Should You Buy or Build Your Next Home

Should You Buy or Build Your Next Home

When you first decide that you want to buy a new home you have two options, to buy or to build.  There are advantages to both, when you build you can put in all of the customizations that you can afford.  However when you buy you can move in as soon as 30 days from now.  Both are great options and it will largely depend on your financial situation, along with the area you want to live in.

Pros and Cons of Buying

When you buy a new house the house is completely finished, everything is ready to use and you can move in as soon as the closing is done.  You don’t have to make any major decisions about flooring or selecting a new bathtub all of that is already in place.  Because you can move in as soon as you take possession of the home you are not stuck paying rent while your house is being built.

However all the things that make buying a home convenient are also drawbacks at the same time.  While it is nice that your laundry room is set up for you, what if you prefer to have it on the main floor rather than in the basement, you’re stuck with it and can easily make changes.  Minor things like wall paper of the vanity in the bathroom are easily changed but you can’t rearrange the layout of your home.

When you buy an existing home chances are the roof, furnace and hot water tank are at least a couple of years old.  At some point they will have to be repaired or replaced and that will cost you some money

Pros and Cons of Building

Building your own home is exciting, you can choose everything from the sizes of the rooms right down to the tiles in the bathroom.  You can make the space your own before you ever set foot in your home.  Everything in the home will be brand new so you can put in energy efficient appliances, windows, and heating systems.  With everything being brand new there is no wear and tear to worry about and you will have a warranty in the event that something goes wrong.

Building a new home is not all sunshine and roses, there are some pretty big drawbacks.  The first one being is that is can take up to a year for construction to be completed.  A custom built home is going to cost significantly more money than buying an existing home.  You are also limited to where you can build.  If you are more interested in city living then building will be almost impossible.  Finding a reliable builder is also not the easiest thing to find either.

Whether you buy or build will depend on your personal preferences along with your available finances.

Real Estate and the Economy

Real Estate and the Economy

When it comes time to buy or sell your house, or if you work in real estate you get entangled in marketing or looking at homes ignoring the bigger economic picture that affects the real estate market.  We tend to look at the local economy and what is impacting the prices in our own neck of the woods.  But real estate and the economy are more closely intertwined than we think.  The factors that affect housing prices can include the global economy, taxes, the job market and of course the interest rates.  Let’s have a closer look at how everything ties together.

Interest Rates

Mortgage rates in the past couple of years have been at an overall low, their lowest point being about two years ago.  While today they could still be considered low, any time the Federal Reserve announce they are planning to hike the interest rate it impacts the average person looking to secure a mortgage.  While half a percentage point may not seem like much but it does change the amount of your monthly payment.  For some it could mean the difference between getting a mortgage or not.  It can also affect the price, the higher the rate the lower the housing price.

Taxes

Taxes are a part of your monthly carrying charges, lower taxes mean lower monthly payments.  Taxes are more of a local issue as the difference in taxes between one municipality and another can be huge.  There are some exceptions, last year’s changes to the federal tax codes had a big impact on market where the taxes are higher, states like California, Massachusetts and New York. Capping the federal tax deduction has the potential to drastically impact these markets.

The Job Market

Does the average home buyer feel they have job security?  What is the unemployment rate?  Is the median income increasing or in decline?  The better the job market is the more likely people are to qualify for and purchase homes.  The job market can vary from one part of the country to another to a degree but when the US job market is healthy so is the housing market.

The Global Economy

Economies all over the world are connected now, what happens in Beijing can impact what goes on in Kansas.  World news can impact the stock market which in turn affects the housing markets.  The more confidence people have in the markets the more inclined to make purchases and that includes buying a new house.

While most of us do watch the news and stay current on world events we may not understand how it directly impacts our everyday life.