As the U.S. housing market continues to heat up after the stunning downturn in 2008, investors and potential buyers alike are eyeing properties across the country. In hot areas like the Rancho Cucamonga real estate market, buyers struggle with the decision to commission new home construction or to purchase used homes for sale. Southern California real estate experts like Jonathan Perea know that this decision cannot be taken lightly; there are advantages and disadvantages to investing in either of these market segments. In this guide, the pros and cons of purchasing a used home versus a newly built home will be illustrated.
New Vs. Used
When considering the investment in a newly-built home or one that is pre-owned, there are many factors that influence the decision to buy. Each type of home purchase can make sense; each offers their own unique advantages in the housing market. Potential homebuyers are likely to have many questions before making this decision, such as the buyer’s own lifestyle preferences, their financing options and budget, and their priorities when it comes to features and location of a home.
New construction offers the potential homebuyer a wide range of choices, particularly in terms of the features and amenities specified in the construction. For homebuyers who wish to commission the construction of a new home, the possibilities are nearly endless limited only by the budget set aside for the project itself. One of the primary advantages of a new home is the fact that most newly-constructed homes on the market come with some form of warranty that covers items like air conditioning and heating units, home appliances, and even doors and windows. In other words, this warranty can protect the new homeowner from potentially costly repairs for the first five or ten years of ownership.
Resale homes vary in price, amenities, and features. Many cities have extensive inventories of pre-owned homes, giving potential homebuyers many choices when it comes to location and budget considerations. The leading advantage to a resale home is that homebuyers can choose the neighborhood or community in which they want to live, then explore homes for sale in that area. This gives the homebuyer much more flexibility than they might enjoy with new construction; vacant lots in desirable neighborhoods for a new home project may be difficult or expensive to purchase. The drawback to purchasing a pre-owned home is that these structures may require expensive upgrades and repairs, depending on condition. Resale homes are not usually covered by purchase warranties, either, potentially increasing the possibility of having to replace components with out-of-pocket funds.
A Focus on Energy Efficiency
Homeowners across the country are looking for ways to save money on energy costs while reducing their environmental footprints. New homes offer significant advantages in this arena; during the construction phase of a new home, energy-efficient features can be added. Tougher national building codes and a desire for “green building” have improved the options for potential homebuyers as well; in years past, energy-efficiency was an afterthought, so used homes are unlikely to be available with energy certifications.
Used homes can certainly be retrofitted to improve energy efficiency, but this can be a costly and complex process. Adding energy-efficient doors and windows, beefing up insulation levels, or adding high-efficiency appliances and heating/cooling systems are possible, but potential homebuyers need to understand the expense of these upgrades and how they will factor into the cost of home ownership. Even with costly upgrades, a retrofitted used home may still not reach the energy efficiency standards of a newly-constructed residence. It is clear that new homes have the advantage in energy efficiency if homeowners desire a “green” building.
Flexibility for Customization
New homes have significant advantages in terms of customization as well. Before breaking ground on a new home project, the buyer and his or her team of builders can specify layouts, features, and amenities, tailoring the new home to the unique lifestyles and desires of the owner. Adding network cabling or wiring infrastructure for security systems and entertainment centers is much easier when a home is being built, too.
By contrast, retrofitting an existing home presents a range of challenges. Tearing down walls to reconfigure the interior spaces is possible, but the layout may be limited by structural considerations. Rewiring a resale home can be an expensive and daunting process as well. In short, with a used home, one is constrained by what is already there and what is possible to remodel, which may or may not meet the specific needs and desires of the homebuyer. The sole advantage that used homes offer in this area is that with the right remodeling and upgrades, a used home can substantially increase in value. This is especially true in established neighborhoods where location is desirable; reselling a used home outfitted with a new layout or remodeled amenities can fetch a premium on the market.
Resale Value and Financing
In the Fontana real estate market and those of communities in and around Southern California, real estate expert Jonathan Perea knows that resale values can fluctuate considerably. Newer homes offer some advantages in terms of resale value; many first-time homebuyers gravitate toward homes built within the past five to ten years. This is especially true when the newer home has the energy-efficient features and layouts desired by buyers. Older homes, particularly those that have been remodeled with an eye toward improved efficiency and comfort, may also command a premium price on the resale market.
In terms of financing, new homes have the advantage in the real estate market. Homebuilders across the country work directly with mortgage providers, such as mortgage affiliates or subsidiaries, and can often tailor a new home construction project to the specific budget and financing considerations of the buyer. Resale home sellers may not have this flexibility; while many sellers are willing to contribute toward closing costs or repair expenses, they cannot offer favorable loan terms in the same way that new home builders can.
There are many factors to consider when choosing between new homes or those that are pre-owned. A qualified real estate agent can help potential homebuyers weigh the pros and cons, guiding buyers toward an investment decision that meets their budget, their desires, and their needs perfectly.