Buying vs. Building a Home in Charlotte: Which is Right for You?
01-September-2020
Whether it’s time to move on from your current home or you are setting off on the new adventure of first time home buying, you may have asked yourself the question - is it better to buy used or build?
Let’s be honest, there really is no definitive answer to this question and your answer will depend upon which factors of homeownership are important to you as well as the stage of life in which you find yourself.
What we can do is paint you the bigger picture of what it means to buy a used home versus embarking on a new construction in the greater Charlotte area - weighing the pros and cons of each option.
So keep reading to find out more!
Buying Used
As of June of 2020, new listings for the Charlotte/Concord/Gastonia areas have dropped by 32.2% from last year. While this is great news if you’re selling a home, the current competitive market may have you compromising your wish list in order to actually find a home before it gets snatched up by another buyer. People are having to make several bids on different homes due to hot competition while some realtors report listing homes that go under contract just two days later.
(Curious about the current Charlotte housing market? Don’t miss our last article about whether now is a good time to purchase a home!)
That’s not to say that buying a used home is not right for you. Housing markets are constantly changing and depending on what stage of life you find yourself in, opting out of the time-consuming process of building a home may actually be the right choice for you. Before making that decision, let’s take a closer look at the costs.
The median price for a home in North Carolina in 2020 is $210,766 while a top-tier home can go for around $366,161. These numbers can vary greatly depending on how close to the city center you want to live or if you are willing to put down roots in a suburb. Either way, buying a used home will have both its pros and cons.
Pros:
- Tends to cost less on the front end: When purchasing a home that’s already on the market, you have the advantage of choosing a home within your price range. If you’ve already budgeted the closing costs, routine maintenance, and any urgent upgrades, you should be able to stay within your fiscal range without too many other hidden costs. There are some potential expenses to consider when purchasing a used home, like any HOA fees that could already be attached to the home.
- Move-in ready: If you’re crunched for time or perhaps the home you’re living in was sold quickly, you’ll need a place to move into right away. However, never forgo a thorough home inspection as used homes can have hidden maintenance issues that will require some time and attention before finalizing the purchase and hiring the moving truck.
- You don’t have to buy land: This can be a relief for many homebuyers who don’t want to go through the trouble of searching for a lot. (However, do keep in mind that most building companies should already have pre-purchased lots and take care of the permits).
Cons:
- Higher energy bills: This is especially true for older homes that were built without energy efficiency in mind. In fact, utility costs are one of the most expensive aspects of homeownership and come in as the third largest expense, just behind mortgage payments in property taxes.
- Buyer’s remorse: With such a competitive market, it’s possible that you will need to make a quick decision on the purchase of your home. Just make sure you are not being rushed into buying a property that you will later regret.
- Lower resale value: It’s just a fact - newer homes have energy-efficient and technological features that will raise its value. Without investing a large sum in upgrades and renovations, an older home cannot offer this benefit.
- Expensive remodels down the road: This one isn’t a given; with the exception of an emergency renovation due to roof leaks or a faulty electrical system, many decisions on upgrades will be just that - your decision. But make sure to take into account the costs of remodeling and installing features that you really do want in your home.
Building New
Now that we’ve covered the basics of what it means to purchase a used home, let’s get into the nitty-gritty of a new build.
While there is no question that a new construction will be a direct product of your wishlist - it’s important to take into consideration both the pros and cons of embarking on this endeavor.
The factors going into the cost of building can vary - especially when one of the biggest variables is the status of the current housing market. However, aspects like size, location, materials, and labor can be easier to estimate.
While it’s impossible to approximate the cost of your particular new construction (as the final price tag will be determined by your building and design decisions) an average new construction in the Carolinas costs around $293,000.
Your final price will have to take into account the structure of the home, interior finishes, mechanical (HVAC, electrical, plumbing), and the cost of the builder/contractor. These costs can add up, which is why starting with a realistic budget and working directly with your builder to stay in the confines of your financial capabilities is essential!
Let’s take a closer look at the advantages and disadvantages of a new build:
Pros:
- Complete customization: When building your home, you get to make all of the decisions. If you want an open floor plan, you got it. If you want to put a bonus room above the garage, it’s yours. A good contractor will work with you to get the best quality materials for your budget and even help you navigate the often stressful decision making process.
- Energy efficiency equals lower utility costs: With energy efficiency features, the U.S. Department of Energy has estimated that a household can save 25% on utilities which can come out to $2,200 in annual savings. Having these up-to-date features will also give your home a higher resale value if in the future you decide to put it on the market.
- Paying for what you need: With a new construction, you are paying for what you need. You can work with your builder to make sure that every piece of your budget goes towards aspects of your home that really matter to you. You won’t be paying for someone else’s finished basement, a previous owner’s splurge on elaborate landscaping, or a walk-in wine cellar when all you really want is extra space for entertaining.
Cons:
- Takes longer: The average home takes 6-7 months to build. So if you are in a housing situation where you can’t wait out the construction period and need a move-in ready option now, consider searching for a home that’s already on the market.
- Can cost more on the front end: It’s no secret that building a home carries its price tag and the construction process can often run into hiccups and unforeseen expenses. However, your builder will often work with you to predict those costs and include them in your initial budget so you will never be caught off guard.
- Lots of decisions: We know, this can also be a pro. But if you are one of those people who prefers not to make a lot of decisions or doesn’t have the time to plan down to the last detail, building a house could be more stressful for you. Just be prepared to accept the decisions other homeowners have made before you.
What about Spec Homes?
Perhaps you want the benefits of a new home, energy efficiency, and smart design but don’t have the time to wait for an extensive build.
Many building companies offer spec (short for “speculative”) homes which are alternatives that can combine the best of buying a used home and the advantages of a new construction.
Spec homes are constructed by the building company with the input of expert designers and architects. They come with all of the features of a new, never-lived-in home and take 2 months less than a new construction.
The only difference? They are move-in ready and reflect the interior and exterior decisions of a professional designer and builder!
Making the right choice for you
Whether looking for a home for yourself or with your loved ones, it’s important to have a conversation that goes beyond just the numbers.
What are you really looking for in a home? Do you have the time to wait? Are you up to making a lot of decisions? Does competing in the hot housing market put an extra strain on your life? Perhaps you want the benefits of buying a new home but don’t need to be a part of making every decision.
At Casanova Homes, we know this is a big decision. Our team is here to offer a listening ear and help you navigate the housing world by helping you get what you want.
If you are considering buying or building a home in the Charlotte area, Casanova Homes is ready to help!