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Building a House vs. Buying: Which Should You Choose? Here’s How to Decide

C.E. Larusso
Written by C.E. Larusso
Updated November 12, 2021
Architect and homeowner at home build site
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When to raise the roof and when to buy it

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That three-bedroom house on Oak Avenue is almost perfect… if it weren’t for the lack of bathrooms. And that four-bedroom over on Citrus Grove would be great if the roof were in better condition. When none of the homes listed on the market feel just right, you might consider building a home from scratch. Before you do, consider all the pros and cons of buying vs. building to truly understand which is right for you.

Building a House Pros & Cons

The idea of building your own home sounds alluring, given that you can create any floorplan you wish. But before you hire a local builder, read the pros and cons of building a house from the ground up.

Pros

Design the Home of Your Dreams

When you build your own home, you’re in control. Whether you want a spectacular deck, a mother-in-law suite, or a wraparound porch for reading and relaxing after dinner, you can make it happen. Starting from scratch can also be overwhelming, so you should discuss your priorities and your idea of a dream house with a professional builder. They’ll also be able to help you source professionals that can assist with landscaping, interior design, and the architecture.

Live Where You Want

Depending on your budget, of course, you have the opportunity to buy a home anywhere there’s available land that’s zoned correctly—yes, that might even include that perfect sunset-viewing spot across from the beach.

Save on Energy

New build homes are typically much more energy efficient than the majority of older ones, and since you can choose your appliances and systems, you can opt for ones that are gentler on the environment and your wallet.

No Toxic Materials

Many materials used to build houses in the ’50s, ’60s, and ’70s—such as asbestos and lead paint—are now considered very toxic. Building your home ensures that none of these harmful materials are used in construction.

Lower (Initial) Maintenance Costs

Since everything in your built-from-scratch home will likely be brand new, your maintenance costs will be lower for at least the first few years, before any major repairs need to be completed.

No Competition

Because you’re building your own home, you don’t have to worry about other buyers outbidding you in the competitive housing market.

Cons

More Expensive

Building a home is, on average, more expensive than buying an existing one. The expenses of building a new structure add up quickly: you’ll need to cover every detail, like your HVAC system, appliances, roofing, fixtures, and more. 

Construction costs for a new home range from $100 to $200 per square foot, though luxury options can exceed $500 or more per square foot. The average total cost to build a home ranges from $120,758 and $452,477, with many variables such as the cost of land and price of materials. The average cost of a new, existing home in the U.S. is $334,500.

Long Timeline

It can take many months to construct a home, and that’s assuming nothing goes wrong. Supply chain issues, poor weather, or simple human error can cause added delays.

Your Loan Could Cost More

Called construction-to-permanent loans, a loan for a new home funds construction and then is converted into a permanent mortgage; while the home is under construction, you’ll only pay the interest. These loans tend to be more expensive than traditional mortgages, so compare rates and shop around with various lenders.

Pros and Cons of Buying an Existing Home

Realtor showing couple a house for sale
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Even if the market isn’t offering the exact home you want, there are lots of reasons to buy instead of build.

Pros

Quick(-ish) Process

In short, the home is already built. All you need to do is deal with the negotiations, mortgage, and paperwork—not all that easy, but simpler than hiring, understanding and managing builders, zoning regulations, local building codes, and other bureaucracy. If you need to move into your new home quickly due to a new job, school starting, or another major reason, it might make more sense to buy rather than build.

Lush Landscaping

An existing home might have the benefit of tall, full grown trees and full hedges; the landscaping has had more time to grow into the space, while building a new home will likely require you to buy and place young trees and plants, unless you’re comfortable being surrounded by dirt and dirt alone.

Negotiation Power

Your real estate agent can help you negotiate to get a final price on a great home that works with your budget, and the bottom line price will be what you pay (in other words, you won’t experience the unexpected costs that sometimes come with building a home).

Established Neighborhood

When you build a home, you’ll need to find and buy land to build it on, and that could come at the cost of having an established neighborhood with neighbors, stores, school, and work nearby. Chances are if you’re purchasing a home, it’s already integrated into a neighborhood that has what you need nearby. In addition, some of the neighbors may have been there for a long time, and can speak to what the area is like, giving you special insights into your new street.

Uniqueness

A new home can certainly be unique in the sense that it’s a design you dreamed up, but an old home can have idiosyncratic, charming features that tell a story of the house’s history, like stained glass, antique doorknobs, or carved wood.

Cons

Repairs Might Be Needed

The home inspection report will reveal what shape things are in, but it’s likely that you will need to replace one or more appliances sooner rather than later as they probably won’t be brand new.

You Might Want to Renovate

The house might be 80 percent perfect, but that 20 percent might be a big enough deal to you to consider renovations and upgrades, which of course add cost (though depending on what you do, you might recuperate in ROI).

Potential for Buyer’s Remorse

Even after reading the home inspection report and knowing what problems the home might have, there could be unmentioned discoveries after the purchase, leading to buyer’s remorse, after that “shiny new home” feeling wears off.

Tough Markets

The housing market could be extra competitive when you want to buy, which can cause added stress and sometimes costs, as you might need to outbid other buyers.

Building a House vs Buying a House: Final Takeaways

House build in progress
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Deciding whether to buy or build a home is a major decision, and there’s no one-size-fits-all answer; the choice will come down to your priorities, budget, and lifestyle.

Better for Urbanites: Buying a Home

Dense cities don’t have a lot of land left to buy, so if living in a city is a priority for you, you’re better off buying a home. While land can be inexpensive in very suburban or rural areas of the country, it will place you very far away from amenities (and likely necessities like school and work).

Better for Eco-Conscious Types: Building a Home

By building your home, you can choose appliances and systems that are energy-efficient and will likely last longer than older models. In addition, since you’re designing everything from the ground up, if you wish to install solar panels on the roof or a rainwater capture system, you can do it.

Better for Picky Buyers: Building a Home

If you’ve toured a dozen homes and can’t help but find major things wrong with each of them, it might be time to consider building. The floorplan is a blank slate for you to impose your wildest wishes upon: three bathrooms on the main floor, a breakfast nook, and a built-in barbeque for the patio? Sure!

Better for Those on a Budget: Buying a Home

Even though home prices have been increasing, the process of buying a home allows you to negotiate with the seller. In addition, there will be a laundry list of costs when you build, ranging from labor, sewer hookups, clearing the land for construction to begin, and permits.

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