Does Building a New Home Make Financial Sense?
Anyone who's looked at home prices recently has likely experienced at least a bit of sticker shock. Unfortunately, house costs continue to climb to all-time highs, pricing many people out of the market entirely. If you're considering entering this hot housing market, you may be wondering if building a custom home makes good financial sense.
As with most aspects of home buying, the answer is complicated. Many people work with custom builders to get their dream home, but there can also be financial benefits. If you're considering building a new home as a way to save some cash, then keep these three tips in mind to make the process potentially more affordable than entering the current housing market.
1. Minimize Your Land Costs
There's isn't a one-to-one relationship between the cost of land and the final value of a home. In other words, the price you pay for a parcel of land isn't simply tacked on to the likely resale of your home after you finish construction. As a result, the cost of your land may become an added cost when compared to buying an existing home.
If you're looking to save money, then it's a good idea to start by minimizing your land costs. Consider parcels in areas a little farther away from city centers or in less heavily populated regions. Getting your land cheaply can significantly reduce the cost of your entire build and potentially mean getting a much more affordable home.
2. Focus on "Must-Haves"
If you're building a forever home with an unlimited budget, then you can go wild and add in as many features as you like. On the other hand, constructing a home with affordability in mind means sticking to the essentials. Make a list of the things you want the most, along with what you'd typically consider deal-breakers if you were looking at an existing home.
Since many developers construct homes to "wow!" potential buyers, they can often be larger than necessary and filled with things you don't need. Keeping your build to the essentials can drive down your costs, allowing you to construct a custom home for less than the price of nearby cookie-cutter houses.
3. Stick to a Plan
As with any project, making changes late in construction can pile on additional costs. Building a home with an eye on finances should also mean minimizing these changes wherever possible. While some alterations may be unavoidable, you'll want to stick with your original plan where you can. Don't be afraid to spend more time planning your new home to ensure you're happy with your decisions.
Ultimately, building a new home shouldn't be just about cost. Custom homes offer the opportunity to live in the house of your dreams, and you should enjoy the process as much as you can. However, with a bit of care and planning, you can build a home you'll love to live in while also avoiding the excessive prices of a blazing hot real estate market.
To learn more about building a new home, contact a construction company, such as Scott Hedrick Construction, Inc.