In real estate, the old adage of “location, location, location” doesn’t just refer to geography. It can also refer to the type of place in which your potential new home is found. Today we look at two competing types of homes — resale homes in established, “older” neighborhoods and new construction homes in gated communities — to list the pros and cons of each.
Advantages of Buying a Resale Home
- A Mature Neighborhood. Resale homes usually exist within older neighborhoods. This means there’s more history for a buyer to look at, with regards to appreciation trends and price comparision to surrounding homes. The trees are usually bigger and prettier, too.
- More Affordable Up Front. It’s a simple fact of any sales industry: Used will cost less than new. New-home buyers often pay a premium for nothing more than the newness of the structure.
- Easier to Appreciate. Financially, that is. In an older home, a newly-renovated kitchen or bathroom can noticeably bump up the value of the home. New-built values tend to stay the same for longer, since everything is new.
Disadvantages of Buying a Resale Home
- Fixer-Upper-ness. Buying a used home probably means you’ll have to do at least some work to make it truly your own, and a buyer’s DIY comfort level will play a huge part in the buying decision.
- Not as Much Design Input. Yes, you can remodel. And yes, you can even build on extra rooms or additions. But finding that absolutely perfect house in the resale market is unlikely, due to the simple fact that you have to make due with something you didn’t help design.
Advantages of Buying a New Home
- Hassle-Free. When buying a new build home, you know exactly how many people have used the house before you — zero. Everything is new and shiny, and even if something does go wrong, it’s likely covered under the builder’s warranty.
- Build It to Suit Your Needs. One of the main advantages of buying a new home is the option to build a house that fits you. You can view pre-existing house floor plans with pictures and modify from there, or you can start, quite literally, from the drawing board.
Disadvantages of Buying a New Home
- A Longer Road to Equity. As stated before, new will cost more than used. But there’s also a more significant time investment required in order to start building equity. Typically, a brand new home takes four or five years to start building equity, regardless of upgrades or renovations.
- Trickier Timing. Along with equity, the value of a new build home can be significantly influenced by the surrounding properties — specifically, whether or not the gated community or tract is completed. If an owner has to sell before the community is fully developed, there’s no real incentive for a buyer to buy their home when they can just as easily buy a brand new home a few doors down.