Buying vs. building a house is the ultimate debate in the US real estate market. On the one hand, buying a house is the traditional and often more straightforward option. It's a popular choice for those who want convenience, established neighborhoods, and potentially lower costs. On the other hand, building a house from scratch is an opportunity to create a living space that meets your specifications and needs.
In this article, we'll explore the pros and cons of each option, comparing the two from various perspectives. Understanding these niceties should help you make an informed decision that aligns with your goals and budget. After all, it’s an important decision that requires careful consideration and attention to detail. You need to factor in various aspects before you reach a conclusion.
So, let’s find out whether you should build a house or buy an existing one.
Buying an existing home is the norm in the US. If you want to move into a place you can call home but don’t have much time to invest in building a house from the ground up, then buying an existing home may be the right choice. However, buying an existing home comes with its own pros and cons. Let’s have a quick overview of them before we delve into details and find out which option is likely to be the better choice.
Pros | Cons |
---|---|
It won’t take as much planning. | You might have to compromise on your wants. |
It is typically a more cost-effective option than building a house. | There may be more repair and maintenance costs than you might expect. |
You can move in right away. | You could face stiff competition from other potential buyers. |
You have a well-maintained garden/lawn and an established neighborhood. | The old design may not meet all your housing and environmental needs. |
Following are the five points to consider in favor of investing in an existing house:
There is always another side to a coin. Let’s look at the risks involved in buying an existing home:
The median price of buying a home by the end of 2023 is expected to be marked at $380,000, according to Research on Statista. The chart below illustrates a breakdown of the common expenses involved in buying a home and how they contribute to the overall cost.
For first-time home buyers, it's important to note that several costs may be involved when buying an existing home. Below is a continuation of the list of expenses:
Buying a home usually has lower initial costs than building one. However, due to inflation, high demand, and intense competition in the housing market, it has become more challenging for buyers to invest in an already-built house.
Good news: A recent 2023 study predicts a significant drop in the cost of existing homes, which would be for the first time in a decade.
By now, you must have a good understanding of the costs of buying a home. Let’s look at the other side: The nitty gritty of Building a House.
Building a house has certain pros and cons. On the good side, it offers the opportunity to customize every aspect of your living space, from location to design details, allowing for a unique reflection of your personality and lifestyle. It also allows you to integrate modern technology and eco-friendly features to reduce energy costs and align with environmental values.
However, building a house is a time-consuming and complex process that requires a significant investment of time, money, and effort, involving acquiring permits, securing financing, overseeing construction, and managing contractors. Not everyone can handle all this hassle and stress, so most people buy an existing home or rent an apartment instead.
Let’s have a brief overview of its pros and cons before we move on to discussing the details.
Pros | Cons |
---|---|
You can be confident about the quality of materials used in the construction. | High-quality materials tend to be expensive. The better the quality is, the higher the cost may be. |
Everything has been customized to meet your requirements. | Getting everything in accordance with your preferences and demands may be a time-consuming process. |
You can avoid the seller’s market and its competition. | Building a house requires complete involvement and is, therefore a demanding process. |
What are the hidden expenses involved in building a house?
According to the US Census Bureau, the median price of a new home built and sold in 2023 is $438,200. However, about 20% of the cost of building a house is the cost of land. Building a house would be a much cheaper option for a far greater value if you own a piece of land and want to construct a house on it.
Every individual on their journey to homeownership comes from a different place. It is impossible to draft a guide that is both general and suited to your unique situation. Whether to build or buy a home is a personal choice and comes with risks, depending on how you take on this task. We have some tips for you:
Remember the three words before you say ‘yes’ to buying or building a house: COST, CONVENIENCE, and SATISFACTION. Considering costs, you can either build your dreams or buy convenience. Regardless, as long as you are satisfied, your choice does not matter.
Finally, ask yourself the following questions:
What do your finances look like?
Whether you embark on a house hunt to buy an existing house or search for land to build a house, you must thoroughly assess your finances and identify the costs involved in buying a home. Invest time and money by hiring professionals to assess your financial health before deciding between buying and building a house.
Are you a first-time home buyer?
First-time home buyers usually need to gain more knowledge about real estate in their area. They may be better off buying an existing home to avoid getting trapped in challenges right off the bat in their first home-buying experience.
Do you have enough time on your hands?
Building a house demands undivided attention. It is much like a newborn child you cannot ignore if you want it to grow well. Carefully assess if you can dedicate around six months of your time to monitoring and managing your house.
Are you a handyman?
The greatest cost involved in building a house, in addition to the costs that cannot be avoided, is the cost of finishing. If you can cut some of the finishing costs by taking over the tasks yourself, you might save A LOT!
This section is for you if you still have questions you think need to be answered in the blog or are here to find a summary. We have answered some popular questions regarding buying vs. building a home.
A good way to see if you are ready to handle the cost of building a house is by imagining you did it all wrong once. Here are some things you wish you had known before building a house that could have saved you money, time, and effort:
There is no one-size-fits-all answer to this question. You might want to assess your finances and budget before you can answer this. Budgeting is very personal, but a general guide would look like this:
1. Required Amount: How Much Can It Cost You? Identify the entire cost profile of each option in your area.
2. Available Amount: How Much Can You Afford? Determine your affordability by asking yourself how much you can spend. Remember to factor in your debt-to-income ratio, which is bound to change if you buy land or an existing home against a loan.
3. Cost Limit: Set a cost limit with the flexibility to cater to unexpected expenses. Besides the necessary (for example, the cost of buying a home or land), let go of some wants if they exceed your budget.
Which Part of Building a House is the Most Expensive?
Overall, building a house is expensive. However, two of the most expensive parts of building a house come from Framing and Finishing Costs. The common thing between these two is the time, labor, and material required. The cost of framing and finishing is predicated on the area of the house, the material used, and the specific demands of the home buyer.
For instance, adding a rainproof paint layer would increase the cost, and constructing a larger house would likewise be more expensive.
While framing brings the customer’s vision to life, finishing adds colors (quite literally) to it.
To be very honest, the answer is not set in stone. Building a house may incur higher upfront costs but be of far greater value when compared to buying a house that requires costly renovations or repairs. In Texas, the average cost to buy a home that is custom-built is around $300,000, which is the same as buying an existing one. In this case, why would you not buy something brand new?
You may still need to consider building a house. Brand-new houses are usually built on lands that are isolated from established neighborhoods and amenities. Building a house may be costlier if a family cannot compromise on their proximity to amenities.
Still not sure whether buying or building a house is the right choice for you? I can help you weigh your options by providing access to a wide range of real estate listings and qualified realtors. Start your search now and make an informed decision!