Should you buy or build your first home?

Every first-time homebuyer faces this age-old debate: Should you buy a house or build one? According to Realtors.com, the median home price is $425,000. However, the national average cost of building is $329,000 for a 2594-square-foot home, which works out to $126 per square foot. But depending on where you live and the market conditions, the cost of buying or building can be significantly more than less. So, is building a home the better choice? Maybe, to determine which option is best for your needs, you have to dive in and do some research.

The benefits of buying a house
Buying a house is often the most straightforward path to becoming a homeowner. If you can find something within your budget and in your desired neighborhood, you can move in immediately without waiting for the home to be constructed. The average time it takes to build a house is typically six to nine months, so buying an existing home is the best choice if you’re ready to buy sooner rather than later.

However, the biggest drawback of buying an existing home is that you don’t have the freedom to customize it as you want, or you may have to pay for necessary upkeep and maintenance, especially if it’s an older home. According to Realtor.com, the average home in the US is 46 years old, so you will likely have to invest in significant maintenance and upkeep as a homeowner. Even if you score a great deal on an existing home, you must also factor in future maintenance and renovation costs into your budget.

Is it cheaper to build a home?
Right now, the average cost of building a home seems cheaper than buying an existing one, especially in competitive markets. But the average price of building a house doesn’t take into account a few of the other expenses that come with building, like:

• Land: Purchasing the land or lot your home will rest on is a significant expense. Even though the average home typically has a lot size of only 0.5 acres, that can add up. Depending on where you plan to buy a plot for your home, you could pay a significant amount for your land.
• Construction costs: Material and labor costs vary widely between regions depending on the type of building materials you select or the building company or contractors you work with. For example, the interior finishes of a home, which typically account for a third of the building budget, can average about $79,000, according to Realtor.com.
• Time: Construction timelines can drag out for many reasons, like permitting issues, material shortages, or labor issues. The longer it takes to build a home, the more money it will likely cost.

Make the choice that is right for you
Deciding whether to buy an existing home or build a new one is a big decision. These are just a few factors you must consider, but there are many more. Make sure to take the time to think through each of your options. Your PRMI loan advisor can be a valuable resource as you make this decision and can offer recommendations on the best type of financing to choose. With hundreds of loan options, including one-time construction or renovation loans, we can offer the financing flexibility you need to build or buy a house.