At face value, the answer seems obvious, doesn’t it?
Newer is better.
Is Newer Always Better?
Our consumer-driven culture has many people convinced that newer is always better.
But is that really true?
Of course not!
Is a Bargain Always Better?
Many people consider themselves experts at finding bargains. You can hear them now, beaming with pride as they tell you about how smart it was to buy a car that’s exactly two years old to minimize depreciation.
These fiscally-minded folks aim to buy everything used whenever possible and are dismayed by the planned obsolescence built into tech gadgets nowadays.
Does that same attitude always pay off when it comes to buying a new vs. used home? Possibly the biggest purchase of your lifetime?
Of course not!
So, here we are.
Asking More of Our Homes Than Ever Before
In the middle of a global pandemic where social distancing and staying at home is the new way of life, we’re asking more of our homes than ever before. Work, school, exercise, hobbies, and outdoor gatherings are just a few of the activities that now require extra space at home in addition to our living quarters.
With all of those competing priorities, it’s no surprise that so many of us are ready to re-think our housing situation.
And if you’re the type of person or family who considers yourself a good steward of your resources, maybe you’re left feeling conflicted about whether a new or used home is best for your family.
So let’s throw all of the typical talking points and our usual assumptions about new vs. used homes out the window and discuss some of the surprising or unexpected reasons you may want to consider buying or building a new home.
Money vs. Emotions
Richard Feynman, the great physicist, once said, “Imagine how much harder physics would be if electrons had feelings.” Well, investors have feelings.”
Morgan Housel, The Psychology of Money
The process of buying a home involves not only our rational, financial mind, but the decision can be fraught with many different types of emotions as well, including fear, worry, hope and joy. And before you disparage one half of your brain over the other, keep in mind that each has a unique role to play in both protecting and enriching your life and your livelihood.
To many, a home is the biggest financial investment they ever plan on making in their lifetime and want to treat it as just that — an investment. While others may be on a mission to provide the best quality of life for their family. Although these are two very different measuring sticks, it is possible to find some common ground.
When contemplating your housing situation, have you taken the time to pen a “pros and cons” list on notebook paper? Let’s work through a few together.
Sure, a new home is going to be customized just for you and your family. And instead of questioning the viability of the many inner workings and aging appliances scattered throughout someone else’s used house, it sure is nice to think about walking into your brand new home, complete with sparkling new gadgets and fixtures, a home builder’s warranty, and a myriad of other product manufacturer’s warranties to help guard against any defects.
Ah, a breath of fresh air! Tinged only slightly by the smell of fresh paint and alive with the possibilities of a fresh start. Family movie nights, holiday dinners, and summers spent by the pool flicker in your imagination.
As magical and wonderful as it can be to think about your family living in a dream home built just for you, maybe the dream feels a little too distant. It could be tempting to think that brand new homes are for other people who can afford that luxury lifestyle.
Perhaps you, or a more frugal spouse, shudder at the thought of being carried away by the moment and worry about making an imprudent financial decision based on emotion rather than practicality.
But what if we could break ground (pun intended!) and find a place where these competing philosophies could coexist?
Where the Hidden Costs Are Hiding
If a used home feels like the right decision for your family just because it’s cheaper, don’t forget to consider the following hidden costs that you might encounter.
Insurance
Insurance may cost more for older homes not built to the latest building codes and standards, especially in a state like Florida known for hurricane activity.
Limited Lifespans
Some of the most expensive features of your home have a limited 15-30 year life expectancy, including the roof, A/C unit, water heater, and more. In older homes, the age of the roof and other major working appliances can be extremely variable and may need to be replaced sooner. In some cases, sooner rather than later. (According to homeadvisor.com, the the average homeowner spends about $8,177 to install a new roof.)
Utilities
Utility bills for older homes could be much higher. The latest energy-efficient building materials and practices used in new homes, like climate sealing your home with spray foam insulation, are not only better for the environment, but they can add up to quite a lot of cost savings as electric and gas bills roll in month after month.
(Note: this is just one example. GW Homes feature dozens of other money-saving green and energy-efficient features.)
Health & Hazards
It’s important to do your due diligence before the purchase of any home, but an older home may come with some unique challenges and even potential health risks. The American Cancer Society confirms that asbestos and lead paint are both linked with cancer, however they were once ubiquitous building materials.
The costs of inspections and tests to rule out these and other hazards and pests such as radon gas, termites, mold, and more, can definitely add up and add to the total purchase cost of a used home. As the saying goes, “an ounce of prevention is worth a pound of cure.”
Inspection Repairs
In a competitive seller’s market, you could pay top dollar for a used home and still be forced to agree to a “pass/fail” inspection, which will put the burden, and cost, of home repairs back on you — unless you want to walk away altogether. Even under more normal inspection terms, you may get into a back-and-forth negotiation with the home seller and end up paying for some of the repairs.
Warranty Protection
As those closing costs continue to add up, you may be presented with the option of purchasing a warranty for your home. In a buyer’s market, the home seller may gladly cover this cost to tempt potential home buyers, but in today’s seller’s market, you will likely need to pay for a warranty out of pocket or start saving for potential repair and replacement costs.
Even if you purchase the warranty, many popular home warranty companies have limits on what they will pay. For example, one company may have a limit of $2,600 towards A/C repair, even though a new condenser unit alone can cost upwards of $3,000. And you’ll still be responsible for the minimum co-pays for service calls.
(Compare that to the 10-year structural warranties included with every home built by GW Homes.)
Landscaping
Mature trees and landscaping can be a lovely benefit of purchasing an older home, but pruning, large tree maintenance, controlling overgrowth, and customizing the landscape to your liking may be more expensive the first several years you own your home.
Location
Location (location, location!) could be a big factor that makes an older pre-existing neighborhood desirable — right in the middle of town and convenient to work and schools. Surely you would save money on gas with the shorter drive to and from work! But don’t forget to calculate taxes and other cost of living differences.
A recent study by Zillow says that families spend an average of $9,000 per year more to live in a city compared to the suburbs (where newer housing developments tend to be more abundant).
Summary
Buying a home is one of the most important financial and emotional decisions that many of us will make in our entire lifetimes.
We hope this article helps shine a light on some of the reasons why our sales team would love to talk more with you about whether or not building a home with GW Homes is right for you and your family.
