In today’s market, you might be considering building vs. buying a home. This is certainly a viable option, but it has its advantages and drawbacks, just as buying a resale home does. There are many factors to consider, such as time-frame, location and design of the house. Let’s take a closer look at the difference between building and buying a home, so that you can make an informed decision.
Benefits of Building vs. Buying a Home
Customization of your home – This is a huge advantage of building a house. When you build a home from scratch, you have control of its various elements rather inheriting someone else’s preferences, from layout to materials right down to little things like what covers go on your light switches.
Better energy efficiency – Newer homes are typically built with energy efficiency in mind. They are more environmentally friendly than older homes are, and can save you money on your monthly utility bills.
Less market competition – Housing inventory in Canada is critically low, which contributed to the frothy market and rising prices. This isn’t necessarily the case when buying vacant land.
Risks of Building a Home
Longer wait time – While a new home can be bought in a matter of days, it takes much longer to build a house. For the average of seven months that it takes to build a new home, you will have to be involved in the planning and still pay for somewhere else to live.
Unexpected costs and delays – Your contractors will provide you with an estimate of the costs for their products and services, but unexpected expenses often arise, along with potential delays. These can set you back a significant amount of money, plus weeks if not months.
Little wiggle room on price – Because you are paying for contractors and materials instead of real estate, there will not be any price negotiation on the built component. Plus, land can be more challenging to obtain, often requiring a higher down payment and with a higher interest rate on the borrowed amount.
Benefits of Buying a Home
Less costly – Overall, buying a pre-existing home is less expensive than building one, but this can change depending on location and market conditions. When you buy a home, a smaller down payment and a lower interest rate are required, and you can move in sooner.
Established location – If you want to be close to an urban centre or in an established community, it is much easier to find a home for sale than it is to find a land lot. Oftentimes, all existing lots will have houses built on them, so it is better to look for a house for sale if you want to live in a neighbourhood setting.
Mature locations and landscaping – Further to the above-mentioned benefit, buying an existing home generally means that you’ll be living in an established neighbourhood with full-sized, mature trees. In contrast, young neighbourhoods with newly built houses may only have small trees, or if the community is very new, no trees or lawn at all.
Risks of Buying a Home
House-buying stress – Searching for a suitable home and fielding other buyers can be both time-consuming and stressful. You might face a bidding war, rejected offer, and be placing bids on multiple houses before one of your offers is accepted, and you can move in.
Compromise on style – Even if you are flexible about what you want in a house, finding one that feels like home and reflects your personality can still be tricky. If there is a particular feature you are looking for, then this gets even more challenging.
Maintenance issues – Pre-existing homes often have older appliances and materials, so you could be looking at upgrading and replacing things sooner than if you were to build a house. Plus, if you buy a home built before 1970, it may contain asbestos or lead paint, and these will need to be dealt with immediately, especially if you have children. Regardless of the type of home you purchase, getting a home inspection is always recommended.
Both building a home and buying one can be viable options for a prospective homeowner and it can be challenging to decide which is better. If you carefully consider each factor and consult with a professional and experienced real estate agent, you can be confident that you will make the best choice for your budget and lifestyle.