6

Welcome to Wealth Informatics! If this is your first time visiting the site, please start here.

Buying a home: New home or an old home, which is better?

We are house hunting in full force! We have not unpacked in the hopes that we will move to our own home soon enough and save ourselves the trouble of unpacking & packing again. So in the coming weeks a lot of my posts will be related to buying a home.  I first made a wish list with our needs and wants.

One of the major decisions we have to make is – a new home or an old home, which is better?

I know “better” is a very subjective word, what is better for me might be horrible for you. But in this case, I am truly interested in the very basic pros and cons of buying a new home vs. an older home.  From what I understand about the current real estate market, at least in our area –

1)      It is a seller’s market. So most homes get multiple bids and go for higher than the asking price.

2)      Builders who went dormant after the housing bubble burst, seem to have become much more active. There are quite a few new constructions that are in the market right now.

3)      (In our budget) New houses seem to be cheaper than an older house!

All of this put together, we are seriously considering going with a new house to get more for our money.  But, for every “on one hand” we could think of for a new construction, there is an “on the other hand”. I do not think there is one best answer. So I figured, I will list all the pros and cons for both situations we have come up with so far and ask other experts aka home owners, who bought either a new home or an older home to see if we are missing anything. Our hope is to be aware of all the advantages/disadvantages and then make an informed decision. We are new to this, so we want to make sure we are not missing anything.

Please help us and point out if we are missing any problems with either of the situations. Here’s what we have so far.

New home or an older home; which is better?

The verdict on each of the pros/cons is certainly a lifestyle decision, but I have tried to go with what is mostly accepted (for example: I am assuming staying within the city with easy access to shopping/schools is preferred by most people) because we would like to sell or rent the house down the line.

# New home Older home Which is better?
1. Most new homes are in the suburbs or away from the city center. Older homes are in established neighborhoods, closer to work, school or shopping. Older homes
2. Built in contemporary style and built to suit individual taste Traditional style. Each home could be architecturally unique and charming Depends on the lifestyle
3. Open floor plans, more spacious Rooms are modular and from what we saw, smaller than new homes. New home
4. Less maintenance Depending on when everything was updated, the maintenance could be much larger. New home
5. Generally higher priced Lower priced (though in our budget and areas of interest, older homes are equally or priced higher than new homes) Old home.
6. Cheaper to operate, energy efficient. Utilities might be higher due to inefficient energy setup. New home
7. Most of these are like mass produced products. Builder might resort to shoddy construction to cut cost. If the house has stayed up for 10, 20 or 50 years, it has good bones. Old home
8. The house should be up to code to pass the county/city inspections Depending on when the house was built/updated it might not be up to all the codes New home
9. The neighborhoods are new, so it might not have aged trees and facilities might be far away. Depending on the area, there might be mature vegetation and established neighborhoods. Old home
10. Can pick and choose the upgrades and amenities (but it might cost a lot more than the base price to get everything) Cannot pick and choose any amenities. New home
11. Home owner’s association will make sure the houses in the neighborhood are kept in decent shape No home owner’s association New home
12. Home owner’s association could be a big pain and could get pretty expensive. No home owner’s association Old home
13. Builders’ want to build as many homes as they can squeeze in the land, so there might not be a big yard. Depending on the area, older homes have more land. Old home
14. Most new constructions come with an extended warranty. So (if they honor the warranty) that might reduce the maintenance spending in the initial years. No warranties. New home
15. Cookie cutter design/look House will have some character and history. Old home
16. If the house is built from the scratch depending on how many other houses are being constructed at the same time, it might be a long wait to actually get the keys. The house is probably move in ready provided no major renovation is required. Old home
17. Following up on the previous point, we have recently learned that the rates are locked only for 2 months (3 months if we pay extra). So during the wait the rates might go up and make the purchase a lot expensive. You can pretty much close in 30 days depending on the loan. Old home
18. There might be more availability on the lots and floor plans so you might not have to be super-fast on bidding to get the house. You have to be ready to put an offer immediately if you like the house, otherwise you might lose it in a sellers’ market. New home (This is based on our experience in the local market).

I am sure I am missing some pros and cons. Can you please let me know why you would pick a new house or an older one?

