On the surface, most home buyers would assume that buying an existing home is cheaper than a new construction home. With this said, there are many factors at play that contribute to the cost differences. Interestingly, the median sales price of an existing home was $309,800 in December 2020, according to the National Association of Realtors® (NAR). Meanwhile, the average cost of building a new house was $302,817, according to HomeAdvisor. Of course, the figures will vary substantially depending on the part of the country that you are in.
Location, custom options, and lumber costs
As with everything in real estate, location is still the primary driver for overall costs. When it comes to new construction, the costs will also vary greatly depending on custom options and types of materials used. These differences make it considerably difficult to compare new construction vs existing home prices. In addition, the recent run up in lumber prices have also made new construction considerably more expensive than before as well.
Another factor to consider when deciding between new construction and existing homes is operating costs. According to the National Association of Home Builders, the operating costs for a new home may be cheaper in the long run. It is estimated that homes built after 2010 tend to have operating costs of about 3% of the home’s value. Meanwhile. the operating costs of homes built prior to 1960 are more than 6%.
Summary
While there are many advantages to buying new construction, buyers should also be cognizant of their budget. Things such as upgrades, custom finishes, appliances, and landscaping can really inflate the price tag. Another factor to keep in mind with new construction is the moving timeline. Oftentimes, buyers may be relocating for a job and do not have the luxury of time to wait for a new construction home to be built.
As with any decision, there are pros and cons for all options. At Live South Florida Realty, Inc. we have worked with many national and local home builders for our clients that are looking specifically for new construction homes. Do you have questions about the new construction market vs existing home market in South Florida? We can help. Contact Live South Florida Realty, Inc. today!
