A couple of weeks ago we looked at some preliminary considerations about how much someone should spend on a house, and what sort of financing options are available. So we’ll assume at this point that you have gotten preapproved for your mortgage and have looked at your budget to see what you can truly afford. Now the decision becomes, do you build the house of your dreams from scratch, or search for something to move into tomorrow? Obviously the ultimate best decision is unique to everyone’s situation, but here are a few considerations to take into account when looking at building a new structure:
1) Your price per square foot (what some consider to be the key value) will usually be higher in a new house due to the natural inflation of construction materials, a shortage of modern tradespeople, and basic devaluation overtime. Large older homes will usually save you quite a lot vs new luxury homes.
2) There is a high likelihood that an older home will have the landscaping you want if you are into mature trees and plant life. Obviously the beautiful trees and flower gardens that you see in magazines take years to develop and plenty of sweat equity as well. Buying an older house can sometimes be an advantage if this is what you are looking for. On the flipside, building new allows you to plan your landscape from the literal ground up. Many ambitious homeowners love the freedom that goes with these designs. Personally, landscaping isn’t a big deal to me one way or another, so it wasn’t a major consideration when I was looking at my options.
3) Character homes. Older homes have more distinct flavour to them than the average McMansion that is going up in suburb near you. Different eras have obviously produced different architectural and stylistic tastes and many people enjoy these unique creations. Be careful though, “character home” can sometimes be code for maintenance nightmare. I would almost recommend taking some home renovation courses before laying down some serious cash on these pieces of living history.
4) Maintenance costs are a huge financial consideration. One of the main points I always stress when talking to first-time homebuyers or homeowners that taking a substantial jump up the housing ladder, is that their new home will almost always cost more to maintain than they originally believe. Roofs, appliances, lawn care, etc, all cost more and more these days and can stretch a budget. New homes come with the peace of mind that these costs will be very minimal as you get settled in, especially if you are not a DIY-type. Any trustworthy builder will guarantee their home with a home warranty for at least the first year after purchase for added insurance.
5) Have it your way. The obvious and most important consideration when it comes to buying a new home vs purchasing and old one is how badly do you crave your dream setup? Personally, my living space isn’t a huge deal to me. I’m a financial freedom-type of dude, and owning assets and paying for experiences is higher on my priority list than a “perfect house”. That being said, I know some people who love the fact that they get to plan every room in their house for the specific needs, and they really enjoyed the process of looking at different layouts and options and decided exactly how their hard-earned money would be spent. There is an undeniable advantage to building a house around your needs, and the premium you pay to own a new house is more than worth that advantage for some individuals.
If you are considering building your own home we recommend our good friends over at Hitachi Construction Machinery who sponsored our post. For the best in machine operation check out Hitachi products and services.
What other considerations did you factor in when you were looking a new place? Did anyone go one way and wish they had taken the other path? (Sorry too many Robert Frost references for teachers around grad time.)