Buying vs. Building a House: Rachel Cruze Says One Is Cheaper, but Not Always Better
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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No matter which way you slice it, buying a home is expensive — and that stands whether you buy an existing home or build one from scratch. However, building is still the pricier option.
“Custom-made things tend to cost more and take longer to make than anything store-bought or mass-produced — especially when it comes to houses,” Rachel Cruze wrote in a recent Ramsey Solutions blog post. “Time and money are two important things to consider when you’re deciding whether you should buy or build a house.”
However, just because buying an existing home is typically cheaper and quicker, that doesn’t mean it’s always the best option. Here are the factors you should consider when deciding if you should build or buy, according to Cruze.
Cost
Cost is certainly a factor you need to consider when deciding whether to build or buy.
“In a survey by the National Association of Home Builders, the average cost to build a new home in 2022 was $644,750,” Cruze wrote. “Meanwhile, the average cost to buy an existing home in 2022 was about $535,500. When you do a little quick math, you’ll see buying an existing home instead of a new one could save you about $109,250. That’s a lot of money!”
While prices have gone up for both new builds and existing homes since 2022, they have gone up more for new builds.
“Thanks to inflation and supply chain problems, builders are paying more for building materials and resources they need to build houses, like workers and fuel,” Cruze said. “All that to say, building a house is not cheaper than buying.”
Time
One of the biggest drawbacks of building a home is how long it takes.
“It takes an average of seven months to construct a new house — not counting the planning and approval stages,” Cruze wrote. “But closing on an existing house usually only takes 30 to 45 days. Plus, you’ll have to pay to live somewhere until your new home is ready — that means if you’re building, you could get stuck paying your current rent or mortgage plus the construction costs for several months.”
If you’re in a time crunch, buying an existing home is definitely the better option.
Home Features
The biggest advantage of building a home is that you can create a home that’s exactly as you want it to be.
“Building a house from the ground up lets you personalize it to suit your lifestyle and tastes — everything from the layout, cabinets and flooring to the sinks, lighting and doorknobs can be custom-picked,” Cruze said. “Even tract homes built within subdivisions allow for some customization in color choices, flooring and certain finishes. So, whether you’re after a rustic feel or a fancy art deco vibe, you can make these style choices early on.”
When you buy an existing home, you will likely have to make some compromises.
“You probably won’t find a house that checks off every single need and want on your wish list, and you might have to settle for some things you don’t like,” Cruze said.
Other Factors To Consider
Perhaps living in your dream home is more important to you than getting the best deal or getting to move in quickly. On the other hand, you may put value and ease above everything else. Deciding whether to build or buy really comes down to your needs and wants.
In addition to cost, time and customization, Cruze said to take these other factors into account.
Competition
“When you own land to build your home on, you obviously have zero competition with other buyers,” Cruze wrote.
Maintenance
“Since new homes must meet current building codes and have up-to-date technology, you probably won’t have to worry about big repairs or maintenance issues for the first few years — no leaky roofs or failing HVAC systems for you,” Cruze wrote. “Plus, you don’t have to worry about finding the last owner’s bad duct-tape repairs.”
With older homes, the maintenance costs are likely to be higher.
“Always keep the age of a house in mind when shopping,” Cruze wrote. “An old, inefficient HVAC system could also cost you a lot more when it comes to your utility bill.”
Energy Efficiency
“New homes often feature the latest energy-efficient systems and materials, which usually lead to lower energy bills,” Cruze wrote.
Ability To Negotiate
When you buy an existing home, you can negotiate the price with the seller.
“You can also negotiate on things like repairs that need to be done to the house,” Cruze said.
There is less room for negotiation when building a home.
“There isn’t much leeway on closing costs or purchase price with a newly built home — unless your real estate agent gets creative at the negotiating table,” Cruze wrote. “But even then, you’ll probably get more bang for your buck with an existing home.”
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