There is nothing quite like moving into a new construction home, particularly when you participate in its customization. Although building a new home is not necessarily an option for all home buyers, the persistent lack of inventory of homes for sale make it a more reasonable option for some. Of course, land for housing is becoming more and more scarce. For more on this topic, check our our previous article titled “Is Land For Housing Becoming Scarce?”. As a result of this, land value contributes to approximately 47% of a property’s value in today’s market. Just ten years ago, this figure was 38% of land.
Pros of building your own home
- New materials & up to code: While this may seem obvious, a new home will likely cause you less maintenance issues given the fact that there is less wear and tear on the materials. In addition, you can also have peace of mind that all of your electric, plumbing, and other items are up to the latest building codes. In South Florida, this will also include the latest hurricane building codes.
- The ability to customize: Perhaps the most desirable advantage of building your own home is the ability to customize. Whether it is the number of bedrooms or the layout of the living areas or outdoor space, you will have the opportunity to lay out your dream home.
- Choose your location: When buying an existing home you are forced to accept the location where it is. In some cases, you may like the home itself but dislike the location or neighborhood. When building your home, you have more freedom to choose exactly where you would like it to be. Of course, oftentimes you may need to buy an existing home just for the lot and location only to tear it down for your construction project.
- Better resale value: It is quite possible that upon selling your home, it will will fetch a premium price as compared to the surrounding homes in the neighborhood. This is particularly true for neighborhoods with older surrounding homes. We often see this in the various waterfront communities throughout South Florida.
Cons of building your own home
- It is expensive to build: The most obvious disadvantage to building a home is the considerable cost often associated with this. Although any project must begin with a budget, you can almost be guaranteed that your budget will be exceeded once you embark on your project. In addition, given the scarcity of land for housing, it is quite likely that you will need to purchase an existing home on your desired land. Prior to being able to build, you will then need to demolish the existing home thus creating additional costs.
- Scarcity of land: As mentioned above, finding land that is suitable for housing is becoming more and more difficult. As a result, you will likely need to purchase an existing home and tear it down before building your new home.
- Shortage of labor: An additional challenge in recent years has been the shortage of available labor. This is resulting in substantially longer build times for new homes. You will need to account for this additional time that will also result in additional costs.
- Supply chain issues: Although not as pronounced as we saw during the peak of the COVID-19 pandemic, we are still seeing supply chain issues across the industry. In addition to the labor shortages, these delays in acquiring materials, appliances, and other items is causing significant challenges for the home building industry.
In addition to establishing a reasonable budget, it is critical that you analyze the location of the land where you are considering a new home build. An important point to remember is that you can always change the house, but you can’t change the location. It is also important to consider the scope of the project that you are considering and how it relates to the neighborhood in which you desire to be. For example, building a 15,000 square foot mansion in a neighborhood that is comprised only of 1,500 square foot single-family homes is likely an over-development. In this case, it will be difficult to achieve the resale value that you would likely desire to have in the future.
As with any real estate decisions, it is important to consult with a local and knowledgeable real estate agent. Are you in the South Florida market? We can help! Contact Natasha at Live South Florida Realty, Inc. today. Also, don’t forget to download our free Florida Home Search app for your smartphone or tablet. Experience the most up-to-date MLS data for the South Florida market in the palm of your hand.