Apr 8 2019 48248 1
Old home vs New home purchase... Which is better?
As we all know, purchasing your home is a huge investment. On the one hand, your taste and lifestyle are a major factor in your decision making. On the other hand, the way you invest that hard earned money has to pay for itself. Here are some things to consider.
Old home benefits:
1. Old homes are generally cheaper than new homes.
You will probably pay less for an older home. This depends on condition and location, but generally, a modern house of the same size and in the same area costs more than an older one. Realtor.com estimates an older home is up to 20% less expensive.
2. Old homes are built better.
The old adage "They don't build them like they used to" Is generally true. Older homes have stood for decades, some centuries, and weathered many storms. Some were built by hand by genuine craftsmen with meticulous attention to detail. Walls are plaster, not drywall. Wood 2X4's were actually 2inches by 4 inches! Wood was hand carved. Also, some wood used in old homes is so rare that it is cost prohibitive to use or even find today.
3. Old homes are often in better-established areas.
In any city across the world, the old homes are close to the civic center. You will see the Victorians close to downtown, the Craftsman bungalow a little farther, and the 1950's Ranch farther, 1970 tri-level in the suburbs, etc. etc. For some decades, the inner city was in decay with people favoring the newer suburban areas. Now with the trend being "walk score" etc. these inner city homes "gentrified" areas have huge potential!
4. Old homes generally have larger lot sizes, and trees.
In the past, land was cheaper and easier to come by. People had gardens, animals, wells. Today, you will find larger homes, but much smaller lots. It takes a tree at least 50 years to become useful and beautiful. There is not a way to replace this beauty. It is also helpful as the world gets warmer. We don't have to water new growth, and we can enjoy that much-needed shade in our windows.
5. Old homes have unique features and amenities that new homes try to emulate.
Think herringbone wood floors, hand-carved staircases, sunken living rooms, huge hearths, stained glass!
6. Some old homes appreciate faster and more predictably.
With a long history to review, you chances of buying in a neighborhood that plummets, or buying a "lemon" with settling issues, or adverse zoning changes nearby is less likely, meaning your chances of losing your investment moneyless. There are usually more established neighbors in old home neighborhoods, as these homes are often passed down through the generations. Lastly, the inventory of old homes decreases and so the law of supply and demand is in your favor.
The downside of old homes:
1. Unexpected repairs and maintenance.
Although you may be paying less for your home per square foot, the chances of unexpected problems increases. You won't have a situation in which your financing will cover all of the costs for the years to come, especially if you have a "fixer upper"
2. Lack of "green" features and modern amenities
The old home is often built to use fresh air vs. air conditioning. The fireplace is beautiful but drafty. The windows are single pane. The insulation is nonexistent. These are all things that cost money to renovate.
3. Incompatibility with your lifestyle
Lets face it, some of us love to make our homes beautiful through the sweat of our own brow. Others of us see fixing a deck or painting every three years as nothing but stress. The older your home, the more it has to be part of your lifestyle. Do you like to garden and mow? If not, then that large back yard may not be for you.
5. Smaller square footage, and difficulty in re-fitting, or finding replacement parts.
Anyone who has ventured into Restoration hardware, or an old home salvage store knows that it is hit or miss to find the same cupboard knobs, radiators or doors. broken stain glass that matches the rest of the home will be almost impossible to replace. This is the same with the chandeliers or tin ceiling patterns etc.
New home benefits:
1. The builder's warranty.
There is nothing like the assurance that a warranty can give you. Since a new home may have some unpredictable problems (settling wrong, plumbing or wiring issues, appliances that are lemons) the warranty will help you sleep better at night knowing your covered).
2. Little maintenance and worry-free living.
It takes many years for a home to need the remodel, update, or repair. Roofs can last 10-20 years depending on the materials. Siding can be maintenance free for years. Appliances, HVAC and water heaters have a normal life of 20 years. A new home with a 30-year mortgage may only need to be re-invested in toward the end, when you are paying mostly principal on your loan. Second mortgages to make large repairs are easy with 20 years of equity.
3. Energy efficiency
The only sure payment on your new home today is the mortgage and insurance costs. As the world gets warmer, and energy more expensive there is no way to know how much it will cost for water, heat, and cooling in 20 years! Energy efficient homes make this variable less risky. Private homes are the largest source of pollution on the planet. Far more than industrial or automobile waste. Because the world is more conscious of our responsibility to help the planet, we may choose to go new and "green".
4. Lack of wear and tear, and the feeling of living in "clean and new"
For some of us, the idea of living in something new and clean is very important. We don't have to worry if someone had a pet we were allergic to, or that there is a tainted history of the home like a death, or crime. There is a comfort in knowing there is no lead paint or asbestos concerns etc.
5. The ability to choose color schemes, and decor styles
If you are buying a new build or home being constructed, you will be able to buy with some choices such as dark wood or light wood finishes, what kind of flooring, what color walls and appliances etc. This can save you money by making the house fit your existing furniture and belongings.
The downside of new homes
1. Lack of originality
Most newer homes lack the originality and personal touches that a hand-built craftsman home has. There may be some give on floor plans and colors, but for the most part, you are likely to find "your house" just around the corner in a different color.
2. New homes are often farther from desired destinations such as schools and downtown areas.
Your new subdivision may have the amenities nearby that you need such as the grocery and many franchises, but you will likely have to drive to get to many of your city's cultural centers and downtowns.
3. No proven home appreciation history.
Subdivisions have no history. It is impossible to say with as much confidence that the neighborhood will appreciate or decline. It may be the case that the builder is reputable or is found to build low quality homes. The land that the new home is built on may end up having settling problems. All of these variables come into play when it comes to the speed of which your home will appreciate. Changes in the economy hit newer home subdivisions much harder than the established neighborhoods with old homes.
5. New home developments often have high HOA costs and restrictions.
Your ability to paint that house that perfect color for you, or your ability to park your vintage car or RV in the drive may be restricted by your HOA. You may have to invest in certain landscaping to comply with the rules. The costs of your HOA fees can be subject to increase depending on your board. Certain rules can be added or taken away with majority votes etc. Some people love HOA's. If you are more independent in your tastes or lifestyle, you may find yourself with unwanted restrictions or fees.
6. Less established neighbors, more turn-around.
Newer neighborhoods tend to have more rental property, and more turnaround of neighbors, and since those neighbors are probably much closer to you due to smaller lot sizes, this could be an unexpected issue.
There are many things to consider and I'm sure I haven't covered them all. Hopefully, this is a good start to weigh your options. In this Realtor's opinion, whatever makes you feel "at home" is your best bet and cannot be measured!
Author: Vicki Black
April 9th 2019
About Vicki: I have been in the "people" professions all of my adult life. Social work, Massage therapy, Acupunc...