To Build or To Buy? Unpacking the Details of New vs. Existing Homes
The current real estate market has people considering whether they should buy an existing home or a new home because of the high interest rates and lack of inventory.
We understand our clients’ concerns about whether it’s better to buy new.
Many wonder if they should invest more in a new home, considering the high prices of existing homes.
They are attracted by the idea of being able to choose their own materials and finishes. And, they might even be persuaded by current incentives from home builders.
In this blog, we are going to break down who should consider buying a new construction home and who should stay patient and search for an existing home.
Buying a new construction home vs existing home (short answer)
Why buy a new construction home?
New constructions, while initially more expensive (10-20%), come with comprehensive warranties that protect against defects and ensure quality workmanship.
This is particularly beneficial if you’re considering a high-value investment, say in a home over $500,000, as these warranties cover structural defects for up to 10 years—provide significant peace of mind and potential savings on repairs. In addition, you won’t have costly repairs often associated with older homes as maintenance issues grow with the age of the home.
Why buy an existing home (resale)?
If your budget is tighter, or you’re drawn to the unique character of older constructions, an existing home might be more suitable. These homes often cost less upfront and are set in established neighborhoods with mature landscapes and close proximity to amenities, enriching your community life and reducing travel times. In addition, new construction homes are without financial risks depending on the stability of the market.
When buying a resale home, remember to account for potential renovation costs. For instance, upgrading an older home can involve substantial expenses—roof replacements can run between $5,000 and $25,000, HVAC systems might cost up to $10,000, and electrical upgrades can exceed $20,000. It’s also important to consider your own level of knowledge of home repair and renovation as the cost of contractors have skyrocketed.
Advantages of New Homes
Home Warranty
In simple terms, new construction homes provide warranties while existing homes do not.
New construction home warranties, like the implied warranty of fitness and the express warranties outlined in construction agreements, are beneficial for several reasons.
For example, in Florida Construction Law, a home warranty provides a legal basis to ensure that new homes meet a certain level of quality, aligned with the reasonable expectations of ordinary buyers.
This is one of the biggest reasons our clients chose to build homes—especially more expensive homes north of $500k.
The following are common warranties in new construction:
- Protection Against Defects: New construction home warranties protect homeowners from defects in workmanship and materials. Since most construction agreements contain implied warranties, homeowners can expect their homes to meet the ordinary standards of quality expected in the industry, even if these are not explicitly mentioned in the contract.
- Legal Recourse: Homeowners have legal recourse if their newly constructed home does not meet quality standards or has construction defects. Under Florida law, such as Florida Statutes § 558.001, construction companies can be held legally liable for these defects, giving homeowners a pathway to seek remedies for issues ranging from structural problems to mechanical failures.
- Quality Assurance: Implied warranties ensure that contractors use accepted practices and materials that conform to industry standards. This guarantees a basic level of quality and safety in new construction homes, which is especially crucial in areas like structural integrity, electrical wiring, and plumbing.
- Risk Reduction for Buyers: These warranties reduce the risk for homebuyers by providing assurances that the property is habitable and fit for its intended purpose. For example, in Florida, courts have determined that people purchasing newly built homes are entitled to an implied warranty of fitness from the builder/developer, ensuring the home is habitable and suitable for living.
An actual example of these warranties in action would be Maronda Homes in Florida.
Maronda Homes in Florida has excellent warranties. They offer a 1-YEAR LIMITED WARRANTY for Workmanship & Materials, covering defects for a full year.
They also have a 2-YEAR LIMITED WARRANTY for Internal Systems Protection, covering systems like wiring and plumbing.
In addition, they provide a 10-YEAR LIMITED WARRANTY for structural defects, which adds value to your property and can be transferred to future owners. Choosing Maronda Homes means getting a protected and durable home, showing their commitment to customer satisfaction.
Check out the Maronda Home Tour below to see a typical warrantied new construction home.
Home Customization
Have a vision for the kitchen island, or maybe you’ve always dreamed of light hardwoods and white molding?
Well, new construction gives you those personalization features.
Now, we aren’t going to tell you a story about how building a new home is cheaper than fixing up an old one, but we will say that fixing someone else’s mistake can be very costly.
For instance, we have witnessed individuals purchasing an older home with “good bones,” only to discover that when they start renovating the old bathroom, they uncover black mold and deteriorated floors and walls.
Suddenly, what was supposed to be a costly upgrade turns into a nightmare expense.
