Why New Construction Homes Outshine Used Homes: A Buyers’ Guide

The Tale of Two Home Buyers

As a home buyer, you have the difficult choice of choosing between buying new construction and buying used. Maybe you’re already set on buying a used home. You’ve embarked on the difficult journey of looking at house after house, talking extensively with realtors, and thinking through all of your must-haves and budget over and over again. But what if there’s an easier, better option you’ve possibly already ruled out? Join us on a journey as we explore how two distinct families, the Jones and the Smiths, weigh their options between new construction and pre-owned homes.

The Jones, Chris and Tina, decide to buy a used home. Before buying, Tina already knows they need to rip out the carpets because they smell like pets from the previous owners and her husband also has an allergy. Okay, they say; this won’t be too bad, and it should be a somewhat easy fix. They go with new LVP flooring and drop $10k right off the bat. Two years later, a heat wave in the summer hits and their 12-year-old HVAC kicks the can, so they have no choice but to spend another $10k. When they bought the home, they knew the roof wasn’t great but unfortunately, reality sets in five years into owning the home. They see the water stains and leakage, water trickles in through their kids’ ceiling, and puddles start to form in the attic, meaning they have to replace the roof sooner than they imagined and spend $12k. Six years later, just when they thought they might have a year to stop repairing their home, the water heater goes bad and they have to fix that too, costing them $3500. And these are just the major expenses; on top of that, there’s a constant long honey-do list for Chris: a leaky faucet, updating light fixtures, fixing squeaky doors, failing appliances, etc., and boom! All of their weekends start to revolve around these home improvement projects. We know this seems like a lot of bad luck, but this is a reality to consider when buying a used home. Trying to update and customize a home to fit your family comes with more expenses and unfortunate surprises as the years go on.

Now let’s look at our other buyers, the Smiths, John and Stacy. This family decides to spend the extra money and buys a new construction home, spending about $50k more than the Jones. They are able to choose the exact home they want with an updated floor plan that fits their family’s needs. Upon moving into their new home, they have no projects and no honey-do lists, meaning they get their weekends back! They love inviting friends and family over to celebrate right away and feel confident in showing off their new home. When it comes to utility costs, their home is highly efficient and energy-saving, featuring tankless water heaters, 15 SEER HVAC units, 90% gas furnaces that heat the home, energy efficient appliances, low flow plumbing fixtures that help reduce water waste, and all LED light fixtures, meaning they’re able to save money and not worry about repairs or maintenances in the near future. Not to mention, the insulation thickness is much thicker than it used to be, meaning they also save on heating costs compared to a used home. They know they are spending a little more in the beginning to buy a new construction home, but love all the extra time they have, the cost-savings, and a home that features all the updates and the layout they’ve always dreamed of.

Now let’s compare the costs!

The average price of a used home in November of 2023 was $387,600 and the average price of a new construction home was $434,700, about a $50k difference, according to this Bankrate article. This may seem like a huge difference, but let’s break the loan payments and pricing down a little more.

The Jones, who purchase a used home, place a 5% payment down, have a 7% interest rate, and have a 30 year loan, so their monthly payment is $2,449 (principal and interest). The Smiths, who purchase a new construction home, also place a 5% down payment and a 30 year loan. However, they took advantage of the buy-down promotion offered by the builder and received a 6% interest rate. Because of this, our new-home buyers pay $2,475 per month (principal and interest). The grand total difference is… only $26 a month! Less than you were expecting? Maybe buying a new home doesn’t sound so out of reach after all.

Conclusion: What Will You Choose?

In the epic saga of new vs. used homes, maybe you’re starting to think there’s a clear winner for you. With used homes, their listing prices are typically cheaper, and you might have a better opportunity of living in an established neighborhood. But with new construction homes, they offer a blend of modern design, eco-friendliness, and the ability to move-into a home just the way you like it that used homes just can’t match. And after doing the math, you might realize the higher price tag doesn’t actually mean a much higher monthly payment. Now it’s time to decide. Which route makes more sense to you? And maybe you’ll reconsider a possibly ruled-out option and step into a future of hassle-free, personalized living.

To view a current list of our homes for sale in both our new communities and pre-established neighborhoods, click the link here!