This is a common question in buyer’s minds and rarely do they have the chance to make a side-by-side comparison. This decision is almost always reduced to the denominator of total purchase price but there are many other considerations. With that in mind let’s look at some of the challenges and opportunities when buying a new home in Northern Nevada.
Pros of buying a New Home
· It’s untouched and clean: Nobody else’s dirt, dents, smells or scratches and make no mistake, there is a value to that. This is the number one “must have” from devoted New Home buyers.
· Customizable features: Options to upgrade flooring, paint, cabinets, appliances & built-in fixtures are available in almost all cases. Quite often, you’ll have the opportunity to pick the lot your house will be placed on.
· It’s energy efficient and “up to code”: At the very moment you move in of course but building codes are always changing. That said, brand new fixtures such as insulation, windows, plumbing and electrical systems almost always provide an immediate cost savings. Buying a home with a new roof, furnace and water heater often pays off in the long run.
· The builder may provide a warranty: One year is typical in Nevada but it’s not required by law, check the fine print.
Cons of Buying a New Home
· You’ll probably pay more up front and it may not be ready right away: This is a generality of course but the typical wait for new homes in our area is 3 – 6 months. According to recent reports from the National Association of Realtors (1) and the US Census Bureau (2), the median sales price of new homes is roughly 10% higher than existing home sales. However, I should mention that this gap was almost 20% just 3 years ago and this decrease may be related to my next point.
· Most new homes tend to be suburban, sometimes rural in nature: Currently, there are just a few new home developments under construction inside the city limits of Reno, Sparks & Carson City. The vast majority are 10 miles or more from downtown while “in-town and convenient” tend to top the “Wish-Lists” of both young buyers and retiring down-sizers.
· You still need a finished yard and window coverings: Typically, my new home buyers invest an additional amount equal to 7% – 10% of the purchase price of the home into these upgrades over their first 2 – 3 years. These finishing touches can be quite costly, but they may also provide the homeowner with the opportunity for a little “sweat equity” assuming they are willing and able to do some or all of this work themselves. DIYer’s should keep an eye out for contract provisions dictating a timeline for these improvements, often within 12 months of closing.
· If one home has a defect, it’s likely they all have the same problem: Constructional defects can haunt even the most reputable builders. When facing the challenge of manpower and material shortages, the risk gets even greater. Over the years I’ve seen entire neighborhoods contend with the stigma of: (insert one or more defects here) Roof Tile, Stucco, Plumbing, Concrete, Moisture & Soil Conditions, etc., etc…. It can take years for the neighborhood’s image and values to recover.
If you’re comparing new homes to existing/resale now, I hope you’ve discovered a few points to consider rather than a simple up-front cost analysis. We can help in many ways. Give us a call!