Why are new new houses less expensive than used homes?! (square foot, sale)
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Why is it that new homes in a nice neighborhood are less than the homes for sale that are years old? It's strange, but better to buy a brand new home in this overinflated real estate market!
Why is it that new homes in a nice neighborhood are less than the homes for sale that are years old? It's strange, but better to buy a brand new home in this overinflated real estate market!
New construction builds aren't holding out for top dollar. They're in the business of building and selling.
Existing home sellers are locked in the wait and see mode and holding out hope to receive what their neighbor or buddy got for their home a couple of years ago.
New homes are more cheaply built. A lot of new homes I have seen pictures of have kitchens and flooring you see in apartments. Really cheap and basic. I mean the cabinets are just plain and featureless press board with grey paint. The bathrooms are cheap too.
On top of that, builders carry costs the longer they hang onto a property, so if they can't sell a home for 6 months, it costs them. If they slash their price by 3 months of carrying costs and dump the property this week, they save 3 months of carrying costs.
Builders can even sell short if it means dumping a dog. You won't see a homeowner do that.
Older homes are just nicer, unless you move up to the executive/luxury end for new homes.
Beyond that, there is no inventory, so the few people serious about selling their existing home are overpricing them, since they believe they are sitting on a gold mine. And they are, as long as people are willing to pay their asking price.
It does seem strange that someone whose home doubled in price in the last 5 years would refuse to lower their price when they have so much equity and wiggle room, but that is not human nature. Their house is up $200,000 and they can't drop their price $25k?
New homes have usually cost more than older because of the "newness". Very little maintenance is expected for a decade or two. The roofs is brand new. All appliances are brand new. There is no wood rot or termites, etc. Perfect unsullied flooring. So what you are getting is a clean slate that cannot possibly have abuse or neglect, as long as you buy a quality home without initial problems.
Beyond that, new homes are priced higher because they reflect current labor and material costs, which are almost guaranteed to be higher than what any older homes had cost per square foot/home size, especially much older homes.
So even lacking things like fences and yards, new homes usually sell for more than used to the desired market that seeks them. People want a brand new fresh start with no initial maintenance and a blank canvas to work on, not cleaning up someone else's mess.
Of course it all depends if the old home was just maintained or if it was greatly improved with a pool, or luxury kitchen/bath remodels, etc.
That new homes are sometimes selling for less than older used homes today just reflects the current broken housing market IMHO.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I haven't seen that in our area. Our median price is at $1.6 million, but the new homes start at about $2.1 million. One big difference, though is that most of our existing homes are on 12,000 sf lots, while the new ones are bigger homes but on little 5,000 sf lots. Our house for example is 3,000 sf on 12,000 sf lot, by in the nearest development the new homes are running 3,800-5,752 sf on lots as small as 3,500 sf.
Depends on where you are and what you're buying. I haven't seen that be the case in my location for comparable resale vs. comparable new construction (location, style, quality, etc)
New construction builds aren't holding out for top dollar. They're in the business of building and selling.
Existing home sellers are locked in the wait and see mode and holding out hope to receive what their neighbor or buddy got for their home a couple of years ago.
This reply made most sense to me.
Well, it is true in my area! Charleston, SC. People are trying to sell their used homes for very high overinflated prices ! The new phase of homes in a upper middle class nieghborhood are cheaper than the existing homes for sale in the same neighborhood! It's very strange.
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overpriced homes!
