Buying a Home: New vs. Old

The home-buying process involves a lot of decisions, and one of the biggest choices to make early in the procedure is whether to buy a new vs. old property.

The costs can be dramatically different, and each home type has its benefits. There are so many pros for buying new and so many pros for buying old that they balance each other out one isnt better than the other, says Michael Corbett, Trulia's real estate expert. Aside from a homes age, a buyer also has to consider neighborhood, affordability, proximity to work, size and amenities.

Knowing how much home you can afford to buy will dictate your choices. In some markets, you may have more choice of new versus older homes since location drives these choices, says Cara Ameer, broker associate and realtor at Coldwell Banker Vanguard Realty based in Ponte Vedra Beach, Fla. A newer home will be less expensive in the long run while an older home may be more expensive and in a much more established location.

As you consider your options while you search for a new home, experts suggest asking the following questions:

Whats the Sales Price?

The limited supply of new homes makes them more expensive. Builders are being very cautious about how much theyre building, says Daren Blomquist, vice president at RealtyTrac. Housing starts are currently at about 800,000 to 900,000 a year as compared to 1.5 million a year during the 1990s, according to the US Census. Weve been under a million houses a year since the financial crisis and thats even continued as the housing market has recovered, he adds.

Even so, premium-priced new homes often sell fast. According to the Census Bureau, the average price for new home prices nationwide in June were about $331.000, on average, while the average price of an existing home was $278,000 nationwide. Theres a $50,000 difference and existing homes are selling for 16% lower, says Blomquist.

When a buyer adds upgrades to a new home, the price can quickly increase. People are often wooed into buying new construction when they go into the model and see how beautiful it is, says Corbett, and they get sticker shock when theyre presented with the final bill.

Will You Have to Renovate? Can You Move in Right Away?

New homebuyers will pay for that newness factor. The homes will likely not need any major repairs for at least 10 years, and if they do, the repair may be covered under a warranty. Youll only have to pay the regular costs of keeping the home running and livable, like utilities, says Blomquist.

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Buying a Home: New vs. Old