How to avoid buying a “lemon” house?

I understand no house can be perfect, new or old. And we have to account for maintenance as part of home ownership.

As we go deep into this whole home buying/constructing exercise we are learning something new every day. I am sure that will never end and we will never be an expert in every aspect of construction; here is what we are thinking we will do to avoid buying a lemon. Again, please let us know if we have to take any other steps to make sure we do not buy the greatest regret of our life.

If it is a new construction…

  • Check the track record of the builder. See how they are handling the problems with other communities they have built.
  • Go talk to previous owners in the same or a community built by the same builder to see how satisfied they are.
  • Bring our own agent when touring the home. If we don’t have our own agent when we first talk to the sales agent, we will never get a chance to have our agent. We have to use their in-house agent, who will obviously have the best interest of the party paying their bills – the builder.
  • When touring the home, picture how “our” home, “our” floor plan will look like, not the staged model home. After all we will get an empty house; the high end furniture used for staging is not included in the price.
  • Have a home inspection before the final walkthrough. If possible, get an inspection at different stages of the construction.
  • Have a home inspection.
  • Talk to the neighbors and look at the tax records.
  • Talk to contractors and get an idea of how much it will cost to replace anything that is old.

If it is an older home…

  • Have a home inspection.
  • Talk to the neighbors and look at the tax records.
  • Talk to contractors and get an idea of how much it will cost to replace anything that is old.

If you had to choose between new house and an older house, which one would it be? Why?

{ 6 comments… read them below or add one }

First Gen American

We just chose an older home (200 years old to be exact). The newer homes in my area all looked “builder basic” and lacked character as did the neighborhood. The clear cut built 50 homes that all look alike just wasn’t appealing to me. I wanted woods and character and history. Homebuying is a very personal choice but older homes are ALOT of work and we bought with the mentality that we will need to rehab the whole thing over time which long term makes it a more expensive option.

Also with older homes, plan on surprises. We rehabbed 2 other homes and still found surprises. Like I’m still kicking myself for not finding the construction debris on the back of the property because it was covered in normal yard waste and leaves..that sort of stuff is hard to find until you’re in the house proper.

Reply

Crystal

We bought a new home last year as you know, lol. The home we bought in 2007 was 3 years old. Both purchases have worked out well for us. Here is my overall view of home buying – old or new, make sure your house is well-built and that you like the neighborhood.

Both of our homes are well-constructed so they are low maintenance. That is key. We didn’t like our old neighborhood and moved in 5 years and we really like our new one and don’t see ourselves moving again anytime soon. But we hate having a home owner’s association now because ours is TOO crazy about everything. So we are adapting and trying to enjoy the amenities we do like – large duck ponds/lakes and walking trails.

You’ll know when you find the right home – it’ll just feel good. Good luck!

Reply

Jenny @ Frugal Guru Guide

I want either an older home or a home I can watch being built. A new home that’s finished construction is a no-go–there are too many things that could have been done badly that haven’t obviously started to fail yet.

Reply

Jon @ MoneySmartGuides

I would definitely ask other homeowners in the development. Near me when the bubble burst, the builder went bankrupt. In the years since, a new builder came in and took over the development. They started selling houses at dirt cheap prices. The catch we that many of these “cheap” homes were half-built four years ago. So the framing has been exposed to the weather during this time. I’m not saying they didn’t take the time to inspect the framing, etc. to make certain it was good for sale, but something tells me that I wouldn’t want to buy those houses. I prefer the look of newer homes, but the fact that the home builders mass produce homes concerns me. After all, they only make money as fast as they can build a house and sell it.

Reply

eemusings

In Auckland? Probably older, as a shit ton of new developments wound up having leaks and other weatherproofing issues … and they also seem to lack soul, though in this market beggars can’t really be choosers. I would be happy with whatever I could get and afford, probably.

Reply

My Financial Independence Journey

Good luck in your house hunt. I live in an area with a lot of older homes. They’re all nothing but endless maintenance. Really makes me happy that I’m a renter because I don’t have the appropriate personality to put up with having to fix something new every summer.

Reply

Leave a Comment

Previous post:

Next post: