It’s much cheaper to finish basement areas than to add square footage onto the main floor of the house, meaning you can get a lot more usable square footage for a lower total cost.)
Now there are certainly cons when it comes to building a new home, and there may be reasons that buying an existing home is better for you.
First, building a new home is a lot of work. It takes time to make all the decisions involved with choosing a floor plan as well as figuring out which options and upgrades are right for you. No, we didn’t have to go see forty different houses before we chose one we liked, but we did spend hours going over the plans and the options on the front end to make sure we were going to end up with something we were happy with. Lot of hours. Additionally, there can be a lot of frustration involved during the construction process with things going wrong, and we’ve probably all heard horror stories about this very situation.
Another difficulty with building a new home is that you have to decide whether to sell your current home right away and rent somewhere else until the new home is completed, or wait to sell until after the new house is done. Do you have the financial resources to wait to sell, even if that means you end up with two house payments for a while until the first home sells? If you decide to sell your current home before beginning the build process, do you have family you can live with in the meantime? Or can you find somewhere else to rent? Will you need to store some of your belongings in the meantime? These are concerns you might not have to deal with if you buy existing instead of build new.
It’s also harder to gauge the final cost of the home when you build than when you buy existing. With builder provided floorplans, you’ll generally start with a base price that covers the house and the lot you’ve chosen. Then you’ll need to price out the options you want to add (and builders vary widely here). Oftentimes agents will tell you to plan on another 10% of home price for upgrades, but you’ll really need to do your homework here. We checked out three different builders in our area: for the first, that 10% number would have been right on. With the second builder, who is considered the “budget builder” in the area, we would have needed thousands more to get the home up to what I would consider a pretty basic standard for a new home.
You also need to remember that when you build a new home, you won’t lock in your interest rate until it’s almost complete. That means the interest rate (and consequently your payment amount) could change from what you estimate at the beginning of the process. Luckily interest rates have been low and stable for a few years now, making this less of an issue than it has been in the past.
Finally, while the inside of your home shouldn’t need work once you move in, the outside might. Depending on your builder and the neighborhood you’ve chosen, landscaping and fencing may be up to you to add after the home is complete, and none of that is cheap. You’ll have to decide if you’ll have the finances to get these things done immediately, or if you’re willing to wait or do some of it yourself.
So there you have it: the pros and cons of building a new home vs buying existing. I’m sure my list isn’t exhaustive, so please share your own experience in the comments!