Ask Our Broker With Peter G. Miller: New or Old?
Question: We are about to enter the real estate marketplace. Do we buy a new home from a builder or an existing home? What are some of the issues we should consider?
Answer: The first issue is price and affordability. As of June, the typical existing home sold for $276,900 according to the National Association of Realtors. New homes during the same month had a median price of $302,100 according to HUD and the Census Bureau.
For many potential buyers, the issue of price decides the question – existing homes are simply more affordable.
But let’s assume price isn’t an issue. How do new and existing homes compare in that case?
With a new home, you get to make choices regarding design, colors, flooring and upgrades. The property can reflect your personal preferences and desires. Nobody lived in the house before you. You don’t have to worry about prior pets, hidden damage or simple wear and tear.
Public tastes change over time and new homes can reflect recent trends. For instance, the main focus of the house may be a kitchen/great room combination rather than the separate dining and living rooms found in older homes. New home closets and bathrooms are likely to be larger than with traditional properties.
With your new home, you typically will get a 10-year structural guarantee and a two-year limited-liability warranty from the builder, backed up by an outside third-party. In addition, individual appliances and systems will have separate manufacturer guarantees. With such warranties, new home buyers are unlikely to face big repair bills for many years.
Operating costs for a new home are likely to be smaller than for an existing house of similar size. With greater energy efficiency, new technologies can result in lower costs to heat and cool new construction.
Existing homes also can offer many attractions. Being older, existing homes may well have locations closer to metro centers rather than distant suburbs. This can mean quicker commutes and better access to downtown activities.
With an existing home, you’re likely to find that many systems and appliances have been updated over time. Gardens may be well-established. The old living room may now be a large dining area and the formal dining area might have a new use as a home office or play area. What used to be the rec room is now the social center, replacing the living room.
The reality is that all homes are unique. It’s worth visiting open houses in both new developments and older neighborhoods to see what you really like, and to not worry about labels.
Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to peter@ctwfeatures.com.
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