When the market was hot, the city was booming and there wasn’t a speed bump in sight, building new was a no brainer. Put 5% down and don’t pay ’til I move in? Really? So, I’ll put $25,000 down on a $500,000 house, and by the time it’s built, it’ll be worth $550,000. I’ll double my money before I even move in! WHERE DO I SIGN?
As you know, this really was the situation for some people in Saskatchewan over the past decade, but it’s not the case now. When I was selling real estate in 2010-2013, I sometimes wondered if I was in the home sales business or the investment business. Building new when the price is going up is an easy decision. Now that prices have flattened, there’s a lot more conversation about buying something a few years old, maybe in an older neighbourhood — “something with character” I often hear.
So? Build new or buy new-ish?
A wise old saying comes to mind:
Price is what you pay, value is what you get. If I price out a new home build for you in a new area, you get to select all the finishes and you design the floor plan. It’s a bit more money “per square foot” than the home that’s 5-10 years older, so the following might appear to be true:
More square feet + finished yard + move in today = existing home all the way!
Hmmmm, then again…
Floor plan designed by you + new furnace + new mechanical + new windows + new doors + new shingles + new acrylic stucco + new foundation + new cabinets + new flooring + new lighting fixtures + new millwork + new garage + new driveway + new home warranty = let’s check out another show home, just in case!
Keep in mind, neither equation mentions the biggest spend of all: you and your family’s TIME.
Budgets are budgets. I get that. No one wants to be house poor. But you have to ask, what scenario has you spending more money on your home, especially after you move in? Which equation translates into you having a better asset long-term?
There’s a reason we’re allowed to pay for these things over 25 years.
If you spend the next decade in your “new” home, which one will need more love to maintain itself? How much does that “love” cost each year? Does that cost add up to equity in the home or does that cost just keep the home at what is expected? Could that same amount of money have finished your yard nicely to a design that works for you? Does that spend add value to an asset that didn’t need fixes/upgrades elsewhere? Do you really want to be a weekend reno warrior?
We’d love the opportunity to work with you on your equation.
Maybe building new adds up after all.