The Expert Podcast

This is a question we get a lot when we talk to our realtor friends and even clients: whether or not you should build a house or buy an existing house. It's a really good question to ask if you're in the market for moving or relocating. There are pros and cons to each choice, and some reasons why you might pick one over the other are not always obvious. Let’s take a closer look.

If you buy an existing house, you can move in right away. The house is ready; you wait for closing and escrow, which might take a month, and then you’re in the house. In contrast, if you build a new house, you might be eight to ten months out, depending on the jurisdiction of permits, plans, and approvals. However, that time frame doesn’t necessarily create a problem for everyone.

One of the biggest obstacles to building a new house is the perception that it will cost more money. Certainly, new home construction typically costs $200–$250 or more per square foot to build. If you’re building a 2,000-square-foot house, you’re looking at $400,000–$500,000 in construction costs, not counting the land. When you factor in the cost of land, permits, and carrying costs, you could be looking at $600,000–$700,000 or more, depending on where you live. This is typically higher than what you’d pay for a resale home in most markets.

However, one advantage of a new home is that you have zero accumulated repairs or maintenance costs. Even if you buy a resale home that doesn’t need repairs today, you’ll still be closer to needing major updates like a new roof or septic system. For instance, if the roof is five years old, you’re only 15 years away from needing a replacement rather than 20–25 years. Additionally, new homes often have better efficiency standards, such as insulation and air infiltration tests, that may not have been available even five or six years ago.

Another advantage of building a new home is customization. You can design the house to your liking, choosing the colors, layout, and features that suit your preferences. Is that worth the extra cost? That depends on your priorities. Keep in mind that while real estate appreciates, the house itself depreciates over time. The condition and layout of an older house can become less valuable, whereas a new home starts fresh but will also eventually depreciate.

When deciding between building and buying, you should also consider inventory. Is there something available in the market that meets your needs, or will you have to wait six to eight months to find the perfect resale home? If the wait is similar to the time it takes to build, you might prefer building a new home that meets your exact specifications. Land is generally plentiful and easy to find.

That said, the building process comes with its own challenges. Even if you hire a general contractor, you’ll need to deal with delays, unexpected problems, and potential financial risks. Permits might be delayed, supply chain issues can arise, and costs for materials can vary. Things can go wrong, like damaged or missing materials, and these challenges can make the process stressful. Even builders themselves acknowledge that the process can be difficult due to the many variables involved.

Despite these challenges, building a house can have major long-term advantages. If you can prepare for and manage the obstacles, you’ll end up with a brand-new home designed to your tastes. It will be move-in ready, with no prior occupants, and tailored exactly to your preferences. For many, that makes the effort worthwhile.