Buying vs building?

KTdidit · October 2013

DH and I have been preparing ourselves to list our current home sometime next summer and search for a new house. We want to stay in our town and have been looking at what is available, knowing that what is for sale now most likely won't still be on the market when we are ready to buy. But we figured we could get a good idea of how much we should be ready to spend and things to consider, as well as to start scoping out neighborhoods and subdivisions where we'd like to be. Turns out the subdividion that we were pretty much set on is in a different school district, and not one we are willing to send our kids to. So back to the drawing board. There is a fairly new subdivision that we really like, and there are a lot of open lots right now. The development of the whole neighborhood has been going fairly slowly since it started a few years ago so we feel like there will still be lots open next year. But we are torn between buying existing or building new. I've always heard that building is often cheaper than buying, but I have a hard time believeing that when it is $60k just for the land! Does anyone have any experience with new construction?

musictchr25 · October 2013

Buying and then renovating is typically much cheaper than building. Especially since the builders' packages have different levels of upgrades, so the basic wouldn't have hardwoods and granite, for example, whereas you could have that upgrade made in an existing house for a much smaller price tag.

You can look at your city/town's tax assessor or appraisal website for an idea of what the houses in that neighborhood ended up selling for, and then compare them to homes that need some upgrades. From that information, you can determine whether it's worth building instead of buying

short+sassy · October 2013

The "buying being cheaper than building" rule of thumb is often true...but certainly not always. It really depends on the market you are in and possibly even down to the neighborhood. For example, where I live, it is vastly cheaper to buy an already built house than it is to build one. I would definitely check out the going rates for move-in ready houses, houses that need renovations, and building new and that should at least give you an idea as to what makes the most sense for you.

hoffse · October 2013

musictchr25 said:

Buying and then renovating is typically much cheaper than building. Especially since the builders' packages have different levels of upgrades, so the basic wouldn't have hardwoods and granite, for example, whereas you could have that upgrade made in an existing house for a much smaller price tag.

You can look at your city/town's tax assessor or appraisal website for an idea of what the houses in that neighborhood ended up selling for, and then compare them to homes that need some upgrades. From that information, you can determine whether it's worth building instead of buying

This. H and I have been having these same discussions. We've discovered that we can buy 1960s-70s houses in areas we like that are literally less expensive than the vacant lots two streets away that are open for new development. Granted, those houses do need some work, but the expensive (and unsexy) stuff will already be done - foundation, walls, roof, plumbing, etc. H and I are more than capable of tearing out nasty carpet and installing our own hardwoods.

We've realized we wouldn't be able to afford the nice finishes on a build at this point, so we'd end up paying more for a house that isn't quite what we want. A remodel (not a full renovation, but a basic remodel) will let us go high end on things important to us and add some splurges that we wouldn't otherwise be able to afford. And we'll end up spending a lot less $$ at the end of the day.

The trick is finding a house with decent square footage and that doesn't require a lot of re-routed plumbing, etc. If you can keep your fixtures in the same place in the kitchen, for instance, you will cut the price and time down a lot. And if you can DIY (it's not as hard as you would think), you can probably cut your price down by 30-50%.

That said, for a second house we might build our "dream home." And we're ok with spending more to have that. We've just discovered that we aren't at that place yet financially.

MommyLiberty5013 · October 2013

DH and I built our first house in 2008. Unless you are doing totally custom design and materials, we found that the builders mass producing homes in subdivisions these days, tend to use cheap materials and cheap labor (but they don't pass the savings on to the buyer so therefore the buyer ends up with a cheaply constructed house for about as much as buying a better constructed home that is years older would be). The mass production builders from the 80's and early 90's however in these same sorts of neighborhoods back then did good work with good materials.

I would go for an older home in the location you desire with updated mechanicals (roof, windows, AC, furnace, etc.) Cosmetics are easy to change.

Janessadawn · October 2013

I have a friend who bought a brand-new house last year, but at an amazing price. Their REA found them a home that had been designed by a couple who paid for many upgrades--higher-end counter tops, central AC, a basement addition--in cash, and then had to walk away at the last minute. Granted, they didn't get to pick everything out, but they got an upgraded, brand-new place without having to pay for the upgrades. Not sure how often something like that happens but if you aren't super concerned with picking out every last detail, it may be something to keep in mind.

Another thing to think about: does your desired school district allow students to "choice" in, if there is room? I went to a different school district than the one to which I was assigned for 6 years as a kid. If so that would allow for flexibility in where you look.

melissanjoe21 · October 2013

We are building? And honestly for us around here and what we wanted there was no difference in price. unless you get a foreclosure or short sale. We were looking at regular sales and they were more than what our newly built will cost. We are also going semi custom. Just shop around there are builder not trying to nickle and dime you for everything.

melissanjoe21 · October 2013

We are building? And honestly for us around here and what we wanted there was no difference in price. unless you get a foreclosure or short sale. We were looking at regular sales and they were more than what our newly built will cost. We are also going semi custom. Just shop around there are builder not trying to nickle and dime you for everything.

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