Buy Your Dream Home Or Build It. What’s Best For You?
Buy your dream home or build it? With spring on the way, this is the perfect time to answer this question that could be burning in your mind.
If you have been having trouble finding your dream home, I can see why the perspective of building it would seem attractive. So, let’s dive into the pro’s and con’s of each!
BUILDING A HOUSE | PRO’s
Customization: When building a house, you have the opportunity to create a space that is tailored to your specific needs and preferences. You can choose the layout, finishes, and fixtures that best suit your lifestyle.
Energy Efficiency: New homes are often more energy efficient than older homes, which can result in lower energy bills and a smaller carbon footprint.
Increased Home Value: Building a new home can add value to your property, especially if you choose to use high-quality materials and make other upgrades.
Warranty: Most new homes come with a warranty from the builder, which provides peace of mind and protection against any defects or issues that may arise.
If you’ve been considering if you should buy your dream home or build it, all of the points above support why building could be the better option for you.
BUILDING A HOUSE | CON’s
Cost: Building a house can be significantly more expensive than buying an existing home, especially when you factor in the cost of materials, labor, and permits.
Time Commitment: Building a house can take several months or even years from start to finish, and you will need to be involved in the process throughout.
Delays: Delays are not uncommon when building a house, and can be caused by weather, zoning regulations, or other factors beyond your control.
Hidden Costs: There can be many hidden costs associated with building a house, such as permit fees, inspections, and utility hookups, that can add significantly to your overall expenses.
Building a home isn’t exactly a walk in the park either? When you’re deciding whether to buy your dream home or build it, you need to be aware of what can go wrong if you opt to build.
BUYING AN EXISTING HOME | PRO’s
Cost: Buying an existing home is often more affordable than building a new home, especially if you are able to find a property that is in good condition and well-maintained.
Speed: The process of buying an existing home is typically much faster than building a new home, and you can usually move in within a few months of making an offer.
Location: Buying an existing home allows you to take advantage of established neighborhoods and communities, and you may be able to find a home that is conveniently located near schools, shopping, and other amenities.
Established Landscaping: Existing homes often come with established landscaping, which can provide a sense of privacy and add to the aesthetic appeal of the property.
Buying a residential resale property is convenient, quick and can guarantee the location you want. Of course, if you’re debating whether to buy your dream home or build it, let’s look at some of the not so nice things with residential resale.
BUYING AN EXISTING HOME | CON’s
Limited Customization: When you buy an existing home, you are limited to the features and finishes that are already in place. This can make it difficult to create a space that is tailored to your specific needs and preferences.
Energy Inefficiency: Older homes are often less energy efficient than new homes, which can result in higher energy bills and a larger carbon footprint.
Maintenance Costs: An older home may require more maintenance and repairs, which can add significantly to your overall expenses.
Lack of Warranty: Unlike new homes, existing homes usually do not come with a warranty from the builder, so you will need to be responsible for any repairs or upgrades that are required.
No matter what option you choose, it’s important to be fully aware of the process and outcomes if you decide to buy your dream home or build it.
If this topic interests you, here is some additional information from an article published by the Globe & Mail
In larger regions such as the Greater Toronto Area, undeveloped land remains a fascination for people looking to build the home of their dreams, while others look to demolish downtown homes in order to build a more modern residence.
But that kind of build can bring either great joy or great pain, and the difference lies in how prepared you are. There are so many factors to consider: Is the soil stable? Will it be possible to set up services like electricity? Do your dreams clash with the reality of local bylaws?
The Globe and Mail spoke with real estate and development experts to compile a list of considerations before taking the plunge and buying land that could one day support your own home.
Talk to your local government about your plans
Before you think about financing, contractors or countertops, it’s imperative to make contact with your local government to better understand what you can and cannot do with the land you’re thinking to purchase.
Some of the vital information they’ll provide is how much of your land you’re actually allowed to build on and limitations to what your structure can look like – how close to the water’s edge you can build, if there’s water connected to your property, for example.