On the other hand, new construction comes brand new, and you get to pick out the upgrades.
For example, we sell a Pulte Home, their design studio is an amazing experience.
What You Can Personalize with Pulte:
- Kitchen cabinets: Choose from modern styles to match your taste.
- Bathroom fixtures: Select stylish options for a customized look.
- Flooring: Decide on materials and designs for every room, from laminate to vinyl.
- Lighting: Pick fixtures that complement your home’s aesthetic.
How the Design Process Works:
- Visit Design Centers: Explore a wide range of features and finishes in beautifully appointed centers across the country.
- Work with Industry Experts: Receive guidance from experienced professionals knowledgeable about the latest trends.
- Access Design Tips and Trends: Utilize Pulte’s resources for inspiration and practical decorating advice.
Design Tools and Accessibility:
- Interactive Tools: Personalize floor plans, choose elevations, layout furniture, and explore color options using Pulte’s online tools.
- Online Portal and In-Person Visits: Start with an online portal to get ideas and estimates, then visit a Design Center in person for a hands-on selection process.
Take a look at Pulte’s design portal below.
With this tool, you can easily select different kitchen finishes online to visualize and compare the best possible options for your kitchen.
Choosing new construction with Pulte Homes allows for a highly personalized home-building experience, from foundational layout decisions to the final touches, with professional support every step of the way.
You can check out a Pulte tour here if you want to see new construction from dirt to finish.
If you are curious which upgrades are worth it, check our blog on new construction upgrades here.
Less Maintenance
New construction has a markup and is generally more expensive than an existing home when considering factors like purchase price, land, and so on.
However, it’s worth noting that older homes often require higher maintenance costs and things are more likely to break down frequently.
If you have the budget and aren’t handy, a new home can save you some money in the long run depending on how long you are going to own the home.
In addition, building standards are constantly being updated.
We’ve seen a lot of updates over the last 50 years. It feels like each decade new building codes and standards are adopted which make homes safer and safer.
Before you buy an older home, look at the updates you might have missed:
- Energy Efficiency: Stricter insulation and HVAC efficiency standards were significantly bolstered by the 1970s energy crisis, with ongoing updates.
- Electrical Safety: GFCI protection became required in the 1970s, with expansion in locations through the years. AFCI protection was introduced in the 1999 NEC with updates in subsequent editions.
- Structural Integrity: Major updates for wind and seismic resistance followed significant events, with notable improvements in codes post-Hurricane Andrew (1992) and the Northridge earthquake (1994).
- Fire Safety: Smoke detectors in bedrooms and hallways became mandatory in the 1970s, with updates for interconnected systems in the 1980s.
- Insulation: Enhanced insulation requirements for improved energy efficiency were significantly updated in the 2012 International Energy Conservation Code (IECC), reflecting a push towards more energy-efficient homes.
- Joists: Engineered wood joists became more common after the 2000s, with codes evolving to address fire safety and structural integrity, particularly with the 2012 International Residential Code (IRC) amendments.
- Moisture Control: The 2006 IRC introduced explicit requirements for moisture control, including vapor retarders and proper ventilation, to prevent mold and structural damage.
And, with an older home, you may want to purchase with the intention of a “fixer upper,” but the cost of contracting has SKYROCKETED.
Below is a rough estimate of how expenses can stack up if you need contracting assistance.
| Expense | Estimated Cost |
|---|---|
| Roof Replacement | $5,000 – $25,000+ |
| HVAC System Replacement | $5,000 – $10,000 |
| Plumbing Updates | $1,000 – $15,000 |
| Electrical System Upgrade | $3,000 – $20,000+ |
| Window Replacement | $3,000 – $10,000 |
| Foundation Repairs | $2,500 – $20,000+ |
| Insulation Upgrades | $1,000 – $2,400 |
| Kitchen Remodel | $22,000 – $50,000+ |
| Bathroom Remodel | $6,000 – $25,000+ |
The Inventory Crunch
We will keep this section short and sweet: if you’ve been looking for a home in the last 3 years, then you know the inventory for existing homes have shrunk dramatically.
And with that shrinking, the options to pick existing homes are SLIM.
Just take a look at the graph below from the Federal Reserve Bank on housing inventory for the last 5 years—it’s never recovered from a high of 1.2 million homes of inventory in 2019 to a low of 350k in 2022 to now a rolling average of 650k.
