If you’re thinking about purchasing a home, you have two options—buy an existing home or build a new one from the ground up.
And while there are many factors to consider in the buy vs. build debate, for most buyers, one of the most important is affordability.
So, which is more affordable—building or buying?
A recent video from realtor.com explored whether it’s cheaper to buy or build a home. According to the video:
- The average cost to build a home is $332,000… The median construction price of a single-family home is $296,000. But thanks to COVID-19, buyers can expect to pay a “pandemic premium” of $35,000—bringing the cost to $332,000.
- …but you’ll incur additional costs during the build process. That $332,000 covers basic construction costs like materials, interior finishes, plumbing, and heating. But those aren’t the only costs in building a new home. When you build, there are additional costs you’ll incur, including excavation and foundation (which, if all goes well, will run about $33,000—but can easily go over if there are any issues), permits (which average around $5000) and inspections ($4300). You’ll also have to cover any living expenses while your home is being built (for example, renting an apartment).
- The average cost to buy an existing single-family home is $380,000. Currently, the median price for an existing single-family home in the US is $380,000—making it slightly less affordable, on average, than building.
The difference between the cost of building a new home and buying an existing home has a lot of variables that will differ from one area to another, and one situation to another. It’s impossible to make a decision entirely based on average costs, so make sure you weigh your options carefully and consult a local real estate agent who can help you evaluate the pros and cons of each situation—so you can make the best decision for you, your family, and your home search.