Is It Better to Buy or Build a Home?
You’ve already decided that a brand-new home is the right choice for your family, but now it’s time to think about whether you should build a home to your exact specifications or whether you should buy an existing home – either a quick possession option or a resale.
Buying a home is a big commitment, and you’ll be living in that home for many years to come, so you don’t want to have any regrets about your purchase.
Let’s take a look at some of the advantages and disadvantages of buying vs. building a brand new home, so you can feel confident about your final decision.
Buying a Brand-New Quick Possession Home
Yes, you can get a brand-new home that’s already been built. As a builder, we understand that people have unique needs, so we make a point of building some homes on spec so there are options in stock. The advantages and disadvantages you’ll read about here apply to these quick possession homes, but you’ll also find that they apply to resale homes as well.
Let’s take a look at the pros and cons of buying a home that has already gone through construction.
Pro: Faster Move-In Times
Building a new home can take 9 – 12 months. When you purchase a quick possession or resale home, you can move into your new home within just a few months. This presents the best solution for those who simply don’t have a long timeline, especially if you are moving to a new city or don’t want to carry two mortgages while your new home is being built.
Pro: What You See Is What You Get
Building a new home can feel like a leap of faith. You can look at examples of the builder’s work, but you have no way of knowing what exactly your new home will look like. When you buy a home that you’ve had a chance to walk through and see, you know the exact home you’re purchasing. This means you won’t have any surprises once you move in.
Pro: Simple Buying Process
The mortgage process is a little more complicated when you build a new home from scratch. You have to receive parts of the mortgage at different stages, changing the amount you’re paying each month.
The good news with a quick possession home is the mortgage process is much more straightforward.
You apply for and are approved for your mortgage, then you get to shop for your home. As long as you find a home that fits the budget that the lender has given you, you shouldn’t have any problems with the mortgage process.
Pro: Better Pricing Options
We design our quick possession homes to be affordable without skimping on quality, and our streamlined building process helps us control costs. This means that you’ll be able to get your new home for a great price. Building a home can cost more, depending on the choices you make in the build.
Additionally, you may be in a position to negotiate the price if the builder wants a quick sale on the home. This is almost impossible to do when building a home from scratch.
Pro: Less Construction to Worry About
One of the hassles of any new-build home is the presence of loud construction vehicles as the builders take on building the neighbourhood. In general, a quick possession home is going to be in a part of the community that’s completed or near completion, so you won’t have to deal with the noise of construction. If you choose to build your home instead, you might be hearing the building noise for a while after you move in.
Pro: No Unexpected Delays
Throughout the building process, there are plenty of situations that could cause delays. Plans could take longer to approve than expected. There could be a shortage of lumber or other materials needed to build the home. This past year, COVID really slowed things down. You don’t have these same concerns when you buy a home that’s already (or almost) completed.
Pro: Moving Tenants In Immediately
If you’re an investor, the longer your property goes unoccupied, the longer it takes for you to start earning money. When you build a home, you’re making payments on the mortgage while the home is being built. With a quick possession or resale house, you can move tenants in as soon as you get the keys to the property.
As you can see, there are a lot of great benefits to a home that’s ready for you to move in right away. However, there are some downsides as well…
Con: Less Control Over Design
With a quick possession home, you don’t get to make a lot of the design decisions, and for some people, this is the fun part of buying a brand-new home. This is even more true in a resale home.
With a new home, you may still be able to alter some of the cosmetic parts of the home, but you can’t change the floor plan. If you have specific and unique needs when it comes to the floor plan, you will have a hard time finding those in a quick possession or resale house.
Con: Few Neighbourhood Updates
If you’re purchasing a home in an established neighbourhood, you have to make sure that it already has the amenities you want. If there’s something you’re looking for, like walking trails, a pond, or even a nearby specialty store, you want to make sure it’s there. In a neighbourhood that’s more up-and-coming, it’s a good bet that features like these will be added nearby at a later date, but not with established neighbourhoods.
Con: Need for Renovations
It’s not uncommon to plan for some renovations if you’re moving into an older resale home. However, even those who choose a new quick possession home may want to make some adjustments. Families, for instance, may want to personalize the space by changing paint colours. Investors, though, would incur additional costs as they do things like add a legal basement suite or side entrance to a home.
When you build a home from the ground up, you get exactly what you want and need.