Moreover, local governments will be able to give you preliminary information about whether the land you’re buying might require expensive work to stabilize it. Many people from large cities buy plots in his region sight unseen because they think they’re getting a great deal, but then realize it’ll cost tens of thousands of dollars to clear away unstable topsoil that can’t be built upon.
People think it’s so cheap, but then they get there and realize that all the money they saved will be eaten up by engineering costs. Alot of folks that don’t go into these kind of situations with their eyes wide open.
Ontario planning development of 50,000 new homes on protected Greenbelt land
Budget for a healthy overrun in costs and time
You should add at least 15-20% to your budget to account for cost overruns in the process of building a home. Typically, there’ll also be a 15-20% overrun in the amount of time it takes to build a home.
Building a home is a complicated process with lots of moving parts. Any unforeseen challenges such as delays in lining up contractors, rising costs of materials and issues with the land itself can quickly add up.
One way people can mitigate cost overruns related to materials is to purchase as many items ahead of time as possible such as drywall. Not only does that protect you from rising prices in the future, but it also prevents delays while waiting for goods to ship in.
In some cases, people can wait up to six months to have an item they need arrive. Supply chain issues notably remain pervasive and can create an expensive logjam in the building of your home.
Prepare for a lengthy mortgage process
The financing process for a home-building project can make a basic home purchase seem like child’s play. The first hurdle is that appraisers are usually much more conservative when evaluating land compared to a home. That means you’ll likely be required to have more cash to put toward the property to make up for any discrepancy.
Brokers may also look more closely at your financial standing because of the risk involved in a home-building project. He added that you’ll need to get a firm quote on costs and a detailed plan from a qualified builder. The bank will study them before approving you for the value of both the land and projected building cost.
Even then, the money will not all be released at once. portions of the money are released as your house progresses through stages of its build. Some of the major stages include when the foundation is laid and when the framing is completed. Banks will generally require an appraiser to confirm each of these stages, which can cost roughly $800 a visit in his region.
Of course, if you have more cash in hand, you’ll have more options. A purchaser could buy the plot of land outright and may have more freedom when it comes to the process of building. Cash is particularly valuable when building a home because construction loans can carry higher interest rates.
Expect costs related to land engineering, permitting, setting up hydro
It’s likely you’ll be buying land that doesn’t already have services connected, especially in more rural areas. The cost of servicing your home should not be overlooked, and could be much more expensive in remote locations.
For example, some properties in B.C. can’t be connected to a sewer system, so owners will have to budget anywhere from $20,000 to $85,000 to have a septic tank installed. He said a rough estimate for setting most services such as electricity and gas for a single-family home would cost around $40,000. There could be engineering expenses such as bulldozing loose topsoil to get to more stable ground, or diverting groundwater – which will also extend into the five-figures.
Then there are the permits. Regional governments such as the CSRD in B.C. often charge less for them: a single-family home with a construction value of $400,000 could expect to pay roughly $2,400 in permits, although that number would likely be much higher in municipalities.
There are more regulations in municipalities, and everything from moving a pile of dirt to chopping down trees could require permits, depending on your local government.
Be aware of the logistical challenges
In the Toronto area, the average person building their own home is definitely not a first-time buyer. They’re generally in their 40s or 50s, and have stable finances that allow them to deal with the uncertainty that comes with such an involved project.
Building a dream home is not for the faint of heart, especially in today’s market where the supply chain has made materials difficult to access and the flow of people into more rural areas has created a shortage of contractors.
Gone are the days where you call up a contractor and they’re on site in six weeks. Many contractors are already booked up for all of 2023.
It used to be possible for a project to be completed in one building season. These days some projects go for two years, so it’s imperative that you can financially sustain that long of a project.
The payoff, however, can be glorious. With proper planning, you can attain a dream home in a dream location.
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If you’ve trying to decide if you should buy your dream home or build it, let’s talk. I can be reached at 647.896.6584, by email at info@serenaholmesrealtor.com or by filling out this simple contact form.
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