Buying an Older House vs. a New One: The Pros and Cons
One of the most common questions borrowers have is whether they should be devoting more of their home buying research to newly constructed homes or older ones. It’s a question with no one right answer.
The final decision will come down to a number of different factors and preferences including maintenance costs, safety, convenience, and appearance. Brokers can play an important role in guiding borrowers as they navigate this issue, so here are the major pros and cons of buying a new versus an older home.
New Home Pros
Up to Code
Building codes have changed remarkably over the years in ways that have greatly improved safety for homeowners. For example, lead paint, which can cause neurological issues, was banned at the federal level in 1978. Asbestos, which can cause diseases in the lungs, was commonly used in home construction until the 1970s as well.
Many older houses with lead paint and asbestos have been remediated, but not all. Additionally, some building materials like aluminum wiring, while no longer up to code due to the potential for a fire hazard they pose, have been grandfathered in and therefore owners are not required to swap them out for safer copper wiring.
New construction homes don’t have to worry about these safety issues, which can translate into lower insurance premiums and higher resale values.
Lower Energy Costs
The quality of insulation technologies has improved drastically in just the last two decades. Double and triple-paned glass, foam insulation between floors and walls, and other advancements allow modern homes to better retain heat in the winter and cool, conditioned air in the summer.
The difference can add up. The U.S. Census Bureau’s American Housing Survey found that homeowners in older homes spend 17% more on electricity and 38% more on gas per year than their counterparts in newer homes.
Size and Layout
Americans’ desire for more space has led developers to build bigger and bigger houses over time. Hence, new homes are typically larger than older homes. The layouts of newer homes are also more conducive to modern ways of living, with wide open floor plans, more storage space, and features like a family room connected to a kitchen, creating one large area for family gathering and entertaining.
New Home Cons
Buying Cost and Negotiating Power
New homes cost 30% more on average than older homes. Furthermore, sellers are much less open to negotiating on the price of a new home.
New homes are frequently built in newer housing developments. It’s difficult and expensive to keep old growth trees during that development process and many of them are cut down. That means only young shrubs and new saplings are planted to replace the greenery in the neighborhood.
Many common trees take 30 years or more to mature, so new homes rarely have as lush landscaping as older homes, which negatively affects curb appeal and may make it more difficult to sell the home down the road.
Though home buyers want larger homes, in desirable areas where land is at a premium they are often limited in how big they can go. Consequently, developers often choose to use up most of the available lot for the house itself, limiting the space for a front and back yard.
It’s also expensive to develop a new neighborhood with many different styles of homes. To save costs, modern home developers create few similar-looking models and populate large areas with them. Some borrowers prefer a home that is unobtrusive and matches their neighbors, but others want something with more personality and a unique character.
Older Home Pros
Whether a new housing development will thrive isn’t always certain. Older homes have established records of sales prices both individually and for their area. That information can help buyers track long term trends and make a judgment about how much their purchase will likely appreciate.
While newer homes are built from more advanced materials, many older homes were built with time-tested skills and still look and function beautifully. Classic Victorian, Colonial, and Tudor homes can last for generations. However, just because a home is old doesn’t mean it was built well, so buyers should be cautioned against skimping on a highly qualified home inspector.
Closer to Downtown
Because they were developed earlier in a municipality’s history, older homes are frequently closer to downtown areas where offices, shops, and restaurants are. That makes for shorter commutes for work and play.
Older Home Cons
According to data from the Census Bureau, the average single-family home in 1973 had just 1,525 square feet of floor space. In 2020, the average was 2,333 square feet. That means older homes typically have smaller bedrooms, less storage space, and will even feel smaller in ways that don’t show up in the square footage, such as lower ceilings.
Ramps, handrails, room for stairlifts, and other modern accessibility features are less common in older homes. Borrowers with disabilities or who may one day have an older relative living with them should keep that in mind.
Older homes mean repairs for older roofs, plumbing, appliances, HVAC systems, and other parts of a house associated with recurring expenses may come due sooner than in a new home. There’s a whole range of issues that a qualified home inspector should examine closely, including sloping floors, mold behind the walls, decaying foundations, and damaged sewer lines.
These costs can be significant. The American Housing Survey found that the average homeowner spends $100 or more per month on home maintenance, but individuals who purchased homes that were less than four years old only spent $25 per month on average.
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