Local builders in Sarasota, Florida have been saying for over 6 months that the cost of buying a new home is on par with buying an existing home of comparable size and features. Now a new study from the National Association of Home Builders (NAHB) supports the concept that buyers can pay more for a newly constructed home and save money over time, even if the new home costs more.
Even with rising costs for labor and supplies and competition from relatively lest costly existing homes the study shows that over time the new home features save money, i.e., the higher costs of operating an older home outweigh the annual costs of the newly built home.
Utility, maintenance, property tax and insurance costs, and analyzed how they vary depending on the age of a home. It found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241.
Similarly, operating costs average nearly 5 percent of the home’s value for pre-1960 structures, while they average less than 3 percent when the home was built later than 2008.
The analysis then compared the first year after tax cost of owning a home by the year the house was built, taking into account the purchase price, mortgage payments, annual operating costs and income tax savings. Based on these savings, NAHB says a buyer can afford to pay 23 percent more for a new house than for one built before 1960 and still maintain the same amount of first year annual costs.
While mortgage payments will be greater with a higher-priced new home, its lower operating costs mean a home buyer’s annual costs would be roughly the same in a newly built home compared to an older home’s smaller mortgage payment but higher operating expenses.
“For a family working with a fixed annual budget, new-construction homes offer outstanding comfort, convenience and overall cost savings,” said NAHB Chairman Rick Judson. “Put that together with today’s near-record low interest rates and competitive prices, and the time has never been better to buy a new home.”