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Alvarez Construction Buy New or Resale
June 4, 2019

Buy a New Home or Resale: Price Versus Cost

The price of buying a home is always an important factor, along with location and the home itself. But there’s an important distinction you also need to consider. The price you pay for the home isn’t always an accurate reflection of what it will take to maintain it. As you decide whether to buy a new home or a resale, Alvarez Construction Company wants you to understand the difference of price versus cost.

As you’re considering different homes for sale, take the time to estimate the total cost of ownership. That’s the price of acquiring AND maintaining the home. In addition to the mortgage (which includes the loan, property tax, insurance, and HOA, if applicable), figure in remodeling, repairs, maintenance, and utilities. That’s your total cost of ownership (TCO).

What do you get from your investment?

Let’s start with the option of buying a resale home. The actual price is often less expensive than a comparable, new construction home. That’s the price, not the cost.

What will it take to make this existing home into what you want? A little paint, maybe new floors? That costs money, but isn’t too bad, as long as you’ve budgeted the expense.

Maybe you want to bring the kitchen up to date. Depending on the extent of the changes, you’re easily looking at a 5-figure remodel.

How’s the roof, the furnace, and the water heater? Those can run into serious money, driving up the total cost of ownership.

A new construction home comes with a builder’s warranty, so your coverage protects you from these significant repairs. Everything in your home is brand new and covered by each manufacturer. Today’s roofing systems can last up to 30 years. A tankless water heater has a life expectancy of 20 years.

The energy efficiency equation

Think about your utility bills. An existing home doesn’t reflect the latest advances in energy efficiency. According to the U.S. Department of Energy, a new construction home is about 30% more energy efficient than an existing one—conserving electricity and water.

If we estimate your monthly bill for water, heating, and electricity to be about $200, then you could save $60 per month by purchasing a home that is 30% more energy-efficient—$720 savings on your utility bills per year. That’s baseline, and many new construction homes—like Alvarez Construction Company’s single-family homes—could save considerably more.

Factor the cost of energy efficiency into your TCO before you decide on which home presents the better “value”.

The compromise of “as is”

You might be lucky to find a home that is truly move-in ready. Still, there are probably features you’d like to change. For now though, you can just “live with it”. Is that what you want from this investment, likely the largest you’ll make in your life?

A brand new home presents the wonderful opportunity to add your personal touches. Pick the color of your walls and floors, the lighting and plumbing fixtures, and the style of your cabinets. Decide how you want your kitchen backsplash to look. Create a fireplace surround that makes you smile.

An equity bonus

As with anything (except wine), an item depreciates over time, while a new home appreciates. Your choice should also consider resale value, and a new construction home tips the scale in your favor on this point.

When you add it all up, a new construction home delivers the greater long-term value. Give yourself all of the advantages that come with making this choice. Look at our floor plans and available single-family homes for sale in our communities around Baton Rouge. Use this mortgage calculator to see what you can afford. Then contact Alvarez Construction Company to come home without a “To Do” list waiting for you.



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