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Should You Build Your New Home?

When real estate inventory dips and the number of homebuyers rises, the competition to land your dream home gets stiff. Take, for example, this statistic: In April 2021, 72% of offers on home listings faced a bidding war, up nearly 50% from the year before.

Faced with limited real estate selection, high prices and dozens of people vying for the same properties, many homebuyers are asking: Is it cheaper to build a house? Here, we break down the advantages and disadvantages building vs. buying a home. 

Is It Cheaper to Build a House?

Maybe. As of early 2022, the U.S. Census Bureau ranked the median sales price for an existing home at $436,700. The median price of building a single-family home, according to Realtor.com, is $296,652.

Pros of Building a House

The most obvious advantage of a brand-new home is the ability for complete customization. Everything from the layout to the paint colors falls within your purview, so you can personalize the space and style to suit your tastes. Other pros of building a house include:   

  • Little to no competition (no bidding wars!) with other shoppers.
  • Absence of toxic materials such as lead paint, mold and asbestos common with older builds.
  • Homeowners can expect few immediate repairs or maintenance with new construction.
  • Advances in home materials promote energy efficiency in new construction.

Cons of Building a House

A surprising disadvantage of new construction is that building your home might end up being more expensive than buying an existing house. That’s because there are hidden fees that add up during the process. Considering upgrading the countertops to marble? There’s a cost for that. Do you prefer hardwood floors to laminate? Prepare to pay more. Do you want professional landscaping? That requires money. Since many of these costs are not folded into the contract price, it’s easy to blow your budget without even realizing it. Other cons of building a house include:

  • You aren’t able to negotiate the purchase price.
  • It takes months and sometimes even a year to build a new home, and that doesn’t factor in current supply delays.
  • With complete customization comes stressful decisions to make and details to manage.
  • Unless you find the perfect infill lot, new builds often have an inconvenient location far from established neighborhoods.

Pros of Buying a House

On paper it seems that buying an existing home is more costly, but you also have the power of negotiation on your side. From splitting closing costs with the seller to asking for repairs on big-ticket items, there are many ways you — or your real estate agent — can bargain for a lower sales price. Other pros of buying a house include:

  • The average time to close on a house after your offer is accepted is 30-45 days, far less time than waiting for construction on a new build to be completed.
  • Buyers can choose the neighborhood they want to live in or a convenient location near desirable urban centers and established communities.
  • If the home is in an established neighborhood, chances are it has mature landscaping.
  • All costs are upfront and transparent.

Cons of Buying a House

In the current market, the most obvious disadvantage of buying an existing home is that you’ll be going head to head with other homebuyers. To secure the home you want, you might have to come to the table with cash, pay more than your budget allows or comprise on your wish list or target location. Other cons of buying a house include:

  • Hidden issues, such as lead paint or cracked foundations, that don’t come to light during the home inspection.
  • Older homes will likely require maintenance and repairs shortly after move-in.
  • Costly remodels are often required to add energy efficient features.
  • Dated layouts may no longer suit a modern family’s lifestyle.

Ready to Make a Move?

Buying a home — whether it’s a new build or an existing house — is often the biggest decision you’ll make in your lifetime. Here at Farm Bureau, we’re here to help. Contact your agent today to learn how you can prepare for, and protect, this purchase.