Which is the Better Buy?: Old vs. New Homes
When you watch HGTV’s “Fixer Upper,” do you marvel at all the history and charm of older homes that come through in the end? Or do you wonder why anyone would go to such trouble when they could just buy new?
Your reaction could tell you a lot about what kind of home buyer you are. But what it doesn’t tell you is whether that impulse will translate into a good financial decision. There are many factors to consider when buying a home, but few are as important as the age of the house you choose.
Today, we’re going to discuss which is the better buy: an old or a new home. First, let’s start with the basics.
What is Considered a New Home?
In general, “new” is a relative term. A teenager’s “new car” may be a family hand-me-down. A person’s “new iPhone” could be unused, but still be several generations old. For our purposes in real estate, a “new home” is a newly completed construction that has not yet had any inhabitants. It’s shiny and fresh, and it’s ready for its first buyer to start building its history. On the flip side, we’re calling “existing” or resale houses old homes.
Which do Buyers Prefer: New or Old Homes?
You may already know which type of home you prefer. But are you in the majority?
A 2018 study by the NAHB Economics and Housing Policy Group examines buyer preferences across generations. In general, Millennials (born 1980–1996) have shown a clear, upwardly trending preference for a new home offered from a builder, and they finished significantly higher than other generations at the time of this study. On the other hand, older, experienced buyers are significantly more likely to want a custom home built on an owned lot.
However, when it comes to buying existing homes, there is no significant change in preference across generations. According to this report:
While this indicates shifting preferences for Millennials, it is still important to realize that the market for housing is heavily tilted towards existing homes, which is almost five times bigger than the market for new homes, according to data from the U.S. Census Bureau and the National Association of Realtors.
Which is the Better Buy: New or Old Homes?
Depending on your needs and preferences, there are just as many reasons to choose an old home as a new home. Here are a few key points to consider, and how the age of your home could impact each one.
Affordability and Size
As the cost of construction has increased, so have the cost of new homes. Brand new homes will usually cost more and be placed on smaller lots, closer to neighbors. However, while they may be more affordable up front, older homes often need a little TLC. Depending on the scope of updates needed, from fixtures and plumbing to roofs and siding, older homes could end up costing more in the long run. However, older homes tend to be on larger lots and offer more privacy. So if outdoor entertaining is a priority, an older home may be the way to go.
Home Care and Maintenance
With new construction, all of the primary work is done for you. When you move in, you don’t have to lift a finger, a paint brush, or a hammer if you don’t want to. What’s more, you shouldn’t need to anticipate any major repairs or upgrades for some time. With new appliances, plumbing, heating, and air, you should be able to live worry-free for at least a few years. And since the new home was built with the latest building plans, designs, and materials, you can be sure their systems already meet today’s codes and standards. A builder’s warranty would offer even more protection.
On the other hand, did you know that 25% of new homes will suffer some type of structural distress? Older homes have weathered a fair number of storms already and have proven their worth. If you’re handy around the house and enjoy a good DIY project, it could be worth it to you to buy an older house with a proven foundation and renovate room by room to your own standards. If you have the space and the time, transforming an older home into your private haven could be a major attraction.