One concept that is often hard for home buyers to understand is why building a new home costs more than purchasing an existing home. It’s difficult to compare a new home to an old home, they are just not on the same playing field.
Here are 3 factors to keep in mind when it comes to the cost of new construction.
- Home products are more expensive, and Lumber is in short supply. According to the Wall Street Journal, “Builders in the U.S. say the higher lumber costs are making homes more expensive. Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more.”
- There is a labor shortage. According to Curbed, “The lack of enough skilled workers and a narrow talent pipeline has added extra hurdles, time, and costs to many current projects, according to builders, hindering the current boom time in the industry.”
- Land is more expensive. There is no way around it, the cost of land has increased in value.
Now with that being said, there are significant cost savings when purchasing a new home vs. old home.
- Maintenance: Realtor.com said it best, “Old homes come with an inevitable need for repairs, replacements, and upgrades. On the other hand, “New homes should be worry-free for several years,” says Stewart. “A brand-new hot water heater, HVAC system, and roof all but ensure no major out-of-pocket expenses for at least eight to 10 years in most cases.”
- New homes are more energy efficient: All of our homes are ENERGY STAR Certified. ENERGY STAR certified homes are at least 10% more energy efficient than homes built to code and achieve a 20% improvement on average.
- New homes are built to today’s code: With a recently built home, “You’ll have peace of mind that all systems are new, up-to-date, and you’ve got no problems that could come down the line,” notes Carib Daniel Martin, a residential architect in the Washington, DC, area. “Some of those issues can be pretty drastic.” For instance, if you’ve never heard about knob-and-tube wiring—commonly found in older homes—look it up. Then look at the cost to have it fixed or replaced. Realtor.com