15 Pros and Cons of Buying a New Construction Home

New construction homes are popular for a variety of reasons. They offer buyers a blank slate to design their ideal living space. These options include everything from floor plan layouts to building construction materials. They also cover extra options for energy-efficient HVAC systems and customized cabinetry and doors.

However, there are a few cons to buying a newly built home that we’ll discuss below. Before purchasing a new construction property, you should consider these potential drawbacks as well as the advantages.

The home buying process is a lengthy one, but it can be made easier with proper knowledge. If you’re planning to build a new construction home, here’s what you need to know about the pros and cons.

The PROS of New Construction Homes 👍

Personalize & Customize

Customizing your new home is one of the most exciting parts of building new construction. A custom, tailor-made home provides a unique opportunity for builders to showcase their creative talent and craftsmanship. It also allows you to express yourself with finishes that reflect your tastes, preferences, and personalities.

Existing homes rarely offer the opportunity for you to change the layout of the house. At best, you can remodel and change out the old fixtures and finishings. If personalizing your next home is at the top of your wish list, then a customized new home may be very appealing for you.

Extra Clean

Want clean living for you and your family? Newly constructed homes offer the most sanitary solution possible. Moving into a new home knowing that no one has ever lived there is a great feeling. New houses provide all of the latest materials and sealants, making it impossible to find a cleaner option.

There are some drawbacks to the new materials, which we’ll mention in the cons below. Overall, living in a brand new house that no one has ever lived in will eliminate any nasty surprises you might find when buying an existing older home.

No Need For Updating

Architecturally speaking, we can say that an existing resale home is like a blank canvas. It’s just waiting to be created as the buyer sees fit. When you purchase your own new and improved masterpiece, there's no need for updating because the products used are taken from the current design trends.

When purchasing an existing resale house, the previous owners could have picked out the design choices decades ago, such as colors or flooring patterns. Many times, this leaves the new homeowner with the desire to update certain features. When building a new home with everything you want from scratch, there are many design choices that you get to make on your own. This pro is a significant benefit to buying a new home over an existing one.

Energy Efficiency

The new energy-efficient houses that are being constructed today can make everyday living much more manageable. Rising utility costs are a concern in 2021. The efficiency benefit from new construction causes utility costs to be lower than average. This benefit causes homeowners to worry less about their electricity and gas bills every month.

There are many reasons why these new construction houses are so energy-efficient. A few reasons include vinyl windows, new door trim and seals, and better insulation between walls to keep out drafts. These products can reduce the need to heat and cool your home by a significant amount. The savings help to offset the higher cost of a new home in the long run.

Less Maintenance

New construction homes have less maintenance than older existing homes. You won’t have to worry about your roof leaking when it rains or your air conditioner breaking in the middle of summer. You can enjoy all the perks of living in a brand-new home without maintenance headaches. When things do break down, they are typically covered by the builder’s warranty, which we’ll talk about next.

Even though a new construction home has brand new everything, we recommend getting a third-party home inspection anyway. Most people will only get a home inspection on pre-existing homes. After the cost of building, who wants to pay for a home inspection? In reality, a home inspection costs around $350 to $500. It can save you ten times that amount if anything is found to be defective.

Home Builder Warranties

When working with a builder, they will typically offer warranties that you could never get on a new home. Sure, you can buy a home warranty later, but that only covers a small number of items. Your homeowner’s insurance will cover significant events, but a builder’s warranty goes beyond all of that.

Many home builder warranties cover anything that happens to the home within two years of the date of purchase. Since the contractors are already working on new homes in the neighborhood, they can be repaired immediately. I’ve lived in a new construction home and was very impressed when I needed them to fix something. It was much more manageable than dealing with a home warranty or filing a homeowners insurance claim.

Not all home builders are equal. Their warranties can vary dramatically. Check reviews on the builder you’re considering by looking at their profile on the Better Business Bureau (BBB) website and ask around the community for additional feedback.

Home Builder Financing Incentives

Many home builders offer special in-house financing that rivals most 3rd party mortgage lenders. They may contribute $5,000 off of your closing costs by using their in-house funding, as an example. Since they are already making money off your home purchase, they have the extra margin to offer financing incentives that an outside source can't offer.

With all of that said, it is wise to shop around to make sure the mortgage offer you’re getting is the best one. Builder incentives change as the market switches from a seller to a buyer’s market. Currently, home builders are kings as the United States is facing a severe lack of inventory in the housing market right now.

