Moving season hasn’t even begun, and already, prospective homeowners have heard the same tune over and over:
“With these historical interest rates, now is a great time to buy. But there’s no inventory.”
So, many in the market are faced with two options: Prepare to slug it out against competing offers for any home you may want or build from scratch. And while new construction would appear to be the more costly option, Frank Anton at Builder Magazine reasons that new homes can actually be a better value — month to month, dollar for dollar — than existing homes:
“Yes, the median price of a new home is $244,000, while the median price of a resell unit is $177,000, but to begin with that new home has about 2,100 square feet versus 1,690 square feet for the existing home. When you adjust for size, the median price per square foot for the new home is only 29% higher.
Then if you factor in reduced operating costs (new homes are far more energy-efficient than old homes) and assume, as you should, that almost all old homes will need some kind of expensive upgrade or remodel (a better bathroom or kitchen or a replacement roof, for example), then all of a sudden the typical new home is actually cheaper than a money pit existing home. Moreover, the new home will almost assuredly have a floor plan better suited to today’s lifestyle and lower maintenance products.”
A compelling argument to be sure.