Are you considering building a house because you just can’t find the perfect existing house to buy for your family? If so, are you unsure of pricing and wondering, ‘is it cheaper to buy or build a house?’
If you’re nodding your head ‘yes’, this episode is for YOU! Let’s go ahead and answer the question of what’s cheaper … buying or building?
APPLE | STITCHER | SPOTIFY
As you can imagine, this is a tricky question to answer in one blanket statement because there are SO many variables to consider.
However, I’ll give you my educated opinion on what I know to be cheaper (and why I came to this conclusion). I’ll also share tips on how to determine what is less expensive in YOUR location.
IS IT CHEAPER TO BUY OR BUILD A HOUSE?
Generally speaking, it’s less expensive to buy an existing home than to build a new home.
However, this is dependent on MANY factors. I don’t want to give you actual dollar figures (i.e. median home price in America) because real estate and building material pricing is HIGHLY dependent on where you live.
Not to mention, pricing is so unpredictable in our post-pandemic world.
Also, pricing is dependent on what caliber of home you want to build … a fully custom home build (i.e. unlimited floor plan and design options) costs significantly more than a production home build (i.e. builder offers a limited ‘menu’ of floor plans and design finishes to select from).
Recommended Post: CUSTOM VS. PRODUCTION HOME BUILD: WHAT SHOULD YOU CHOOSE
COMPARE ‘APPLES TO APPLES’: DO LOCAL RESEARCH!
It’s important to compare apples to apples when deciding whether building or buying is cheaper. The only way you can accurately compare buying vs. building is to look at existing homes for sale in YOUR city and speak with LOCAL builders.
Find 2-3 existing homes for sale that are very close to what you want, and then speak to a local builder to determine the cost to build a similar house with the same square footage and the same caliber of finishes.
CONSIDER UNKNOWNS + EXTRAS WHEN BUILDING A HOME
If you buy an existing house, you know EXACTLY what price you’ll be paying for the house.
Sure there might be some negotiating on price, but once it’s determined, you know what the final price is so you can make sure it fits into your budget.
You do NOT have this price guarantee when you build a home!
There are certainly ways to come up with a realistic home build budget; however, sometimes surprises come up and/or the rising cost of building materials can affect your final price.
It’s also easy to get excited about design upgrades and this can really skyrocket your final home cost when building.
If you go with a production builder who builds the same floor plan over and over and offers a limited choice of finishes, your builder can give you a pretty darn close estimate prior to building your home.
Building a custom home, however, is trickier to determine the final price. It isn’t so cut and dry if you plan to build a custom floor plan with custom finishes and selections.
Another thing to consider … if you buy an existing home, chances are there is already landscaping and window coverings. These are both HUGE expenses! Plus, there are other new home expenses that might affect your budget … fencing, alarm system, decking, etc.
When you build a new home, ALL of these expenses are coming out of YOUR pocket and should be accounted for when determining your home build budget.
Recommended Post: 7 UNEXPECTED EXPENSES WHEN BUILDING A HOME
SO IS BUYING OR BUILDING CHEAPER? MY OPINION
When you consider the rising costs of building materials and the extras (e.g. window coverings, landscape, etc.), I think you’ll almost always find that it’s less expensive to buy an existing home than to build a home.
If you’re on the fence about buying vs. building, do some local research (as mentioned above) and then make a decision that’s best for your family and budget.
However, if you really have your heart set on building, then go for it! You can always build a smaller house or find other ways to reduce building costs so your home fits into your budget.
If you do decide that you want to build a home as opposed to buying an existing home, I’ve got a great *FREE* resource for you …
Download a copy of my free ‘Custom Home Build Prep Guide’ and learn the 5 crucial steps to prepare you for a home build with less stress, more confidence, and a strategic plan to stick to budget :). This guide will get you started on the right path to a successful home build.
[…] are certainly pros and cons to both options (buying vs building). It’s up to you to decide what’s most important to YOU when making this […]