Question: We are ready to move into a house we’ll raise our family in and are set on Arlington. We want a newer home, but are not sure if it’s better to buy new construction or resale; our decision will ultimately be a financial one.
Can you put together numbers that show how the sale prices of new construction compare to resale?
Answer: Of course I can! When weighing the financial decision of new construction vs. resale, you’ll also want to consider the replacement cost of major systems like HVAC, windows, roof, water heater, appliances, etc. that carry life cycles of 10-30 years (appliances being on the early side, roof/windows coming later) as well as higher efficiency factors of new homes that significantly reduce utility costs. Many new homes also come with extended “bumper-to-bumper” warranties that you won’t get in resale.
As expected, there’s a clear premium to be paid for new construction and buyers tend to negotiate a deeper discount from the original asking price on homes being resold. The dataset is based on sales since January 1, 2014, for detached homes built since 2000 with 4-6 bedrooms, 3-5 bathrooms, and 3-4 levels.
Are these numbers in line with what you expect to see on the difference in sold price between new construction and resale? Are the prices about what you assumed for new/newish homes by zip code?
