Buying a house is never easy. You not only have to think about the kind of house you want, but also what’s available within your budget. For instance, a brand new home may be out of reach so you’ll have to settle for an older home instead. But that means more money will go towards repair and maintenance, which decreases your chances of buying a newer home later on. So with that said, it is better to get a new home because of lower maintenance costs and there are financial benefits as well.
Settling for Less
In recent years the price gap between new and old homes, which used to be 15-20%, is now 30-40% according to the Daily Real Estate News (1). This means there’s a wider range in house pricing than before. This is because “workers’ incomes haven’t kept pace” with increasing house values (Salisbury 1). As a result, those with smaller incomes tend to buy older homes. However, “Many maintenance expenses are likely to grow as a home ages” (Emrath 1) meaning repair costs will go up overtime. On top of that, “over half (55 percent) of all buyers would prefer to purchase a new home” (Taylor 1) instead of the other way around.
In our current economy, there are plenty of opportunities to buy the house you want. For example, the points you pay for your mortgage can be “deductible as interest if you paid enough cash at closing…to cover the points” (Kiplinger 1). So if you pay enough money for mortgage points, they can be deduced later on. Also, “While the inventory of single-family homes is expected to rise…demand will too” (Salisbury 1) meaning more people will demand new homes just as their price will go up. Therefore, the value on new homes increases as they “incorporate newer materials and components specifically designed for low maintenance” (Emrath 1) which means lower repair costs compared to old homes.
A Better Deal
So whether you choose to live in an old house or a new one, your choice will matter. For first-time buyers, an older home may seem more preferable because of the lower pricing. However, an old house requires more maintenance leading to higher repair costs. By contrast, a new house has fewer maintenance issues and greater financial advantages. Then as home values increase, having a new home will benefit you in the long run.
Daily Real Estate News. “Price Gap Widens Between New and Old Homes.” National Association of Realtors, 31 December 2014, http://realtormag.realtor.org/daily-news/2014/12/31/price-gap-widens-between-new-and-old-homes. Accessed 14 February 2017.
Emrath, Paul. “Lower Operating Costs Mean Buyers Can Afford a Higher-Priced Home—If It’s New.” HousingEconomics.com, 6 December 2012, http://www.nahbclassic.org/generic.aspx?genericContentID=193629&channelID=311. Accessed 14 February 2017.
Kiplinger. “Tax Breaks for Buying a Home.” Kiplinger, 28 February 2012, http://www.kiplinger.com/article/taxes/T010-C000-S001-tax-breaks-for-buying-a-home.html. Accessed 14 February 2017.
Taylor, Heather and Fu, Jing. “Characteristics of Home Buyers.” HousingEconomics.com, 3 November 2015, http://www.nahbclassic.org/generic.aspx?genericContentID=246591&channelID=311. Accessed 19 February 2017.
Salisbury, Ian. “How to Negotiate the Best Price for a House in 2016.” Money, 2 December 2015, http://time.com/money/4120671/negotiate-best-price-house/?iid=sr-link8. Accessed 14 Febrary 2017.