Do New Construction or Existing Homes Make the Most Sense Today?

There’s been discussion recently that new construction has become less expensive than resale. While that may be true in certain areas at certain times, it’s very location- and budget-specific. Overall, there are obvious trade-offs buyers need to consider when comparing resale and new construction.

You can’t argue with brand new—everything in the home is new, nothing has been used, and it comes with a warranty. But one trade-off is that there are often more expenses associated with moving into a new home. A resale home typically includes things like window coverings and appliance upgrades the buyer might have wanted. You can get those in new construction, but they usually come at a premium.

Factors to Consider

In terms of the yard, resale homes often have more mature landscaping and established trees, while a brand-new development is going to have the little “Charlie Brown trees” everywhere. Of course, in a few years they’ll grow—you just have to be patient.

Another big consideration is living with construction. If you’re in a development that’s being built in phases, you’ll have contractors, trucks, concrete, dust, and dirt. But I like to refer to that as equity. If you’re buying at the beginning of a new development, you’ll deal with the noise and construction, but your home’s value will typically increase as the community grows because developers and builders tend to raise prices with each phase, along with what the market can bear.

What’s been unique over the last couple of years is the level of incentives builders have offered that a typical resale home seller can’t. The biggest is the interest rate buy-down. Large-scale builders can purchase financing in bulk and offer reduced interest rates if you use their preferred lender, something an individual home seller simply can’t afford to do. That’s likely one reason new construction has, in some markets, become less expensive than resale.

Determine Your Priorities

The most important thing is to determine your top priorities. Is it the school district? The amenities within the community? New communities tend to offer more amenities, like pools and clubhouses, whereas older established neighborhoods typically don’t. But those amenities often come with higher HOA dues, which factor into the overall cost. Location is also key because new construction is typically on the outskirts of more established neighborhoods as farmland is developed.

Ultimately, it’s an individual decision based on what’s most important to the buyer. Some people will always choose new construction because they value the benefits of a brand-new home, like energy efficiency, new appliances, and a warranty. Others will want an existing home to enjoy things like an established yard, unique design character, and proximity to schools or work.