Newly Built Homes Comparable to Resales

Posted by Sarasota Suze in Real Estate

New HomeLocal builders in Sarasota, Florida have been saying for over 6 months that the cost of buying a new home is on par with buying an existing home of comparable size and features.  Now a new study from the National Association of Home Builders (NAHB) supports the concept that buyers can pay more for a newly constructed home and save money over time, even if the new home costs more.

Even with rising costs for labor and supplies and competition from relatively lest costly existing homes the study shows  that over time the new home features save money, i.e., the higher costs of operating an older home outweigh the annual costs of the newly built home.

Utility, maintenance, property tax and insurance costs, and analyzed how they vary depending on the age of a home. It found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241.

Similarly, operating costs average nearly 5 percent of the home’s value for pre-1960 structures, while they average less than 3 percent when the home was built later than 2008.

The analysis then compared the first year after tax cost of owning a home by the year the house was built, taking into account the purchase price, mortgage payments, annual operating costs and income tax savings. Based on these savings, NAHB says a buyer can afford to pay 23 percent more for a new house than for one built before 1960 and still maintain the same amount of first year annual costs.

While mortgage payments will be greater with a higher-priced new home, its lower operating costs mean a home buyer’s annual costs would be roughly the same in a newly built home compared to an older home’s smaller mortgage payment but higher operating expenses.

“For a family working with a fixed annual budget, new-construction homes offer outstanding comfort, convenience and overall cost savings,” said NAHB Chairman Rick Judson. “Put that together with today’s near-record low interest rates and competitive prices, and the time has never been better to buy a new home.”

Posted by Sarasota Suze in Real Estate and tagged with , , ,

The housing recovery is on its way in Sarasota, Fl. I attended a Home Builders Association of Manatee-Sarasota Expo last week that showcased the new home styles and new neighborhoods going up all over Sarasota and Manatee Counties.

From a national perspective, new-home sales jumped in January from the previous month to the highest level since July 2008, a sign that the housing recovery is accelerating. We saw a 16% increase in new-home sales in January which was the largest percentage increase in nearly 20 years.

A shortage of existing homes on the market has created a huge demand for new homes. And according to one of the major home builders in our area, the price of a new home is on par with the price of a comparable resale. As a result, builders began construction on the most houses and apartments in four years last year.

Low inventories encourage more construction. At the current sales pace, it will take just over 4 months to absorb the current new homes for sale. Building new homes has a major impact on the economy as each new home built creates an average of three jobs for a year and generates about $90,000 in revenue from taxes according to the National Association of Homebuilders. The industry has increased jobs by 98,000 since September.

Steady job creation and near-record-low mortgage rates are spurring more Americans to buy houses. Sales of previously occupied homes rose to the highest level in five years last year.

At the same time, the number of previously occupied homes for sale is at a 13-year low. That shortage creates more demand for new homes. Builders began construction on the most houses and apartments in four years last year.

Buyers are encouraged by low mortgage interest rates and the expected price increases. Sellers also get off the sidelines when prices go up. This adds to consumer confidence as higher home values also make homeowners feel wealthier and more money is spent.