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New Construction Homes: A Bang For Your Buck Comparison In Texas’ Growing Housing Market By Michael Ogg Rock Mortgage Partner and NMLS #299884

According to a recent survey by Trulia, 2 in 5 people surveyed prefer new construction homes over pre-existing homes. I thought the number would have been much higher than that given all the common benefits associated with a new build and that the number of housing permits issued in Texas have been increasing since 2009 according to the U.S Census Bureau. At Rock Mortgage, we make it a priority to understand why people buy, so we can help them through the process and prioritize each customers goals. So, I explored some of the advantages of new construction and considered some reasons why new construction homes aren’t the right choice for all home buyers.

The Pros

By purchasing a new build home, buyers can customize many features of the home before construction begins, and they never have to worry about spending precious time remodeling after closing. This is a big plus for those looking for move-in ready housing.

New homes often feature modern style and conveniences such as open floor plans, big kitchens, large master bathrooms and walk-in closets that suit the needs of families because a happy wife equals happy life.

New construction buyers also get to pick one of the top features of any home, location. Whether dreaming of living on a cul-de-sac, out on the ranch or within walking distance of all life’s necessities, builders can make it happen, and buyers can pick a lot that avoids nuisances like power lines, noisy neighbors or long commutes based on their personal taste.

Finally, new homes are often much more energy efficient. With double pane windows, vented roof tops, on-demand hot water, and more insulation in the walls and ceiling – home owners in Texas can save up to $1000 per year on energy bills.

And, who doesn’t love that new home smell? However, new construction homes come with their own drawbacks that any homebuyer should consider when house hunting.

The Cons

The average cost of a new home is nearly 25%higher according to U.S. Census comparisons due to the rising costs of materials and skilled labor such as builder-grade steel and aluminum. New energy-efficient requirements by the Federal, State and Local authorities come at a cost as well, increasing expenses upfront before homeowners are able to realize the cost savings from energy savings.

Property taxes are another reality that homebuyers need to consider. While homebuilders get the benefit of selecting the perfect location, most suburban areas don’t have access to city water, and developers must build a new M.U.D (municipal utility district) to deliver these utilities. This means drilling a series of wells, laying all of the pipes and putting in a processing plant. They do this by borrowing money (Municipal Bonds) and the money is paid back in the form of MUD taxes. In a new master-planned community, MUD tax can beas high as school taxes for at least 10 to 20 years depending on the size of the community bond. In many instances, we have found, buyers can afford to buy up to $100K more house with the same payment in an existing neighborhood when compared to a MUD neighborhood.

About 95% of new construction is located outside most of the populated cities in Texas, so new construction home buyers may have to plan on adding at least 20 minutes to an hour to their commute. Some urban renewal projects in Houston, Dallas, Austin, and San Antonio are underway. However, building a new construction home inside the city limits will come at a big cost. These trendy neighborhoods can start in the low 500’s and go to well over two million dollars.

Finally, most neighborhoods are man-made, if you’re looking for a scenic tree-lined street, you’ll be waiting at least 15 to 20 years. New homes typically mean new landscaping, and soaring Cypress, like Rome, aren’t built in a day. Most new developments are completely cleared before they put in the roads because having to work around existing trees and vegetation costs developers time and money.

I realize that in Texas like much of the United States, there are people that are equipped and talented in the handiwork it takes to maintain and take advantage of the benefits of an older home as well. And, there are some pretty good reasons to buy a pre-existing home.[SA2] 

Savvy house hunters should weigh all of the pros and cons of new versus existing homes before making a final selection. Then, choose what if right for them based on an informed decision. Happy HouseHunting!

For additional information about building or buying a home, Rock Mortgage’s registered home loan experts can advise you on which mortgage options are best suited for your individual needs. Call Rock Mortgage today at 832-230-3067 or visit us online. It will be our pleasure to work with you!