Why new houses cost more and is it worth it?

Home Builder with Zeus Construction MA CS-114391

Why do new houses cost more than existing (old) ones? And is the premium worth it?

Here are the major things that I see making the cost of new homes higher than their used counterparts.

First the good news: EVERYTHING IS NEW ON A NEW HOME! This is obvious but it's the #1 reason for new home cost. Everything from the foundation and frame, roofing and paint, siding and landscaping, electrical, mechanical & plumbing, kitchen, bathrooms and flooring - everything is brand-spanking new. New homes even have that new-house smell!

What do you get for it being new? Typically you get a one-year builder warranty included in your purchase. This means if anything goes wrong with your new home in the first 12 months, the builder will come out and take care of it. This is a really nice feature. Despite all the horror stories you may have heard, most builders are pretty good about this. My company uses this opportunity as another way to take care of customers because it's excellent marketing for my brand and shows that we stand behind our product.

Customization: This is the real game changer. If you get the new home under contract early enough in the process, you get to customize the home as much as you want! This means anything from finishing a basement or space over a garage, custom kitchen design, custom trim and finishes, accessible bathrooms, special entertainment features like built-in surround sound, USB electrical plugs where you want them (in the kitchen, at bedside), a Level 2 electric car charging plug in the garage, custom patio with built in firepit and kitchen. The possibilities are endless and so are the costs!

Insulation and air-tightness: New energy-efficiency standards are applied to new homes first. This means that a new home is going to be up to date and much more energy efficient than existing homes. This translates into massive savings during your time of ownership. Don't forget to calculate the energy savings you will experience on a new home when comparing buying new vs buying old! It can be quite significant.

Land cost: They aren't making any more of it! If you're in the market for a new home you already know that finding a buildable lot is quite challenging. Working with your real estate agent, scouring zillow and craigslist for those possible FSBO lot sales is time consuming and often unproductive. Ready-to-go lots are expensive because they've already been through the approval process. If you get lucky you might find an old house for tear-down in an acceptable location.

Stormwater systems: A hidden cost to the project but almost always there nowadays. Developers and builders have to manage stormwater on site which typically means installing underground infiltration chambers along with drainpipe to channel the stormwater. Because these systems must be custom designed by an engineer, a small system for a single home can add $10,000 to the cost of the home.

There are many, many more items that cause new homes to be more expensive but in my opinion, these are the most significant in today's building environment. What other major items did I leave out of this list? Feel free to comment about it below.

If you need an experienced builder/developer to assist you on an upcoming project, feel free to contact me.

Posted by

Cameron Bagherpour
Builder, Developer, Investor
Zeus Construction
Canton, MA 02021

Comments (1)

Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello and thank you for your information to share with us here in the Rain.  Make it a great day!

Apr 27, 2023 09:38 AM