Although existing homes are more affordable, most Americans want a new property.
According to a recent survey of 2,048 U.S. adults by Trulia, an online real estate marketplace, 41 percent of total respondents strongly or somewhat preferred to have a newly constructed home compared to an existing home if the properties are the same price. Conversely, only 21 percent strongly or somewhat preferred a resale property. The remaining 38 percent had no preference.
Despite these aspirations, Trulia found that more than half of respondents were unwilling to shell out the extra funds required for a new home. On average, newly constructed properties cost 20 percent more than their resale counterparts of similar size and location, and only 46 percent of respondents were willing to pay the premium. Even for this minority, the pickings are slim, as inventory of new homes in the U.S. has been tight.
"Most people who say they strongly prefer a new home aren't willing to pay the premium, and many regions of the country have little single-family construction," said Jed Kolko, Trulia's chief economist. "Still, as the housing market recovers, new homes will be a growing share of the national market."
Where interested buyers can find new homes
To aid those bold consumers who want to spend a little more for a new residence, Trulia created lists of housing markets with the most and least new single-family homes. Raleigh, North Carolina, has the most opportunity, with 17.2 new single-family properties permitted in 2013, per 1,000 existing home units. The City of Oaks was followed by Houston; Charleston, South Carolina; Austin, Texas and Charlotte, North Carolina-South Carolina.
In regard to metro areas with the fewest new single-family homes, New York had the lowest inventory. In ascending order, San Francisco, Detroit, Los Angeles and New Haven, Connecticut, held the other four spots in the bottom five.
What makes new homes more appealing?
There are many advantages to purchasing a newly constructed property rather than an existing home. One such benefit is fewer fears when it comes time for the new property inspection, as new homes won't have the years of gradual structural damage suffered by resale properties.
Trulia asked respondents their opinion regarding why they'd want a new home. Upgrading to more modern features was the top perk for total participants (59 percent) and those who strongly preferred to have a new property (63 percent). Across both groups, the rankings remained consistent. For example, the No. 2 benefit cited was the ability to customize the property, followed by lower maintenance and repair costs and the ability to live in a home that meets modern construction standards. For many owners of existing homes, that last concern can lead to serious issues down the road if faults are discovered by a home inspection.
The fifth and sixth reasons for buying a new home were being the first person to live in a property and the ability to live in a newly developed neighborhood near other new homes, which can be beneficial for resale value in the future.
A way to have it all
Kolko noted that while many buyers fall into this group, there are still some who want the benefits of an existing home.
"Why do more people prefer new homes," Kolko asked. "The top reasons are modern features and the chance to customize the home. Fewer people prefer existing homes, but those who do point to traditional features and living in a more established neighborhood. For many people, the best of all worlds might be a newly built home in an older neighborhood."