Home buyers have quite a few options when it comes to purchasing a home. Budget-conscious buyers often lean toward the typical “fixer-upper” home rather than new construction homes. Their logic is that older homes are usually priced a bit lower, and these buyers figure they can get the home they want by applying a bit of “elbow grease” and investing a little bit of money at their local home improvement store.
But is this always the case? Is it really “cheaper” in the long run to remodel an existing house? Or is a custom home actually more cost-effective? Let’s examine the pros and cons to see if we can reach a consensus on this question.
Advantages of a Fixer-Upper
It’s understandable to see the attraction of an existing home in need of renovating, especially to buyers with limited funds to spend or those who really want their dollars to stretch further. Let’s look at some of the “pros” here:
- Lower cost upfront. You can often get into an existing structure that “needs work” for less money than its move-in ready counterparts. Owners of these properties realize that they can’t compete on value or amenities because you’re going to have to invest more money to fix what’s wrong — so they choose to compete on price instead.
- Customize as you go. Since you’ll be in charge of your own remodeling project, you get to customize options and upgrades to reflect your own tastes, desires, and preferences.
- Personal satisfaction. Beyond the price, you might gain satisfaction from undertaking a challenging renovation project and seeing it through to completion — especially if you are one who likes to do the work yourself instead of hiring it out.
Disadvantages of a Fixer-Upper
Now let’s look at a few of the negatives of buying a home that requires a remodel:
- Lots of work. If you’re the type of person who doesn’t really enjoy making home improvements, let’s face it: a fixer-upper probably isn’t for you.
- The work is ongoing. Fixer-uppers are typically “works in progress” for long periods of time, and when one home construction project completes, another begins. Lots of dust, rooms you can’t use while construction is underway… just be prepared for it.
- Hidden costs. One of the biggest risks involved with older houses in need of repair is that you don’t really know what’s beneath the surface until you get into the project. (Just look at half the home improvement shows on HGTV to see what we mean.) Replacing the drywall often exposes out-of-date electrical systems or plumbing that fails to meet current building codes — so the costs add up. If you buy an old home, you may also have to meet expensive requirements regarding historic preservation. Quite often, homeowners uncover critical problems that are very costly to fix — and suddenly, their “bargain” isn’t so much of a bargain.
- Ongoing costs. The job of “fixing up” an older home is never really over. Just when you replace the water heater, the HVAC system goes out — and then it’s time to replace the roofing. Maintenance and repair costs are an ongoing thing with these homes, so even if you have a lower mortgage payment, you’ll have to budget more money each month to keep up with ongoing maintenance and upgrades.
- Potential health risks. Older homes often have asbestos in them, which can be dislodged into the air during demolition. Mold caused by long-term moisture penetration can also pose health threats when encountered without protective equipment during a renovation. Without proper protection, you could be at risk for cancer and other respiratory issues down the road.
Now having taken a look at the pros and cons of buying a remodel home, let’s do the same with a new construction home.
Advantages of a New Construction Home
- Low maintenance. By definition, everything in a new house home is new, which means it won’t need repairs or upgrades for several years. If you buy a move-in ready “spec home,” you can also move in right away without waiting for the home to be built, generally for the same price as having built it from the ground up. All of this means your ongoing maintenance and repair costs are low, especially at the beginning.
- Warranty coverage. If anything goes wrong within the first year or two, your new construction home will be covered with a warranty to cover repairs and replacements. This also reduces the cost of living there.
- Energy-efficient. New homes are built to stricter energy efficiency standards these days, which means you’ll save money on your utility bills monthly. You can add energy-efficient improvements to an existing building, but rarely does it match a new structure’s efficiency.
- Customize as you go. You’ll notice this benefit is essentially the same as in a fixer-upper. If you build from the ground up, you have the same options for adding your own personal touch — the only difference is that it will be included in your home’s price without costing you more after the fact.
Disadvantages of a New Construction Home
- Usually higher priced upfront. In most cases, you’ll pay a bit more for a brand-new home than for a fixer-upper — although the short term expense will likely result in long-term savings.
- Developing neighborhood and landscape. Fixer-uppers are usually found in more mature neighborhoods with established lawns, trees, and so on. New construction projects are usually built in new subdivisions with unfinished lots and smaller trees, so you’ll need to be patient while these fill in.
So… Which Is Cheaper?
In the long run, the costs of a new construction home and fixer-upper tend to balance out. It’s more a matter of when and how you pay than what you pay. With a new construction home, you at least have a good idea upfront of what your costs will be, with far fewer surprises. It’s more of a gamble with a fixer-upper because hidden issues are quite common, and you could find yourself in a money pit.
Bottom line: If you’re buying a home to “flip” it — that is, to fix it and sell it at a profit — you might come out ahead financially by buying a remodel home versus a new construction home. However, if you’re buying the home to actually live in it, the long-term costs for a new construction home may actually be less than the fixer-upper.
Buying a new construction home might be even cheaper than you think, and Lowder New Homes offers a variety of deals and incentives to help lower the cost. To learn more, contact us today.