Is It Cheaper to Build or Buy a Home in 2023?

For home buyers, cost commonly determines whether they build or buy a home. Buying a home is an energy-consuming endeavor and is looked upon as a serious commitment and investment. Building one typically takes longer but provides homeowners with exactly what they want. There are equal pros and cons to both. Is it better to buy a home or build one? Let’s examine both sides.

Building a House

While the initial outlay of capital to build a home is substantially more, newly built houses can save homeowners time, money, and stress. Money aside, buying or building a home is also dependent on the level of satisfaction you’re after. It’s hard to beat the feeling of living in a house that was specially designed and built for you.

Customization

Not only will your new house be structurally sound, but it will also be built exactly the way you want it. Customization offers the opportunity to tailor aspects of your home to your preference. It’s a home for you, by you. From the layout to the flooring, your new home will perfectly reflect your taste.

Average Cost of Building The Home

The average cost to build a new home in 2023 starts at $500,000. This ballpark figure is dependent on region, size, and materials. It’s not as simple as just building — you need to factor in the costs of buying a lot, drawing up plans, procuring permits, and preparing the land before construction begins.

Other Benefits of Building a Home

Is it best to buy or build a home? If you truly want the home of your dreams and have the budget, it is far better to build.

• Maximize Functionality: Your home will be adapted to suit your personal needs. When your house is built to personal specification, you don’t have to compromise and can utilize space better.
• Smart Homes: No one should really ignore the current climate crisis. When you build from scratch, you have the power to make it tech-savvy and more eco-friendly, whether it’s solar panels or improved water conservation systems.
• Avoid Bidding Competition: Since COVID-19, there’s been a rise in home purchasing. It’s currently a seller’s market, and there’s a fierce race to offer the best price. When you build a house, there’s zero competition.

Disadvantages of Building Your Home

• Hidden Costs: There will almost always be miscellaneous costs left out of your preliminary budget that can come to significantly more than you budgeted to pay.
• Location: Existing homes reside in more desirable locations. If you want to live in the city, for example, it may be challenging to find an open lot to build upon.
• Time: The U.S. Census Bureau reported it takes seven months on average to build a house from scratch. Paying rent, or a second mortgage, to stay somewhere else in the meantime becomes an additional cost.

Buying a Newly Constructed Home

Buying a newly constructed home can be a fitting solution if you’re on the fence about whether to build a new home or buy an existing one. It offers the advantage of new finishes and contemporary design without the hassle of hidden maintenance costs.

Fewer Decisions

There’s a lot less to decide upon compared to building a home from scratch. New housing developments may provide options for interior finishes like countertops and cabinetry, but beyond that, they’re generally designed with a cookie-cutter approach.

It’s Faster

Unless you’re buying property off-plan, the process is much faster than waiting to complete building your own. On average, it takes about five months to buy a home, depending on how long you shop around for, which is still less time than building.

Average Cost of Buying a Home

The age of a home and its location affects the price. Midwest homes cost less than homes on the West Coast, which are considerably more expensive. Bear in mind that this is just the price of the home, excluding any furnishing, appliances, or remodeling that homebuyers usually spend an additional $8,233 on.

The financial consultant company Ramsey Solutions offers the following data on the average cost of buying a home:

Other Benefits of Buying a House

Buying a new home provides almost the same benefits as building one but with added convenience.

• Warranties: Newly constructed homes come with system warranties that cover HVAC, plumbing, electrical systems, and major structural defects.
• Lower Costs: Buying in a new development is often cheaper, as the developer includes the cost of the lot into the purchasing fee.
• Contemporary Design: New developments make provisions for the latest technology and tend to be more energy-efficient and eco-friendly.
• Financing Incentives: Most developers offer in-house financing that’s cheaper than 3rd party mortgage lenders. Since they’re already profiting from your purchase, they have the margin to offer beneficial financing incentives.

Disadvantages of Buying a House

The National Association of Realtors published that as of February 2021, every home that was sold in the US had an average of four offers. Even if you have a substantial deposit, a prospective buyer who offers more may very well close the deal. Unfortunately, if you have a limited budget and can’t counter the offer, there’s not much you can do.

Another factor to consider is the age of a property’s internal systems. Older houses may need electrical and plumbing upgrades. Other health hazards may include asbestos, mold, and pest problems that lead to structural damage. Well-maintained, charming houses with historical charm aren't exempt from these drawbacks, which can add unexpected costs.

So, Is It Best to Build or Buy a Home?

Building a new home is more expensive, but it can save costs long-term, eliminating pricey maintenance upgrades and potential renovations. So, is it better to buy a home or build one? It truly depends on your individual circumstances. There is also the option to remodel an existing home, which combines the best of both worlds.

At Zenith Design + Build, we can remodel your existing home to add more space and give it a contemporary upgrade. From the floor plan to the interior design, we offer a comprehensive service that makes renovations easy. Click here to discuss your home aspirations with us.