Does It Cost More to Buy or Build a Home in 2023?
Everyone dreams of becoming a homeowner someday, and they could achieve this goal by choosing to either buy or build a home from scratch. Since both options are not cheap, and this is a serious decision one needs to make, many people spend a lot of time debating whether to buy or build a home.
If you are looking for homes for sale or want to build a house for yourself or your family, you most likely already know that prices play a major role when deciding which one is best for you.
If you have saved some money or are thinking to start saving for a house, you might be asking yourself, “Does it cost more to buy or build a home?” Well, the answer to this question is not simple.
The cost of buying or building a home will depend on things such as your budget, location, the size of the house, property taxes, and your preferences, among others. So, if you are wondering if it is cheaper to build or buy a home in 2023, read on to learn more about the factors determining the price of each.
This post will help you know whether it will cost more to buy or build a home so you can decide which option to go for, or even if this long-term investment is worth it.
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Comparing the Cost of Building vs. Buying a Home in 2023
- Additional costs
Should you buy or build a home? Which will cost more? According to the National Association of Realtors, building a home is cheaper than buying a ready-made house; the average cost of building one currently being $283,130 compared to the $353,900 average cost of purchasing an existing home.
However, building the house might be the only cheap part because you will incur additional costs of buying land and clearing it, painting the exterior and interior of the house, furnishing it, landscaping, installing wallpaper, and setting up utilities, such as water, electricity, HVAC, internet, security, and cable TV, among other expenses.
Buying a home, on the other hand, can be more straightforward because, most times, you know the price upfront, everything is already set up, and you don’t have to change anything about your new house unless you want to.
In some cases, however, the existing home you get may not be perfect, and you might incur additional costs of renovation, remodeling, repairs, and maintenance. So, before buying a home, consider its current condition and factor in the additional costs you will incur while turning it into your ideal house.
Fortunately, most real estate companies sell homes that are in good condition, hence you don’t have to worry about additional costs. For example, if you are considering buying a house in Canada, you can find many beautiful, affordable homes for sale in Vancouver that are ready for occupancy.
Not only will such houses be convenient to move into, but you will also be sure of the actual cost of buying a home.
Additionally, if you decide to buy a home instead of building one, there will be many options to choose from. Therefore, if the home you desired initially doesn’t have everything you want, you can always change your mind and purchase a different one that requires less or no additional work, which could make buying a home cheaper than building one.
If you still choose to self-build a home and want to keep the cost low, you could opt for a simple design, buy all the materials you can at the beginning, and make sure you and the construction company are on the same page about your building plans.
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- The timeline for moving in
You can wake up today, decide you want to buy a home, and just look up the offers available, come to an agreement with the realtor, seal the deal, and become a homeowner just like that. However, if you decide to build a home, it could take time, sometimes even several years, to complete it and start living there.
As you wait for your home to be ready for you to move in, you will have to continue renting an apartment or house elsewhere, which is an additional cost you wouldn’t incur if you had bought an existing home instead.
Furthermore, if you take too long while building a home, there might be price fluctuations for materials and services with time, which could make you go over your budget.
Buying a move-in-ready home is convenient, especially if you are on a tight schedule to find a new place to live. For example, if you are relocating because you made a career change and got a new job in a different city, you will need a home you can move into right away or within a few weeks or months.
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- Bargaining power
While you could bargain when buying the land or lot on which to build your home, when purchasing the materials, or when hiring the construction company, you can’t negotiate on much else.
On the other hand, you can have a lot of bargaining power when buying a home because you don’t have to choose that particular house if the seller doesn’t budge on the cost.
When negotiating, you could use the data you have acquired about the home you are interested in to get the seller to lower their prices.
For example, the age of the property, fixtures, and systems, the length of time the house has been on the market without a buyer, prices of the other homes for sale in the area, or any renovations you might need to do after buying the home. If you are good at negotiating, it could be cheaper to buy a home than build a house.
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- Competition
Buying a home can be cheaper than building a new one if your chosen location doesn’t have a high demand for homes for sale. However, if the market is hot and everyone wants to own a house in the same area you are interested in, you might find yourself engaging in a bidding war as the prices keep going higher than you expected.
If you are on a budget, you will probably have to compromise on some things because you might not be able to match the price of the type of home and location you want.
When you choose to purchase land and build a home instead, you won’t have to participate in any bidding wars and can construct your customized home without going through the stress of hunting for a house that suits all your needs.
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The Bottom Line
Does it cost more to buy or build a home in 2023? As you can see, the answer to this is not a simple yes or no because, whether you decide to buy a home or build one, there are pros and cons for both.
Don’t rush into anything, and instead, weigh the options available carefully because making a mistake could cost you dearly. While checking out the homes for sale in a particular area, choose what is right for you based on your budget, timeline for moving in, and preferences.
Alternatively, even though it can be expensive, building a home for yourself and your family can be fulfilling. If you can stick to your budget and still make your dream home a reality by constructing it from scratch, all the time, money, and effort you invested will be worth it.
The best thing you can do when deciding whether to buy or build a home is to choose what is best for your specific needs and for your bank account.
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Buying a home will cost way much more than building one!
I’m glad to hear your thoughts on this, Mauro. Thank you so much for reading!❤️
I really want to build a home one day because of customization and making the layout how I want it to be. It sounds so fun and exciting to think about building a home for my family but I still have a long way to go before I can afford doing it.
Playing for you to get there soon, Lily-Anne❤️ Building your own home can have a lot of advantages because everything will be new and you get to design the house exactly the way you want it. Just stay focused on your goal and keep working and saving towards achieving it.
I don’t think building or buying is ever going to be something I will be able to do, but if I could do it, I think building one would be an incredible thing to achieve and experience doing. I would imagine doing that is cheaper than buying, especially now with the market being what it currently is. Thanks for sharing this!
Thank you so much for reading and sharing your thoughts on this, Molly!❤️ If you really would love to do either, I would advice you to eliminate the doubt from your mind and believe you could do it and you might just manifest it in the future.
Its a tough choice, both have their benefits and associated efforts. Building from scratch though is a lot more emotionally satisfying although it comes up with a great deal of effort. I think Time, effort, cost and need will make a decision maker’s choice eventually. Excellent article!!!
You said it perfectly, Manoj! Thank you so much for reading and sharing your thoughts❤️