Reasons for purchasing new construction or resale home.
Not that long ago buyers wanting to purchase new construction were in a difficult position. With increased home construction in the area buyers have choices not seen is a while; whether to purchase new construction or resale.
New home development is accelerating in the Sacramento Region; this is good news! Buyers have more choices, sellers angst about being able to find a replacement home should be alleviated, and logic says pricing will ease regarding yearly increases.
Let’s look at the facts for considering or rejecting either purchase.
For this discussion, new construction is a development of multiple dwellings completed in a relatively short period. As the buyer, you pick the lot, model, and elevation.
The consensus reason for buying new construction is the feeling of being the first owner experiencing the smell of fresh construction materials. Do not minimize the emotional aspects of moving into a newly constructed home, similar to the feeling of purchasing a new car. Everything is brand new, clean, and working. And if it isn’t working after move-in, call the builder for correction.
If you are considering purchasing a newly constructed home, you will have to get beyond the sticker price.
Builderon website indicates that there is a 21% premium for purchasing new construction versus existing construction (2017 data). Unfortunately, a portion of that pertains to the regulatory cost associated with the various governmental jurisdictions involved each needing their piece of the pie. Regulatory fees seem to escalate each year.
You go to the sales office knowing the advertised price ranges. Those are base prices, not the cost to have the home replicate the model. On a base of $400,00, it would be easy to add upgrades that would push the price closer to $500,00. Be cognizant of the lure of the models.
Most builders have their “preferred” lender. There is usually an inducement for using the preferred lender in the form of upgrades or closing cost credits. Understand, you are not obligated, you can select your lender, assuming they will loan you the necessary funds.
Technology has progressed each year and today’s houses are smarter and more energy efficient than previous years. These advances are welcomed and becoming significant across all buyer demographics since they will equate to smaller monthly utility bills.
Generally, you will receive a one-two year manufacturer’s warranty on appliances and fixtures plus the builder warrants the structure for ten years. Warranties are not universal. However, national builders or well respected local builders will stand behind their product and will want to make you happy and satisfied. They prosper through their reputation.
If you are the type of person that likes to design, plan, and create a backyard masterpiece then you are in luck; the backyard will most likely be a clean slate. On the other hand, if you are not, then assume an added expense of having the work done for you.
Lastly, considering new construction, you will have to realize that your home’s floorplan is not unique. The layout will be similar to others in the development. There are some variations, but all are predefined, no room for much creativity. Also, for each lot builders will designate models and elevation. You may have to compromise on lot choice because of this restriction.
So what about purchasing an existing home?
Based on the above, existing housing cost less initially. The unknown would be any deferred maintenance issues that need correction, plus changes to account for personal taste.
Older builds are thought to have the architectural appeal that you can’t find in today’s housing. Case in point would be moldings, flooring materials, and a design sensibility, unlike today. Many older homes are not in tracts and were built for a unique buyer and their specific wishes. The downside to this uniqueness is with replication; you can’t go to the local box store and find replacement molding.
Let’s face it; older homes seem to have architectural features that most folks would not be willing to pay an artisan to create or afford the many hours required to complete.
Generally, existing homes will have larger lots. Today’s builders need to place many homes on the available land to turn the desired profit on their investment. Today’s regulations require a percentage of open space; helps with the aesthetics of the community, but can’t be sold.
Existing homes and neighborhoods are established. The landscape is completed, mature, and has a feeling of permanence, as do the residents. These “old timers” become mentors for new residents moving into the area.
One obscure item when purchasing an existing home is the existence of window coverings. Buyers view this as a considerable expense, whether real or not. Like landscaping, one more item to do and pay for when all they want to do is enjoy the property. Newly constructed homes will require window coverings. I suppose this is a moot point if you are an exhibitionist.
Many older developments have that look of sameness similar to newer tract neighborhoods. However, that is about the only similarity; all other characteristics are that of existing homes.
There are good reasons to purchase either new construction or resale. Determining factors when choosing a new home are location, overall cost, architectural style, and lot size. With that said, since you are buying a “home” let emotions play a partial role.