Is It Cheaper to Build or Buy a House?

That latter can be costly to fix, which points to the extra cost of renovations that you wouldn’t have to worry about in owning a new house.

According to Asher, one of the benefits of buying is that the home is instantly available. Generally, you don’t have to wait on new construction, construction loans, building materials, or material costs. This can make a homeownership journey a lot less stressful, and will save on costs paying for accommodation while waiting.

McKeel has seen the same in her work, especially when clients choose to buy because it’s a more familiar choice. “It is undeniable that building a new home will take time, especially one that needs to be custom designed,” she says. “Depending on the scale of the project, our design process takes about five to nine months. Bidding and permitting can take as little as a month, but can also take as long as six months if your property requires any special approvals.”

Another con: Not being able to have an active say in the design process, which can greatly affect your overall satisfaction and feelings of personalization with your home. 

Building vs. Buying a House

Answering the question “Is it cheaper to build or buy a house?” demands that a future homeowner weigh a variety of factors, especially around cost. Here are some factors that will have a big impact. Consider these points before you decide to buy or build.

Maintenance

For existing homes, maintenance generally costs more. “Older homes can be clad in materials that are less rot resistant, such as the old masonite siding,” Carroll says. “Fascias and eaves these days are more likely to be made of concrete products whereas the older home stock will be typically made of wood which is prone to rotting.”

You may have to take on neglected maintenance projects and upgrades that previous owners avoided. You may also choose to make stylistic changes to appearance-based things such as countertops, roofing, and interior finishes. These costs can add up pretty quickly.

For newer homes, Asher notes that maintenance can be avoided for many years, and that a lot of the appliances and systems will be under warranty for a while. “But owning a home is no different than a car,” Asher says. “It needs care, upkeep, insurance, and more.”

Landscaping

McKeel emphasizes the benefit of complete customization and maintenance. “On one hand, buying a home means that you will likely have established plantings and green spaces, but building a new home will allow you to influence what plants or features are in place,” McKeel says. 

She also notes that it’s easier to add complex landscaping systems—like irrigation, water features, pools, and retaining walls—when you build a new home. “You can tie them into the design of the home’s mechanical or plumbing systems from the start,” she says—although these options will inevitably be costly.

Energy Efficiency

Existing homes can be generally less efficient depending on when they were built. “Anything built pre-2012 building code will be significantly less efficient than current housing stock as the 2009 to 2012 International Residential Code cycle made some of the most significant energy changes in recent years,” Carroll says. In this respect, building your own house will pay off in terms of lower energy bills in the long run.

Appreciation

For older homes, appreciation depends on the maintenance done on the home and that of the neighboring homes in the development, says Carroll. “Homes that are not maintained may still enjoy some appreciation though far less than homes that were kept in repair and that are located in developments with up-to-date and enforced homeowner association restrictions,” he says. New homes will typically appreciate four to six percent per year.

“For newer homes, if purchasing early in development, a homeowner can experience appreciation in short order if the development maintains a healthy sales cycle and the development appreciates as it sells out,” Carroll says.

According to Narofsky, owners should be aware of the commitment to maintain a home or property, which will shape its ultimate value. That means paying attention to long-term costs—like maintenance, energy use, and taxes.

“Many people still hold to the American dream of owning their own home,” he says. “It’s a great achievement for many to accomplish this and with a great return on satisfaction.”