With property values rising, due in part to relatively low inventory levels, prospective buyers may feel like purchasing a new property is beyond their financial capability. But as a new report from the National Association of Home Builders indicates, they will likely be able to pay for it when taking into account other cost considerations.
Based on analysis of the U.S. Census Bureau's and Department of Housing and Urban Development's 2011 American Housing Survey, NAHB researchers indicated people who purchased a more expensive newer home often wound up paying what those who bought a existing home in a given year when annual operating costs were factored into the equation.
They were able to do this, according to study, because of the utility, maintenance and property taxes that new homeowners had compared to existing-home property owners. For example among buyers who purchased a residence that was built before 1960, their average maintenance costs were $564 a year. Meanwhile those who purchased a home built post-2008, their costs averaged less than half that amount, or approximately $241.
Buyers can afford new-home list price considerably higher than existing home
Rick Judson, NAHB chairman, noted that this means that buyers of new properties may be able to spend as much as 23 percent more on a new house's listed price compared to a residence built prior to 1960, taking into account annual costs, which all too often aren't factored into buyers' expenses.
"Home buyers need to look beyond the initial sales price when considering whether to buy new construction or an existing home," said Judson. "They will find that with the higher costs of operating an older home, they can often afford to spend more to buy a new home and still have annual operating costs that fit their budget."
He added that thanks to the operational cost savings that come with purchasing a new residence - combined with the affordability of mortgage rates - "the time has never been better to buy a new home.
Recently built, single-family home sales weren't quite as robust in February as they have been as of late. The Commerce Department reported that new-home sales slipped just over 4.5 percent in 2013's shortest month of the year, totaling a seasonally adjusted annual rate of 411,000 units. Real estate experts are confident, however, that sales will pick up now that the spring has arrived, a season that traditionally brings greater purchase activity.
Given their newness, homes that were just completed, or finished within the past few years, need to be inspected thoroughly to ensure that they meet code specifications that the state establishes. A professional, property inspection company may be able to provide insight for homeowners regarding how they can make their properties more energy-efficient, thereby reducing operational costs.