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Does building a new home result in any home equity?
Posted on 10/1/19 at 7:33 pm
Posted on 10/1/19 at 7:33 pm
Or is it cheaper / better to buy a home that is already built? It seems like the homes you can have built in a new neighborhood are typically a bit cheaper than the ones the developers builds then list (which makes me think you get equity in the home by building), but I don’t know if that’s true.
4
Posted on 10/1/19 at 7:36 pm to jammintiger
Your equity is the value of your home over the purchase / loan value.
Posted on 10/1/19 at 7:40 pm to zuluboudreaux
Right, and I may be asking the question wrong. Say it costs 400k to build a new house in a new neighborhood. The day you move in, is the house typically worth more than 400k or less (or the same). I didn’t know if you basically got a deal by going through the building process, apart of course from getting the home built to your taste.
Posted on 10/1/19 at 8:19 pm to jammintiger
It has to be compared to price per sq ft of other homes in the area and depends on upgrades and comps. This is something you should know before you build brand new not after.
Posted on 10/1/19 at 8:40 pm to jammintiger
I have been looking at building and the numbers don't really make sense. You have to value having a brand new house and hope there are no issues for 5 years.
This post was edited on 10/1/19 at 8:42 pm
Posted on 10/2/19 at 5:36 am to jammintiger
I believe the answer will vary
When I looked into building a few years back, houses in my neighborhood were cheaper to buy than it would have been to build.
We saved quite a bit of money by buying a 7 year old house.
When I looked into building a few years back, houses in my neighborhood were cheaper to buy than it would have been to build.
We saved quite a bit of money by buying a 7 year old house.
Posted on 10/2/19 at 7:41 am to adixit
quote:
Buying and selling home is really big deal, Your every decision is very important for you.
So keep be aware and choose right way for home.
Once you stuck in wrong home condition so you can face lot of issues.
Are you "Jim" from Ohio in customer support? Either that or Confucius has started an account.
Posted on 10/3/19 at 2:07 pm to Croacka
quote:
We saved quite a bit of money by buying a 7 year old house
Compared to a new house of course you did as that’s not an apples to apples comparison.
The OP is talking about building a custom home vs buying a new spec home from a builder.
Posted on 10/4/19 at 12:46 pm to Croacka
quote:
We saved quite a bit of money by buying a 7 year old house.
Sure, but to be fair, you bought a house with most likely:
7 year old roof
7 year old windows
7 year old appliances
7 year old HVAC/H20 heater/furnace
7 year old plumbing fixtures
7 year old light fixtures
7 year old overall finishes
I would hope in this scenario you get a discounted price vs new home construction, as I have yet to see these items value increase over time. With regards to materials, aka bones, houses built 5 years ago used far less advanced products simply because they did not exist.
To OP, typically new construction in PUD communities carries a premium and you are likely paying current full market value for it unless your market is struggling.
The value with new construction is like you said, designing it to your specific tastes.
Posted on 10/4/19 at 2:50 pm to ItNeverRains
quote:
7 year old roof
7 year old windows
7 year old appliances
7 year old HVAC/H20 heater/furnace
7 year old plumbing fixtures
7 year old light fixtures
7 year old overall finishes
Exactly my point above.
Posted on 10/4/19 at 3:43 pm to jammintiger
It was for me, but depends on the building costs and existing home sales in your market.
Posted on 10/4/19 at 8:52 pm to vistajay
It’s rare I see someone come out ahead on equity in new construction. Builders are not typically going to give you a great deal but you get exactly what you want for the most part. Buying an existing home, you can get instant equity a lot of times because the seller just wants to get off of the house.
Posted on 10/4/19 at 9:09 pm to vistajay
You can grow the square footage pretty easily and inexpensively because your real money is spent in the kitchen and bathrooms. Almost everything else is fixed costs per square foot at a much better ratio than the expensive rooms. By doing this, you can build a nice, sizeable house, in a neighborhood with bigger houses - and better home values. So yes, you build in equity if you do it right.
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