When to raise the roof and when to buy it
Building a house allows homeowners to customize their dream home.
Buying a house is more traditional, and takes less time than building from scratch.
The best option for you will depend on your timeline, budget, and design preferences.
Your home’s location will have a say in the price of building vs. buying a house.
That three-bedroom house on Oak Avenue is almost perfect–if only it weren’t for the lack of bedrooms. And that four-bedroom over on Citrus Grove would be great if the roof were in better condition. When none of the homes listed on the market feel right, you might consider building a home from scratch. Before you do, consider the pros and cons of buying vs. building—from the cost to build a home to the return on investment (ROI) of buying one.
Building vs. buying a home truly comes down to customization and control. There's no doubt that building your own home offers more flexibility when picking the design, location, and—on many levels—the cost of the home itself. That being said, you have to consider how long it takes to build a home, and whether this added timeline fits into your life plans.
Buying a house comparatively takes less time, often costs less, and requires far less coordination with banks and contractors. That being said, you don't have as much say in the style of the house and will likely still need to do some renovations after you move in. You will also dive into a potentially competitive home market with fluctuating interest rates.
The idea of building your own home sounds alluring, given that you can create any floorplan you wish. But before you hire a local builder, read the pros and cons of building a house from the ground up.
Pros and Cons of Building a House
| Pros | Cons |
|---|---|
| Customized home design | Higher costs |
| Choose the location | Longer timeline |
| Save energy costs | Costlier loan terms |
| Avoid toxic materials | |
| Lower maintenance costs | |
| Avoid competition |
Best for:
Forever homes
Locations with new developments
Ultimate customization
Flexible timeline
When you build your own home, you’re in control. Whether you want a spectacular deck, a mother-in-law suite, or a wraparound porch for reading and relaxing after dinner, you can make it happen. Starting from scratch can also be overwhelming, so you should discuss your priorities and your idea of a dream house with a professional builder. They’ll also be able to help you source professionals that can assist with landscaping, interior design, and architecture.
Depending on your budget, of course, you have the opportunity to buy a home anywhere there’s available land that’s zoned correctly—yes, that might even include that perfect sunset-viewing spot across from the beach.
New build homes are typically much more energy efficient than the majority of older ones, and since you can choose your appliances and systems, you can opt for ones that are gentler on the environment and your wallet.
Many materials used to build houses in the 1950s through the 1970s—such as asbestos and lead paint—are now considered very toxic. Building your home ensures that none of these harmful materials are used in construction.
Since everything in your built-from-scratch home will likely be brand new, your maintenance costs will be lower for at least the first few years before any major repairs need to be completed.
Because you’re building your own home, you don’t have to worry about other buyers outbidding you in a competitive housing market.
Building a home is, on average, more expensive than buying an existing one. The expenses of building a new structure add up quickly: you’ll need to cover every detail, like your HVAC system, appliances, roofing, fixtures, and more.
The cost to build a new home can range from $100 to $200 per square foot, though luxury options can exceed $500 or more per square foot. The average total cost to build a home ranges from $120,758 and $452,477, with many variables such as the cost of land and price of materials. The average cost of a new, existing home in the U.S. is $334,500.
It can take many months to construct a home, and that’s assuming nothing goes wrong. Supply chain issues, poor weather, or simple human error can cause added delays.
Called construction-to-permanent loans, a loan for a new home funds construction and then is converted into a permanent mortgage; while the home is under construction, you’ll only pay the interest. These loans tend to be more expensive than traditional mortgages, so compare rates and shop around with various lenders. If you secure a land loan, you can also expect to pay more than a traditional mortgage.
Even if the market isn’t offering the exact home you want, there are lots of reasons to buy instead of build. Buying a home can help you nab a spot in your dream neighborhood or in a historic house. The process also requires far less coordination and timeline hiccups than building from scratch. There are plenty of reasons why buying a home vs. building is the traditional option, after all.
| Pros | Cons |
|---|---|
| Shorter process | Necessary repairs |
| Developed landscape | Renovation costs |
| Negotiation power | Buyer's remorse |
| Existing neighborhood | Market competition |
| Unique design |
Best for:
Starter and forever homes
Move-in ready homes
Shorter timelines
In short, the home is already built. All you need to do is deal with the negotiations, mortgage, and paperwork—not all that easy, but simpler than hiring, understanding and managing builders, zoning regulations, local building codes, and other bureaucracy. If you need to move into your new home quickly due to a new job, school starting, or another major reason, it might make more sense to buy rather than build.