We’ve seen this in our town of Clermont, FL. Home prices have increased and inventory has decreased.
Sometimes the housing search is cruel. And now, the interest rates are sky-high which decreases purchasing power.
But, there can be a silver lining right now for new construction: with high interest rates, home builders know people need incentives.
The ball is in your court when it comes to new construction.
What incentives are we starting to see?
- Builders offering lower interest rates than national banks
- Builders allowing for substantial point buy downs
- Builders offering major discounts for already built homes
- Builders offering substantial upgrades during the design process
We won’t try to sway you with complex calculations, but what we are saying is that builder incentives may offset the higher price tags for new construction.
Moreover, the gap between cost and value is narrowing.
And we have a lot of experience selling new construction; check out our latest reviews here.
Advantages of Buying an Older Home
There are many advantages of buying an older home. Let’s explore the most common reasons our clients choose existing homes.
Less Expensive
Typically, older homes come with a lower initial price tag.
This is the main reason we point our clients to existing homes when they are on a budget constraint based on what the market is giving us.
As a rough estimate, you will pay 10% to 20% more for a new home than an existing home within the same community.
And of course, the higher up you travel in home prices, the bigger that gap becomes as expensive older homes will sit longer and have few buyer showings which means sellers will be more likely to negotiate.
All in all, you’ll probably get more bang for your buck in resale if you are patient.
Dealing with contractors can be a headache
We’ve had many client issues with home builders that would make anyone scream.
On the other hand, we’ve had wonderful experiences with amazing home builders who’ve fulfilled our clients dream list for their home.
The devil is in the details—or at least the builder you choose. And let us tell you, they are NOT all the same.
We’ve walked into situations where home builders won’t allow third party instructions, are rude to our clients during the process, and refuse to make needed adjustments to the home.
In addition, we’ve had clients who were so disappointed in the product that they opted to sell the home after closing.
Buying an existing home cuts out the headache of the builder and let’s negotiate with the existing home owner.
More Options and Variety
Unlike the cookie-cutter style of new developments, older homes offer a lot of variation in architectural styles.
With the rise of home makeover shows, people have grown to love a fixer-upper and are learning to see a home for its potential rather than getting caught up in the previous owner’s paint color choices or old carpet faux pas.
And, you aren’t just looking for uniqueness in your architecture; you may also want to compare school districts, neighborhood safety, local amenities, public transportation and more.
An existing home search opens up the map considerably compared to new construction.
Mature Neighborhoods Look Finished
We love the look of mature neighborhoods with towering trees, manicured landscaping, and homeowners who have taken pride in the exteriors of their home.
New construction neighborhoods can look…well… bare.
In older established neighborhoods, there’s no waiting for the landscape to fill in or trees to grow.
Older neighborhoods have that lived-in charm with mature trees and established gardens.
It’s like moving into a neighborhood that’s already in full bloom.
Take the Esplanade in Clermont, FL as an example. The neighborhood is established, and the landscaping is beautiful.
When clients travel in, they always comment on the tall palm trees and the blooming plants and gardens.
Amenities Are Closer (new construction is often “farther out”)
Typically, older neighborhoods are closer to city centers, meaning shorter commutes to work and livable distances to restaurants, parks, and shops.
For us, amenities are everything.
In fact, when we purchased our home in the Orlando area, we chose an existing home for its location to food and fun, its bones for upgrades, and its view of the lake.
There is a new movement with builders buying land further and further out, which we understand, but there are many people who will buy a smaller home to be closer to amenities.
Now, there are new construction homes in the heart of communities, but in addition to the higher price tags for being new, there is often an additional increase in price based on their proximity.
For example, in the popular and growing town of Lake Nona, located southeast of Orlando, newly constructed homes near the medical centers fetch prices that are 250k to 300k higher than those in Clermont, FL, where we currently live.
You’ll just have to decide how important proximity is for your lifestyle. If you don’t mind driving an extra 10-30 minutes, you’ll definitely get more bang for your buck with existing homes.
Conclusion
Choosing between a new construction or an existing home boils down to your financial readiness and lifestyle preferences.
New homes come with high price tags but also provide warranties and customization options that make them appealing for those willing to invest more upfront.
Existing homes, while often more affordable, may require costly upgrades to meet modern standards but also offer unique character and quicker access to established amenities.
Carefully weigh the upfront costs against potential renovations and the type of community you want to live in.
This balanced approach will help you make a decision that suits both your budget and your desired lifestyle.
