The decision to buy an existing home, a spec home or have a custom home designed and built can be challenging. Most of us want what we want and don’t want to make compromises. In the real world, most of us end up making compromises based on availability, cost and the features important to us in the home. Before you get started, it is best to understand the dynamics so you can make an informed decision.
In a buyers market fewer homes are available which pushes the cost of an existing home up. In a sellers market the reverse is true. The cost of an existing home is pushed down.
Proximity & Trending
As in any market, one of the most important factors influencing cost is supply and demand. Most markets will have greater demand where there are more people.
Of those that would prefer a new home, just under half would be willing to pay more for the new home. The challenge is it still costs more to build than buy an existing home in our current market. Wise buyers are reaching out to better understand these dynamics.
The first step is to educate yourself on the differences between buying verses building. In a growth real estate market, the differences between buying and building may be slight while in a declining or even in a stable real estate market, the cost to build will likely be more than the cost to buy a comparable home. This is not to suggest you should buy rather than build. Just understand you will likely have a larger investment requirement should you decide to build. The good news is with a design/build approach…..you will get exactly what you want because it is custom designed specifically to your design requirements. It is also important to understand that all Real Estate markets are local and the cost differences between buying and building will vary. Take the north Georgia market for example……Cherokee & Forsyth Counties (located just north of Atlanta) are booming. As a result, the cost differential between buying and building has narrowed to about 15% to 20%. In other words, it cost about 15% more to build than buy. Just two years ago this cost differential was 30% to 35% in this same market. Travel north to Pickens, Gilmer or Fannin counties and the differential is also down form 2 years ago, but to a lesser degree. It cost about 25% to 30% more to build in these counties (down from 35% to 40% just two years ago. The bottom line is it is important to understand your market and the availability of comparable properties. As the inventory is depleted, the cost differential between buying and building will narrow.
The second step is to find a competent Realtor and Builder that can provide you with the information you need to make an informed decision. In a perfect world, if you can find a person or company that offers both real estate services and design/build services all under one roof, you are more likely to receive an unbiased view of the dynamics of buying versus building. Either way, do your homework and get the facts before diving in and deciding which is best for you.