As the prices of properties continue to soar in many areas, the question regarding whether to buy a newly built home or rehab an existing one has been popping up with increasing frequency.
For some, the lure of a freshly built single-family home that has never been inhabited is a no-brainer. Others prefer the perks that come with dated construction—prime locations, established neighborhoods, the character of old world construction, and so on.
There is also the small matter of cost, and although new builds are a percentage costlier than their existing counterparts, this disparity is fast washing away. What we are seeing in some markets is old single-family properties priced so high that it makes more sense to build or buy new.
Does the Charm of Old Construction Justify the Cost?
There are some things we just cannot take away from old single-family homes. Considering these properties were constructed way back when property prices were very low, they are more likely to sit in some of the most prime locations in town.
Typically, they tend to have larger yards and more mature trees and vegetation, and they are often located closer to downtown, entertainment, and restaurants.
As far as the houses themselves are concerned, there is no denying the fact that older construction was meticulously built, and the genuine craftsman is still hard to miss. After all, they have weathered the storms for decades; others centuries.
Older homes also have more character thanks to the interesting architecture dating centuries back. Popular styles include Victorian, Colonial, Tudor, and Greek Revival.
Beyond this allure, though, older homes often come with a lot of baggage. A lot of this mostly boils down to one thing: cost.
There is always something that requires fixing. Chimneys may require tuck-pointing; so might stone foundations. Roofs may leak. Floors may slope.
While periodical maintenance is essential for every home, old or new, it is an inevitable, frequent undertaking in the case of older homes.
Replacing the wiring and plumbing is also an expensive affair with older single-family homes. Apparently, this is something that is bound to come up at some point.
Growing tree roots could, for instance, break up sewer pipes. If a property was constructed prior to the sewer system, there is a likelihood the cesspool will overflow into a sewer. Old galvanized pipes are also prone to rust.
In the case of electronics, the sensitive ones require grounded wiring. Aluminum wiring, common with older homes, is also a fire hazard. The list goes on.
There is also no overlooking the fact that many older homes might not be equipped with trendy installations. The HVAC system aside, this could also mean costly bathroom and kitchen remodeling jobs. Assuming this is all taken care of, then it will no doubt reflect on the listing price.
Speaking of listing price, despite their age, classic and vintage homes these days generally cost more than many new builds. This is not all to do with the obvious charm. They also tend to be within proximity of mass transit, schools, shopping, and urban amenities.
Why Buying New Makes More Sense
From an investment point of view, a newly constructed single-family home comes with a slew of benefits.
For one, there will be little to worry about in the case of repairs. All the major systems in the property, from the roof to the plumbing to the electrical and HVAC are in tip-top condition.
This not only means less overheads in the name of maintenance, but also better prediction of monthly homeownership cost. Warranties can also protect a new home for years before any major repairs are needed.
New homes are also likely to be more efficient when it comes to heating and cooling—one of their major selling points, actually—which means lower utility bills to contend with.
These types of properties are also smarter and healthier when it comes to integration of technology and building materials, as they often use paints and materials low or devoid of volatile organic compounds (VOC), which translates to better indoor air quality.
The other advantage a new home has over an old one is a more updated look that appeals to the modern-day renter or buyer. Newly constructed homes are coming with open concept floor plans (a big deal these days), granite counters, and other higher-end finishes.
Essentially, this means less or zero work to bring the property up to the standard that most renters or buyers expect, not to mention the potential for higher rental rates since tenants will fork out more for a newer home with all the nice finishes.
Do you prefer to buy older homes or new construction? Why?
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.