Question: How does the new construction market compare to the market for resales of recently built homes?
Answer: When most people buy a large, expensive new construction home, they plan to live there for a long time so there isn’t a lot of data yet on the resale market for newly constructed homes (built in the last ten years), but we have just enough data points that I think it’s a worthwhile exercise to compare the market performance of new construction vs resales of recently built homes.
Years ago, I had a theory that resales of newly built homes would struggle because of the high volume of competition from new construction homes. That theory has been wrong. The average resale since Jan 2023 of a home built in the last ten years has sold just 1.2% below the original asking price and nearly 50% of those homes have sold within the first ten days on market, both strong performance metrics for any sub-market in the DC Metro area.
The data set below looks at sales since Jan 2023 of new (never lived in) construction homes vs the resale of homes built in the last ten years in Arlington, Mclean, and Vienna. I removed some of the outliers by size and limited the data to homes with 4,000-9,000 total finished square feet. The average resale home in this data set was built in 2017.
- Resales sell for an average sale price about 5% lower than new construction, but just 3.7% less on a $/SqFt basis
- In Mclean and Vienna, the average new build is about 5-6% larger than the average resale, but in Arlington new homes seem to be getting slightly smaller than homes built in the last ten years. It’s difficult to know if this is accurate or a false trend in the data.
- The number of bedrooms in each home hasn’t changed much over the last ten years, but builders are finding ways of getting an extra full bathroom in many new homes
- The most expensive place to buy a new/new-ish home is Mclean, even though Arlington has a higher $/SqFt
- A mistake many buyers make is thinking they’ll find less expensive homes by going outside the beltway to Vienna, but the reality is that prices are similar, you just get more house and yard for your money compared to Arlington and Mclean
- The cost per square foot of lot size in Arlington is nearly double that of Vienna
- There are significantly more sales of new homes than there are resales of homes built within the last ten years; nearly 2.5x more new builds are sold
Tip: 1/4 acre is equal to ~11,000 SqFt
Buying a new home has plenty of benefits and often deserves a premium over buying a resale of a recently built home, however, there are some benefits of buying a resale that are worth considering including:
- Likely to have more mature, established landscaping
- The existing homeowner has likely made some upgrades to improve living like purchasing window shades/treatments, building out closets, extra lighting, installing a firepit/patio, and other things many builders may not do
- The early kinks of a new home have (hopefully) been worked out. Every new home will go through a “break-in” period where the new owner will find things that need to be repaired/addressed so if you’re buying a resale of a newly built home from a homeowner who has been diligent about care and maintenance, you are likely reducing some of your risk in the home purchase process. Existing issues have likely already started to present themselves so it will be easier for a home inspector to catch.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.
