Why Some Buyers Still Prefer New Construction
September 26, 2011
A newly built home will cost buyers more than buying a pre-owned home, but for buyers who can afford the premium price, experts say there are still benefits of buying new.
“It’s appealing to people who are concerned about energy costs in the future and the longer-term efficiency of the home,” says John K. McIlwain, senior resident fellow for the Urban Land Institute. “There’s also the advantage that if you buy a home today, that has energy features that will be worth more down the road, when the market recovers.”
New homes also are maximizing usability space and offering modern amenities, such as big closets, that can be a lure to buyers.
Buying new “has become a deep part of American culture,” McIlwain said. “We built an economy around having to replace everything every two to three years.”
However, new-homes have become a tough sell. The median sales price of a new home in July was $222,000. On the other hand, the median sales price of an existing home in July was $171,200, according to the National Association of REALTORS®.
Besides price, appraisals are also a big issue hurting the new-home market. In many cases, appraisals are coming in lower than the cost of construction. Appraisals may come in low particularly when there aren’t very many new homes selling in an area, which then means appraisers must look at similar sales in the area. Low appraisals are causing many deals to fall apart, experts say.
Source: “Why Would You Buy a New Home?” MarketWatch (Sept. 26, 2011)
Updated: December 02, 2020