Why Should I Build a New Home?

As you're probably aware, now is a great time to buy an existing home.  The housing slump has pushed home prices down, so there are some great buys out there.  In addition, interest rates continue to be at or near historic lows, so your total cost is, in real terms, as low as it is likely to be for the foreseeable future.

New home costs are also down -  mainly because builders are cutting their margins to try to compete - but, since material and labor costs haven't gone down (and many have gone up), there's a limit to how low the prices can go.  So, if the best buys are in existing homes, why in the world would anyone decide to build a new home?  Actually, there are a number of really good reasons why you'd pick now to build your new home:

• Prices are attractive.  I know, I just said the best bargains are existing homes, but that doesn't change the fact that builders are working hard to make their products more affordable.  Lot prices may be better, and new technologies are allowing builders to save during construction. 
• They don't build them like they used to.  In this case, that's a good thing.  The builder I represent, Goings Homes, is a builder of Green Homes - featuring design and construction features to enhance the Energy Efficiency, Environmental, Health, and Safety features of the home.  A home built with these features will save energy today, and, when you factor in resale value, is very likely to cost less in the long run. 
• You can have exactly what you want.  A few years ago, our neighbors asked me to help them sell their home and purchase a town home.  They had purchased their home from the builder, and had maintained it impeccably for 49 years, so clearly they would plan on staying in the new home for some time - in fact, it will probably be the last home they buy.  They would need a quality home, and didn't need to settle for something "just OK".  After searching, we quickly determined they wouldn't be happy with someone else's home - they all needed work.  We did find a very nice town home, built by a reputable local builder, that was complete.  Since it had been complete for some time, the price was very attractive, but it wasn't quite what they dreamed of - they really wanted some upgrades, and preferred different woodwork and cabinets.  In addition, the location, while nice, didn't sit exactly like they wanted.  In the end, they ended up building a home, and having everything just the way they wanted it.  Did it cost a little more?  Of course - in fact, they spent about 10% more for the home than they would have for the existing (but still new) one, even allowing for the upgrades.  They got what they wanted, and they'll live there for years - the extra cost was more than made up for by the satisfaction of living in their dream home.
• Reduced Maintenance Costs.  When you buy a new home, you're getting new everything - wiring, plumbing, roofing, carpet, heating and air conditioning, appliances - the whole ball of wax.  Yes, you've paid a little more, but you won't have to put a roof on in a few years.  With an existing home, something is going to need attention eventually, sometimes pretty quickly.  Most builders will offer a warranty covering their construction methods and materials, and appliances will be covered by a manufacturers warranty.

OK, you're convinced, right?  Well, hold on a little - not everyone should buy a new home.  What are some legitimate reasons NOT to buy new construction?  Here are a few:

• You never stay in one home for long.  My neighbors lived in their home for 49 years - that's one extreme.   I had a client who was moving for the 5th time in 8 years -  that's the other extreme.  Figure out where you are on that scale - if you're likely to move in just a few years, think hard before you buy new.  An exception would be if you are transferred for work and have a relocation package that guarantees you won't lose money on the sale of your home (the case with my client mentioned above).  The point is, you'll lose money if you have a home built and immediately try to sell it.  Think about it - why would you buy a used home for the same amount you could have a brand new one built?
• You absolutely want to live in a particular established neighborhood.  In Lincoln, as in most cities, there are some lovely older neighborhoods that have a character and charm that appeals to certain buyers.  In those cases, it's unlikely you'll find an available lot, and, if you do, your new home will be out of place surrounded by stately older houses.
• You love old homes.  In my experience, there are two types of people - Old Home People, and everybody else.  People who love old homes see the beauty in them - they like the creaking floors, plaster walls, drafty windows, and cave-like basements.  There's nothing wrong with that - just like there's nothing wrong with the buyer who wants nothing to do with any of that.  Look around a little, and see what  you really like before you make a decision.
• You really like to fix up a home yourself.  Some people will remodel a house, no matter what its condition.  If that's you, go ahead and buy a home that needs some work.  I have a good friend who is extremely handy.  He has the time, ability, and money to fix up a home so it's just how he wants it.  A few years ago, he and his wife bought a new home.  They got a great deal on it, but it was very plain - white walls, cheap, white countertops, carpeting in the kitchen, etc.  I didn't really like it very much when I first saw it.  After they bought it, he did just a few things to it:  Removed living room windows and replaced with much larger, better windows, Painted the entire home, Added enclosed, heated sun room on the back of the home, Replaced kitchen countertops, Finished almost the entire basement, Added underground sprinklers, Removed kitchen carpeting and replaced with ceramic tile, Replaced virtually every light fixture in the house, Removed the stained baseboard trim, painted, and re-installed, Added crown molding, and probably a bunch of other things I can't recall.  The house is beautiful - you wouldn't recognize it.  It probably made sense to him, but for almost anybody else, this would be nuts!  If you want a house like that, it's more cost effective and less frustrating to just have it built that way.
• You need something right NOW.  Building a home from scratch takes around 6 months, so if you've sold your home, and have very little time to get out (and you're not willing to rent while your home is being finished), you'll need to buy something that's already complete.  That could be a spec home - new construction built without a commitment from a buyer - but it will most likely be an existing home that someone is leaving.
• Cost is your primary consideration.  Face it, if you are looking at the very low end of the price scale, new construction just isn't in the cards.  In Lincoln, many home buyers are looking at or below $100,000.  There are few, if any, new homes available in that price range, and those that are may or may not have the size or features you require.  There are plenty of great deals out there for existing homes - you'll find something great in your price range.

New construction isn't for everybody, but, when it makes sense, it can be a great plan.  If you're thinking of moving, consider new construction, along with your other options.  If you think it might make sense for you, ask your realtor to set up a meeting with a builder or two - you'll want to have confidence in whoever you choose to build your new home.  Take a look at some of their other homes, and see what you think.  With the right builder, getting into a new home can be an exciting and low-stress experience!