An existing home might have the benefit of tall, full-grown trees and full hedges; the landscaping has had more time to grow into the space, while building a new home will likely require you to buy and place young trees and plants, unless you’re comfortable being surrounded by dirt and dirt alone.
Your real estate agent can help you negotiate to get a final price on a great home that works with your budget, and the bottom line price will be what you pay (in other words, you won’t experience the unexpected costs that sometimes come with building a home).
When you build a home, you’ll need to find and buy land to build it on, and that could come at the cost of having an established neighborhood with neighbors, stores, school, and work nearby. Chances are if you’re purchasing a home, it’s already integrated into a neighborhood that has what you need nearby. In addition, some of the neighbors may have been there for a long time, and can speak to what the area is like, giving you special insights into your new street.
A new home can certainly be unique in the sense that it’s a design you dreamed up, while an old home can have idiosyncratic, charming features that tell a story of the house’s history, like stained glass, antique doorknobs, or carved wood.
The home inspection report will reveal what shape things are in, but it’s likely that you will need to replace one or more appliances sooner rather than later, as they probably won’t be brand new.
The house might be 80 percent perfect, but that 20 percent might be a big enough deal to you to consider renovations and updates, which of course add cost (though depending on what you do, you might recuperate in ROI).
Even after reading the home inspection report and knowing what problems the home might have, there could be unmentioned discoveries after the purchase, leading to buyer’s remorse, after that “shiny new home” feeling wears off.
The housing market could be extra competitive when you want to buy, which can cause added stress and sometimes costs, as you might need to outbid other buyers.
Deciding whether to buy or build a home is a major decision, and there’s no one-size-fits-all answer; the choice will come down to your priorities, budget, and lifestyle.
Whether you find your dream home design on the market or build it from scratch, the final look comes down to your preferences. You may not find the charm of a historic home when building, but can replicate it with the right design team. Some home buyers prefer the look of an existing landscape and lived-in home as opposed to the modern blank slate of new construction.
You will have the option to stretch your design muscles from early blueprints to the final countertop colors when building a home. Sure, you'll need to work with someone who knows how to build a house—such as a general contractor or construction manager—but you will have a far larger say in the process than buying an existing structure.
While the final price tag comes down to countless factors, such as location, property taxes, and the details of your loan, buying a home typically costs less than building in many cases. Buying a home does not include often unforeseen costs, such as building permit costs or land surveying costs, before the building process even begins.
Completing a project without a permit could result in major fines or having to tear it down and start over. A reputable contractor can pull the necessary permits for you prior to starting a project.
By building your home, you can choose appliances and systems that are energy-efficient and will likely last longer than older models. In addition, since you’re designing everything from the ground up, if you wish to install solar panels on the roof or a rainwater capture system, you can do it. Keep in mind that the cost of building a green home can drive up your total price tag, but you may be able to offset it with state and federal incentives.
As long as you work with a quality home-building team, a new home will naturally last longer than an existing one. New home construction should take the local climate into account to ensure that it requires fewer renovations or updates in the future. You can also skip renovations that update outdated home systems such–like old wiring, HVAC systems, and plumbing–by starting off fresh.
The timeline to buy a house takes anywhere from one to seven months on average, including your search for the perfect home. Building a house, on the other hand, takes at least eight months after you find the location, choose your loan, and obtain the building permits. If you build the house without a general contractor, you're looking at a 13-month process on average. Homebuyers ready to get moving will opt for buying an existing home.
The ROI of buying vs. building a home is a complicated comparison. On one hand, building a house offers new finishes, appliances, and updated home systems. On the other, an existing home, in a highly sought-after neighborhood, may sell for more than its value if the market shifts in your favor. Homeowners can also make more targeted updates to existing homes that have higher ROIs than building new construction.
