Making the decision to take the plunge into homeownership is a big step. Once you’ve made that decision, however, you’ll be faced with many more, the first of which being whether you should build or buy your future home. This single decision will have a significant impact on your life and your finances for years to come, and as such should be made after careful consideration of the pros and cons of building a house vs buying. There are many variables to consider, including the upfront cost of building a house vs buying a house, and how the upsides and downsides of each decision will affect you in the long run.
To help you take step back and get a sense of the bigger picture, we here at Fifth&Hazel have put together a few pros and cons of building a house vs buying a house. The decision to build or buy is a very personal one, however, and there is not one right or wrong answer for everyone. Keep reading to learn more about the advantages and disadvantages of each, and take the time to consider how each decision will affect before deciding to build or buy.
- Customization: Building a house allows you to customize it to your exact needs and wants. You want a master bedroom with two walk-in closets? You can have it built. Prefer an open floor plan? A pool? Building your own home from scratch gives you the freedom to make these decisions.
- Higher Standard: Building your own home enables you to choose the highest quality building materials. This includes newer and more efficient building materials that go toward creating an overall more efficient house, thereby saving you money in the long run.
- Higher Profit: If you choose to sell your home, you are more likely to make a higher profit. Newer homes often fetch more than old homes, and are far more appealing to potential buyers.
- Time Consuming: Building a house takes longer than buying a house. According to the US Census Bureau, it takes an average of 8.9 months to build a custom home, and 6.1 months to complete a production home build. If you’re moving for a new job, could find yourself with gap in residency, or on a tight schedule for any reason, it may not be ideal to wait around while your new house is being constructed.
- Higher Upfront Costs: Building a house is on average more expensive in the short term than buying a house. You will have higher upfront costs, and are more likely to find yourself with unexpected costs during construction that may stretch your budget more than you are comfortable with.
- Starting From Scratch: This may be a good thing is some respects, but new builds are often lacking when it comes to landscaping, being part of an established neighborhood, connection to utilities, etc. You’re literally breaking new ground, and that comes with some degree of uncertainty, especially when it comes to projected property values. Since your new home will likely not be part of an established neighborhood, you will not be able to base property appreciation projections on past trends in the market.
- Convenient: Buying a house that is already built and in an established neighborhood is far more convenient than building a house. You’ll likely be closer to conveniences and amenities, will be moving into an already established community, and will probably have mature landscaping around your new home.
- Faster: Buying a house can be done much faster than building one. If you streamline the process, you can be moved in and making mortgage payments in as little as two to three months on an existing home.
- Lower Upfront Costs: Buying a house that is already built will cost you less upfront than you would pay to build a house from scratch. If you do it right, you’re also much less likely to have unexpected costs along the way.
- Updates And Renovations: Depending on their age and your personal needs, existing homes will likely need some degree of updating and renovating before you move in. This may be as simple as a fresh coat of paint, or as complicated as adding an additional bathroom, but anything that must be done before you move in will take time and money.
- Compromise: If you’ve decided to buy a house, you need to come to terms with the fact that you are likely not going to find a house that meets all of your needs and wants. You will need to compromise on some things, at least initially, or spend time and money making the changes you want.
- More Costly Long-Term: When buying a house, take into account the fact that older homes are less efficient than modern ones. Over time, an older home will cost more to heat and cool. Additionally, older homes will require more maintenance than a new build. You could find yourself facing costly repairs sooner rather than later with an older home, like replacing old deteriorated plumbing or repairing a leaky roof.
So which is right for you? Should you build your own home from scratch, or purchase an existing home? Carefully consider each of the pros and cons mentioned above and consider how they pertain to your situation. Do you have the time to build a home from scratch? Are you able to fund a build from start to finish? Do you absolutely need two walk-in closets in the master bedroom, or will one suffice? Building or buying a home is a very personal choice, and when you have all the information you can be sure that you are making the right one.