Building a New Home vs. Buying an Existing Home: What You Need to Know

Owning a home is a lifelong dream for most of us, whether it's for our own sense of safety and stability or as a tried-and-true form of asset investment. No matter what your reasons are for wanting to do so, the ownership of a residential property may be a nerve-wracking experience, regardless of whether you choose to build it yourself or purchase one that is already constructed. It is essential to investigate both possibilities in depth before making a final choice to select the alternative that best meets your needs and is within your financial capabilities.

To help you make an informed decision, we'll compare and contrast the various factors involved in purchasing an existing home and the process of building a new one.

Cost

The first factor that many aspiring homeowners consider when trying to find a suitable choice between building or buying a new home is cost. Building a home has costs that include cost of buying, costs of excavation and laying foundations, framing, interior and exterior finishes, site work, major systems rough-ins.

Purchasing a property will cover all of these expenditures in addition to the final price, but you will still need to account for mortgage financing, legal fees, stamp duty, insurance, service charge, and even furnishings in your budget.

Time Involved

The building process is time-consuming. It takes more than seven months to construct a single-family home in the United States. This does not take into account the typical waiting period of one month for building permits.

An immediate advantage to buying an existing home rather than a new one is that you don't have to wait as long to get a mortgage preapproval. The closing process on a property sale typically takes two months. A buyer who does not have seven months to wait for their new house would prefer a closing date that is only two months away.

Competition

It's probably not going to come as much of a surprise to you to learn that the housing market is red hot if you've been giving serious thought to making a purchase. Concerns about supply have arisen as a result of increased demand for residential real estate.

In today's market, one alternative to competitive bidding and offers that are higher than the seller's asking price is to purchase land and construct a house on it. If you build your own house, you can contribute to the total number of houses on the market without increasing the number of people looking for housing.

Maintenance

Although the new house you bought may have everything you desired, the fact that it has a past remains. This past may include a roof that has seen better days, a few dated kitchen appliances, outdated electrical and plumbing systems, an old hot water heater, and decades of home renovations and patch-ups performed by the owner.

Having your own house built means that you won't have to deal with any unpleasant shocks or unplanned maintenance bills. You won't have to deal with costly repairs or replacements if you build a new home from the ground up. For homes that are older, these costs will be much higher.