New Construction vs. Existing Home: Which is the Best Option for You?

Homebuyers have to make countless decisions throughout the purchase process. The fact is, deciding between neighborhoods, floor plans, finishes and price point can be dizzying for even the most prepared buyer. Plus, when you’re considering one of the biggest investments of your life, making all the right decisions seems that much more important. That’s why it’s critical to consider all of your options before making any choice.  

One major decision you’ll have to make early is comparing a new construction vs. existing home. This initial decision will help guide the rest of your home search, and could seriously narrow down potential properties. 

Of course, before deciding, you’ll want to have all the facts. Thoroughly consider the pros and cons of each home type to start your search off on the right foot. 

New Build Homes 

A new build home is exactly what it sounds like: a house that is newly constructed. 

A homeseeker might come to live in a new build home in a few different ways. Some buyers choose to purchase a lot, or plot of land, and construct their own custom home. They then work with an architect, contractor and other construction experts to build the home. In some cases, a custom home is constructed and, for whatever reason, the owner chooses to sell as opposed to moving in. 

On the other hand, buyers might purchase a brand new home listed by a developer or investor. These homes tend to be less customizable and may come with a predetermined floor plan, color scheme and more. 

Living in a new build home is a unique experience, and it’s not for everyone. For example, in 2020, only 13% of homebuyers opted for a new build. To decide if it’s right for you, you’ll want to understand the unique pros and cons. 

Pros of purchasing a new build home: 

• It’s new! Of course, one of the most enticing benefits of a new build home is the fact that no one else has lived there before. That likely means no wear and tear, no stains and no scuff marks. 
• It may be customizable. If you opt for a custom home, you’ll get to choose the floor plan, paint colors and finishes. 
• It’s likely more energy efficient. Older homes may feature outdated building materials. If you purchase a new home, you could save money on heating, cooling and more. 
• They might require less maintenance. Older homes tend to come with older systems. That means you may have to replace the water heater or kitchen appliances sooner rather than later. New homes tend to come with less issues. 

Cons: 

• It’s expensive. Newer homes are often more expensive than existing homes. This is because building materials, demand and labor can add up. This is particularly true in the current market, as lumber prices continue to climb. 
• They may take more time. In some cases, a new build home may be complete and ready for move in. In other cases, you may need to wait for construction to wrap up. 
• It might cause decision fatigue. When building a new home, you’ll have to decide on floor plan, materials, finishes and more. It may get overwhelming. 
• Financing may be more complicated. If you purchase a new lot and construct a custom home, you might need a construction loan in addition to a mortgage once the home is completed, which means future interest rates could be a gamble. If you opt for a new-construction neighborhood in which one builder sells pre-determined home layouts in the area, you could avoid the need for a construction loan. However, you may be required to pay a deposit for your future home without the ability to lock in an interest rate until 30-90 days before your move-in date.  
• While infill projects offer the opportunity to purchase a new-build home in pre-established metropolitan areas, many new construction projects are offered in wide-open spaces. That could mean less access to trendy restaurants, common convenience and short commutes.  

Purchasing a new build home is a unique experience. To determine if this is could be the right choice for you, lay out your goals, preferences and timeline. Then, compare those factors to the list above. 

It may also help to talk to a real estate agent or home finance professional. They can help direct you to a home you love, new build or not. 

Existing Home 

An existing home is one that has previously been occupied. It is essentially the opposite of a new build, meaning that construction was completed at some point in the past. Existing homes could have been built last year or in the 1800s, but either way, they are not brand new. 

Existing homes make up most of the market, and a majority of buyers (87%) choose one. 

Purchasing and living in an existing home is different from a new build. You’ll also want to familiarize yourself with these pros and cons before making a final decision. 

Pros:  

• It’s already built! Of course, an existing home is already constructed and, in most cases, livable. You likely won’t run into any construction delays. 
• You’ll have more choices. Existing homes dominate the housing market, so you’ll have more choice in your neighborhood, price point and more. Keep in mind that inventory is tight in today’s market, though. Competition can still be fierce. 
• You can upgrade outdated systems. If you do choose an existing home, that doesn’t mean you can’t incorporate the modern materials or home systems of your dreams. Updating an existing home might even build equity. 
• It may come with an established community. If you purchase an existing home within a neighborhood, you may have more access to parks and green space, neighborhood perks and more.  

Cons: 

• Some features may be outdated. Depending on when the home was built or renovated, and what kind of updates the previous owner has made, the floor plan or building materials might be less than trendy. 
• It may require more maintenance. Because existing homes are older than new builds, they might require you to repair or replace certain systems and appliances. 
• You may spend more on utilities. Older building materials tend to be less energy-efficient. This means that you may spend more to heat, cool or otherwise utilize the home. 
• It won’t have that personalized touch (at first). Of course, with an existing home, you didn’t get to choose the layout or finishes. So, it might not necessarily feel like “you” upon move in. Keep in mind, though, that you can renovate and decorate however you prefer. 

Existing homes are a popular choice among buyers, but it’s important to understand the full picture. 

As with a new build, consider what you want out of your purchase. Then, compare and contrast those goals to the corresponding pros and cons list. 

New Build vs. Existing Home 

When it comes to choosing between an existing home vs. a new construction option, there is no one right answer. Every homebuyer approaches the process with a unique set of wants and needs, and the right home will be just as unique. 

Keep your goals at the forefront of your home search and consult with your homebuying team to determine the right fit for you. Then, enjoy your dream home, whether existing or new build!