Building a New Home
Building a new home is a popular choice for a number of reasons, but it’s not without some careful consideration both ways. Let’s take a look at some of the advantages and disadvantages you’ll find when building from scratch.
Pro: More Customization Options
Customization is one of the most obvious benefits to building a home from scratch, but people don’t always realize just how many opportunities for customization there are. You get to choose all the design details and in some cases, you can customize the layout of the home. This is a big benefit for anyone looking for something special.
There are also opportunities for customization when you think about the lot placement. For instance, you can choose a lot with a bigger backyard for the kids or a smaller one so you don’t have as much yard work. You can also select a lot close to neighbourhood amenities or that backs up onto a wooded area. The further you get into the buying process, the more you realize how easy it is to truly create the home you’ve been dreaming about.
Pro: Better for the Environment
In general, new homes can be good for the environment. They’re built using modern materials, and buyers can choose environmentally-friendly options. Additionally, homes built with modern building techniques tend to be more energy-efficient. As an added bonus, you can talk to your builder about choosing a lot with good placement to take advantage of the sun’s natural energy.
Pro: Better Resale Value
You’re planning to stay in your new home for many years, but when it does come time to sell the home, you’ll find that it has a better resale value than an older home. As time goes on, people are going to want the types of features that are included in newer homes, such as the owner’s suite, modern designs, and energy efficiency. They’ll be more likely to check out your home because it has what they’re looking for.
Pro: New Home Warranty
All brand-new homes in Alberta are covered by the Alberta New Home Warranty Program. If something breaks in the first few years you live in the home, you won’t have to worry about repairs. This is a big relief, as many new homeowners are tight for cash after moving and want to have some peace of mind. If you buy an older resale home, you’ll need to budget for major repairs as soon as you move in.
Pro: Growing Value of the Home
When you build your home in an up-and-coming community, everything around you is growing and expanding. There might not be much to the neighbourhood now, but when you try to sell the home in 10 years, there could be a ton of great features like a new school, interesting shops, and so on. These are features people will pay more to be near, so there’s a good chance that your home could skyrocket in value.
Pro: No Competition From Other Buyers
In a hot resale market, you’re always worried about competition from other buyers. You might find your dream home, only to be outbid by someone else. Sometimes, sellers are even getting more than the asking price. This can be an incredibly stressful process.
When you’re building a home to your own specifications, you don’t have this stress. You know you’re going to get the house you want without anyone outbidding you.
Pro: Benefits for Investors
If you’re an investor, buying a built-to-order property is a big plus. You can design it just the way that you want to maximize the income you bring in from tenants. For example, you could design a home with a main living area for one tenant and a separate legal suite in the basement for another tenant. Plus, with the modern look, you’ll be able to charge higher rents while attracting great tenants.
Con: Longer Wait Time
When you customize your home, you have to wait until it’s built before you can move in. This can be troublesome, particularly if you’re moving to a new city and don’t have a place to live yet. If you’re renting, it can be hard to get out of your lease at the right time. And investors have to wait before moving tenants in.
Con: Paying Two Mortgages
During the time that your new home is being built, you will still need a place to live, which means most people are making two housing payments at the same time (rent or a mortgage payment on the home they’re living in and a mortgage payment on the home that’s being built). This can be costly and frustrating. The good news is that the new mortgage payment is done in stages. Talk to a mortgage lender to see what your payments might look like.
Con: Delays in Construction
Most of the time, construction moves forward as planned. Sometimes, though, there are unforeseeable circumstances that slow down the process. We learned a major lesson from this last year when the coronavirus pandemic hit. Luckily, we were able to quickly adapt, but things like bad weather or problems with the supply chain can happen at any time.
Con: Limited Choice in Location
You can only build a new home on available land. If you prefer an established neighbourhood, it may be hard to find a lot for you to build, and any remaining lots are probably not as desirable as the one you want. If you’d prefer to live in a much older neighbourhood – such as one that’s close to the downtown area – you need to look for a place that will allow an infill home. These locations are few and far between. They are also much more expensive than building in a new community.
Because everyone’s home buying situation is unique, there’s no right or wrong answer when it comes to which is the better choice between a quick possession or a brand-new home, so it’s important to consider all the factors to decide which is best for you. If you’re still unsure or you need more information about specific homes or communities, speak to one of our Area Managers today.