Is It Cheaper To Build Or Buy A House?
Homeownership is a significant component of the American dream. However, there is a massive list of decisions that people have to make and questions they have to ask when getting a new home for themselves and their families. One of the common questions that many future homeowners have to ponder is whether it’s more cost-effective to buy or build a new house. Which is the cheaper option? If one costs more, does it offer specific benefits that make the higher costs worth it?
Thankfully, our team of trusted experts here at My Site Plan is here to help you explore these questions so you can make the best home buying (or building!) option that’s right for you. Please continue to explore the cost comparisons of building vs. buying a new home and the various other pros and cons that come with each option.
Related: Everything You Need To Know About House Framing
What Are The Costs of Building a Home?
Suppose you’re focused solely on the initial costs involved. In that case, building a home can sometimes be a bit cheaper than buying one- around $70,000 less, in fact- especially if you’re making efforts to reduce your construction costs and save money. That said, building a new home is very expensive and can end up being more costly than buying a home depending on your particular situation and other factors involved, such as your location and any extra amenities you want to add.
According to data from Home Advisor for 2022, it costs approximately $284,397 to build a new house in the United States, and people typically spend between $119,022 and $449,772 on average. Typical construction costs to consider when building a new house include:
- Buying and clearing land: $4.5k-$155k
- Framing the house: $20k-$50k
- Creating the home’s foundation: $4k-$25k
- Roofing the house: $5.6k-$11.5k
- Plumbing and electrical installation: $27k-$45k
- Window purchases and installation: $3k-$9.3k
- Exterior and interior finishing: $51.8k-$179.4k
Related: What is the Cost to Frame a House in 2021
What Are The Costs of Buying a Home?
While the costs of buying a new home may seem obvious, things tend to be a bit more complicated than prospective homeowners may realize. Despite the seeming straightforwardness of the home-buying process, you’ll likely find yourself paying more than the asking price of the house in question, especially in the competitive markets of the current real estate industry. The typical costs of buying a home include:
- Down payments
- Closing costs
- Mortgage and homeowners insurance
- Title insurance
- Property Taxes
- Various fees (including HOA fees, origination or underwriting fees, appraisal fees, application fees, credit check fees, title search fees, and more)
- Home maintenance, repairs, and upgrades
According to data released by Redfin, the median sale price for homes throughout the United States is currently set at $306,000, which represents a 6.7% increase from last year. That said, the total amount you’ll pay for a new home is dependent on several factors, particularly the city and state you’re looking to buy in. For example, the median sales price in five of the most popular metropolitan areas in the country ranges from as little as $203,000 (in Chicago) to $635,000 (in Los Angeles).
If you’re currently planning a home construction project, you’ll need access to a quality site or plot plan to help you get started and get your hands on the necessary permits involved. Our team of trusted experts at My Site Plan is here to help.
The Pros and Cons of Building a Home
Building a home comes with a wide range of benefits and drawbacks that future homeowners need to consider carefully before choosing to move forward with any construction plans they might have. These include:
- You’ll get precisely what you want out of your future home because you can customize it to meet your exact desires.
- You can avoid the hassle of struggling against competing offers on the housing market.
- The house will be move-in ready when all is said and done.
- You shouldn’t need to worry about any significant repairs when you move in.
- New homes offer broader market appeal.
- Newer homes tend to cost less to live in because they’re more energy-efficient.
- Newly built homes cost less to maintain.
- You’re the first person to own the house!
- It takes a lot of time to build a new home.
- You’ll have to make a wide range of decisions throughout the building process.
- You may have to deal with issues from contractors.
- It may be more or less expensive than buying an existing home- it just depends on your situation.
- You’ll have to handle every expense, which can get costly fast.
- You don’t have many options for price negotiation.
- Home trends can fade quickly, and you may eventually find it challenging to sell the house.
Related: Basic, Medium, or Detailed - Which site plan is right for you?
The Pros and Cons of Buying Your Home
Like building your own home, buying a home also comes with a range of benefits and drawbacks that prospective homeowners need to consider before putting down any of their hard-earned savings. Some of the most prominent pros and cons of this decision include;
- Buying an already existing house allows for faster move-in time.
- You have higher bargaining power.
- You have more options regarding the area you want to live in.
- You can make a better budget for renovations over time.
- The landscaping will usually look better.
- You may need to invest in repairs sooner.
- You’ll have to renovate or upgrade to get what you want.
- The house will likely be less energy efficient than a newly built home.
- You’ll probably have to make some compromises.
- The house will have older internal systems and appliances.
- You’ll likely have to deal with some market competition.
Final Thoughts and Considerations to Keep in Mind Going Forward
Thank you for reading through this article on the cost considerations of buying vs. building your future home. Our experts here at My Site Plan hope it’s been able to help you make a better, more educated decision regarding your path to future homeownership. If you’ve decided to construct your own dream home or simply want help renovating your current property, please don’t hesitate to explore our wide range of top-quality site and plot planning services. And for more information on home construction, renovation, or more, please also consider exploring our wide selection of educational articles and other resources.
Having access to top-quality site and plot plans can make it much easier to get your hands on the various permits you’ll need for your future construction and demolition projects. Thankfully, our team of trusted experts here at My Site Plan is eager to help.
- Ryan Crownholm