Is It Better to Buy a New Home or an Existing Home?
Posted on | March 3, 2009 | 1 Comment
About one out of every six home buyers will purchase a “newly constructed” home each year. There are many reasons why you might want to buy a brand new home. No one has ever used the stove, bathroom, sinks, closets, laundry room, etc. There are no worries about how the previous own treated the house or what has gone on inside those four walls.
Unlike most tangible goods you purchase, a new home can actually increase after you buy it. As soon as you drive a car off the lot, you lose at least 1/4 of its value. The same does not hold true for homes. You may actually see a significant increase in value based on the location of the house. If you strategically purchase a home in a growing area, you could double your money on a $300,000 investment. It is very hard to do with the current economy, but it is possible over many years.
Something you will need to consider when buying a newly constructed home is that the costs are going to be more than an existing home. New homes are equipped with central air, higher ceilings, more bathrooms and many technological advances that existing homes do not have. This is going to cost you more money, but it also has a chance to greatly increase the value of the home. If money is an issue, you might want to consider looking at existing homes before scoping out the newly constructed homes in your area.
Another issue that you will need to consider is that newly constructed homes are often built before the neighborhood is established. The homes are erected and then the retail establishments start to pop out around the developments. This may only take six months or it make take three years. You have to ask yourself how far you are willing to drive to go to a movie or get gas. If convenience is very important to you immediately, you might want to consider buying an existing home. By taking the risk of buying in an up and coming area, you may see greater returns on the value of your home. If you foresee the area growing immensely, you could make 200% on your home in the matter of a few years. Once again, you have to consider what is right for you.
Especially in the current economy, you need to check up on the home builder. Make sure that the stock price of the home builder is not under $1 or you might be buying a home that is never finished. There are many ghost towns in Detriot and Las Vegas that were being built during the housing bubble and could not be completed because the home builder went bankrupt. You will not be able to look at the balance sheet of the home builder but you can do some research online. The stock price is a good indication of how financially strong the company is. Any stock price under $5 is extremely questionable. If the company is not publicly traded, you can still do research online through message boards and financial websites. Almost every home builder has a reputation and you will be able to find it through Google.
One last thing that you need to consider when deciding to buy a new home or an existing home is time. If you have very little time to fix problems and address the needs of the home then you might look into getting a newly constructed home. The older the home, the more likely it will have problems. Some people enjoying fixing up homes and dealing with Do-It-Yourself problems but others do not have the time. If you are extremely busy and do not have time for home projects, your best bet is to look at a newly constructed home.
There are many issues involved when deciding if a new or existing home is right for you. Be honest with yourself and anyone else involved in the home buying process and do your best to make the right decision. The most important thing is to have fun! Enjoy the home buying process, you won’t get to do it often.
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One Response to “Is It Better to Buy a New Home or an Existing Home?”
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March 4th, 2009 @ 6:30 am
Another issue is putting in a yard. I was all about the existing home (it had central heat/AC) with a mature yard. My husband didn’t want something someone else had lived in. We paid for a fence last summer and this summer will have to put in the sprinkler system and the grass. We don’t necessarily need a sprinkler system, but where we are, it’s what buyers want. Our next home will probably be an existing home with a mature yard