The CONS of New Construction Homes 👎

Expensive

On average, it cost around 20% more to have a new home built than to buy an existing one. This number changes based on the area and price range of the home. Many people accept higher prices because of all the pros mentioned in the section above. You will have to determine whether a 20% increase in price is worth it to you, based on your needs.

It’s common for rookie homebuyers to walk through the builder’s model homes and want their new home to be just like that one. In reality, the model home will be much more expensive than the traditional properties in the community. Get ready for the sticker shock of the model home price when you’re at the builder’s office. We recommend using a real estate agent to help you through the process and keep your expectations in check, especially on custom homes.

Less Mature Landscaping

When developers create new neighborhoods, they typically tear down all of the vegetation in the area. They do this because it’s the most costly way for them to break ground and get started.

When you have a new home built, you may have to pay extra to have new landscaping put in. This expense can be costly as the average landscaping project for a home is around $3,000 to $16,000. These additional costs come out-of-pocket in most cases.

Older neighborhoods tend to have much larger trees and shrubs, as the vegetation has had decades to mature over time. Some homebuyers prefer to buy in established communities for this reason.

Limited Options

The showrooms of the home builders offer a wide variety of product options with premium levels of materials. But what if you want to choose a product that is not on their list? Likely, the option will not be available for you.

New home builders like to stick with their most commonly used products and materials. This decision decreases the chance of defects and time spent learning new installation methods for new products. Don’t be afraid to ask the builder for more information about their preferred products.

When buying an existing home, you can hire a contractor who will install any purchased products from third-party vendors. There is no limit to the number of custom items you can add to an existing home within the range of local building codes.

Additional Expenses

When buying an existing home, you might be able to buy it for the set price without any other expenses. Buying a new construction home means that there are always more costs than just the purchase price. It's hard to know how much a new home will cost until it's completely done. This makes budgeting difficult if you're not sure about all the line item charges builders can add before closing on your new house!

Off-gassing

The new-home smell that so many people love may be damaging to your health. Formaldehyde is one of the most common chemicals that is released from the new wood in a home. This chemical is used to embalm dead bodies, and needless to say, it's not very good for you!

It's not just carpets and curtains that are the culprits of your allergies. It's also the chemicals within the new house you're thinking about buying. With over 10,000 potential chemicals off-gassing in a new home, it can take up to 10 years for these chemicals to fully vent. If you're sensitive to chemicals, make sure you do more research before making your next move.

Volatile organic compounds (VOCs) are the culprit in new home construction. You can search for the term on the internet to learn more about it. The National Association of Home Builders has some useful information on this topic.

Timeline

Many people find buying an existing home is the best option because of the unpredictable home-building timeline. With a new house, you have to wait 3-12 months before moving in. This issue can be a challenge for people who are in temporary housing and need to get out of their current situation as soon as possible.

If you buy an existing home, you can move right into your new place within 30 to 45 days of signing the sales contract! This ease of purchase makes the new build process less appealing if you need to buy a house right away.

Higher Taxes

New construction neighborhoods often have higher taxes than older ones because they lack established infrastructure. Many new developments have to take out loans from the city to install the roads, electrical grids, and infrastructure needed to maintain the new neighborhood. This loan is paid down every year from the taxes within the community.

Many homebuyers are often surprised by the high cost of property taxes in new construction communities. A recent study conducted by WalletHub found that, nationally, the average homeowner spends $2,471 per year on property taxes. New construction property taxes can be twice that amount. Adding high property taxes to your monthly mortgage payments may be enough to disqualify you from getting a construction loan.

Strict HOAs

Homeowners Associations (HOAs) are becoming more popular every year. If an existing homeowners association wants to add a new rule, they have to vote on it. Since it’s much easier to make HOA rules upfront, rather than adding them later, new construction neighborhoods tend to have the most-strict HOAs.

When new developments are created, they design all of the homes and lots to maintain uniformity. These new neighborhoods typically have smaller lots with more regulations than older communities. When a homeowner does something extreme to their property, it negatively affects the immediate neighbor’s property values. This scenario causes new HOAs to be rigorous right from their conception.

Conclusion

Buying a home is one of the single largest investments you will ever make, and it’s essential to do it right. When purchasing a new construction home, you get the opportunity to shape your vision for your dream home.

You can choose from many different floor plans that professional architects and interior designers have labored over. You also get to build exactly what you want into your house: custom cabinets or countertops, hardwood floors in every room, or even an extra bedroom if there isn’t enough space for your growing family.

As you process through the list of pros and cons above, you should have a good idea of whether building a new home is a good option for you or not. Take your time and consult with a real estate agent to get the best results. Their experience and knowledge will help you through the process and eliminate confusion as you build your new home.