6 Cost-Saving Reasons to Buy New Construction

Buying a newly built house costs more -- even with all the builder incentives thrown in. The National Association of Realtors reports that the median price for existing homes in May was $166,700. The Census Bureau says the median home price for new homes was $222,600 -- or 33.5 percent higher. The price gap explains why new home sales are at historic lows – in many cases selling for less than replacement construction costs.

Numbers alone don't account for personal preference, of course, and many older homes come with charm, a sense of history, or are just in the precise neighborhood you want to live in. Often, though, the first thing someone who buys a pre-existing home does is remodel it to their tastes. Are they really coming out ahead of the money game if they immediately rip out the kitchen and bathrooms to match the ones in the beautiful new model home -- spending $100,000 in the process and living with months of construction?

There are other strong reasons to consider new over old. Building codes have tightened over time, and some older homes are not up to snuff. That doesn't mean that they will necessarily fall down in the next natural disaster, but there are things to be wary of:

1. Home repairs made by homeowners. There are lots of handy men out there who believe that home repairs are what you do on the weekend with the aid of your brother-in-law. They come with varying degrees of capability, but few are as good as the licensed guys who earn their livings building homes. As a result, there are decks that sag, shower doors that don't hang properly and bathroom tile improperly grouted. Many home remodels are done under the radar of a home inspector and permits weren't pulled. When you buy a used home, it behooves you to ask whether the garage was converted legally into a home office and who did the actual work. "My husband is very handy," should send up a red flag. New homes generally come with a 10-year warranty on major systems -- electrical, plumbing, etc.

2. Weatherization. Older homes weren't built with the same insulation as newer construction and usually have single-pane glass windows. They also may lack central air conditioning, which can be costly to install, especially if you are re-insulating and putting in double-pane glass windows and doors at the same time. And if you're not, you're really just going to air condition the great outdoors, so rethink your plan and dig deeper into your wallet. New homes' exterior wall-finishing materials are maintenance free, and thermally and acoustically insulated. Low-emittance windows, as well as lighting and new appliances, are more energy efficient.

3. Asbestos and lead paint. Yes, both are still around. Many older homes were insulated with asbestos, which in itself, isn't a cause for alarm. Asbestos becomes an enemy when you disturb it and its particles are released into the air. Popcorn ceilings? Call the asbestos-removal team. Ka-ching! Asbestos was banned from construction starting in 1978. Home builders are prohibited by law from using asbestos and nobody is selling lead paint anymore.

4. Irrigation systems. In the past they were frequently installed close to the exterior wall and homes weren't designed with adequate drainage. Water would get inside the house and cause mold.

5. Roofs are expensive. Asphalt roofs in desert communities usually have a short life, yet when you try to replace the roof with tile, the roof supports aren't strong enough. It's a big -- and expensive -- job. Many home inspectors don't actually get up on the roof and will qualify their report by saying it is based on visual inspections from the ground. We think that in the first heavy rain, you'll agree that's kind of worthless. New homes generally carry a 20- or 30-year roof warranty.

6. Homeowners' tastes have changed. Even as recently as six years ago, big was considered better. Nowadays, new homes reflect the changing preferences of buyers who want more energy efficiency, and a great room that combines the kitchen, family and living room areas in a smaller total footprint. Gone are the large mudrooms, media rooms and even the third garage bay, according to Stephen Melman of the National Association of Home Builders.

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