New vs. Used Homes: Why is a new home more cost-effective?

New vs. Used Homes: Why is a new home more cost-effective?

June 29, 2022

From the title of this article, you are probably saying, “Why not buy a used home? Used homes are cheaper.” It might seem that way, but when looking at the total cost of home ownership, a used home comes with unexpected expenses that you need to keep in mind. 

Many things play a role in your home decisions which is why this article may bring you some clarification on what to expect when weighing your options between a new home or a used home. Before deciding to buy a used home, here are a few factors to consider in your decision-making process. 

The problem with buying a used home is you may be paying more than what you bargained for. Used homes do not have updated systems and structures which may put a dent in your bank account later down the road. New homes on the other hand give consumers as much value as possible. This means that all units, plumbing, electricity, and other components that are up to date will not need a replacement anytime soon. 

Appliance Lifespan/Cost:
HVAC units in new and used homes differ greatly depending on the age of the used home. Not only do the units in new homes have technological advances, but also have a longer lifespan. These units can last up to 15-20 years in a new home because of the up-to-date systems installed. Buying a used home might not have this luxury, especially if no routine maintenance was done by the previous owner. You may have to expect to replace the unit sooner if the used house purchased does not have an updated system. 

And, if maintenance sounds scary to you, don't worry. Our expert team of customer care representatives meets with you one-on-one before you move into your home to walk you through how to take care of your home and make sure you get the best value out of your appliances and systems. PLUS, there is a 2-year warranty on your Ideal home. 

Other appliances pertain to this as well. New and used home appliance lifespan/costs are compared and listed below: 

Water Heaters:
Water heaters vary when it comes to lifespan and cost. According to Better Homes & Gardens, you should consider saving money to get your water heater replaced if it has been in a home for between 8-12 years. The average cost for a water heater ranges between $400-$1,334 in Oklahoma

Stoves and Ovens:
It is a good idea to look into repairing a stove or oven rather than finding a replacement unless these appliances are 15 years older or more. Stoves and ovens are one of the most used appliances in a home because it's usually used daily to prepare meals. According to Puls, the repair cost for both stoves and ovens ranges from $50-$200. While this may seem reasonable, this is an easy cost to avoid when you have newer and trustworthy appliances. A range stove's average price is between $550-$2,300 depending on how up-scale you want your stove to be. For wall mount ovens, the average price ranges between $1,500-$3,000

Dishwashers:
Dishwashers installed within the homes during the construction of a new home are more efficient by saving you money and water. The typical lifespan of a dishwasher is about 8-10 years. The national average for the cost of dishwashers is $770-$1,445 and sometimes on the high-end scale up to $2,000. Again, depending on the maintenance and care provided by the previous homeowner, a dishwasher in a used home may not be as energy-efficient and may need repairing sooner rather than later. Installing and owning a new dishwasher is important and saves the higher costs you could have to pay in the future. 

Up-to-date features and appliances hold less risk. When buying from Ideal Homes & Neighborhoods, you are guaranteed to have reliable and trustworthy materials. Used homes may not have this quality, which puts a buyer at risk for out-of-pocket payments when something goes wrong. 

Maintenance:
A homeowner should set aside 1% of the value of the home each year for maintenance. This percentage includes both inside and outside maintenance of the home. Outside examples may be lawn care, roof damage, and pest control while inside maintenance could be AC, flooring, plumbing, etc. The bad news about all maintenance is that there is no set number for the lifespan of appliances and other maintenance factors because each home has unpredictability. 

New homes often do not require repairs. If something happens, the warranty for the new construction covers repairs. The problem with used homes is that the older the home, the more maintenance one will have to do which means a higher cost. The main factor for how much maintenance a home needs is based on the age of the home. 

Average Cost:
According to research, the average price of a new home in the U.S ranges between $100-$160 per square foot which would be around $200,000-$320,000. If you think about it, this is a very good deal considering that your new home will be trustworthy and up to date. As of April of 2022, the average price for a used home in the U.S. is $397,600 which is a national all-time high. In Oklahoma City, home prices have raised by 15% compared to 2021 prices and the median price for a new home in Oklahoma is an average of $265,000

From a subjective perspective, you could be getting a bigger home for less by buying a used home but would have to pay a higher price when it comes down to maintenance and utilities. 

Utilities:
It is very important to consider your utility bill when finding a home because it contributes to total expenses. The cost of utilities is different between used and new homes because the insulation in each varies. Ideal Homes & Neighborhoods is the only home builder in Oklahoma to guarantee your home’s heating and cooling costs because the energy efficiency of each home is rated so high. 

Comparing Home Energy Rating Systems (HERS) scores between new and used homes, new homes have a significantly lower rating compared to used homes. HERS scores are the scores that rate homes to evaluate how energy efficient it is. The lower the score, the more energy-efficient the home is. According to Ever Blue Training, a typical resale home has a score of up to 130 while a new home has a score of 100. This is something to consider when deciding on which home to purchase. 

Closing Costs:
Closing costs vary greatly depending on where you live and what you buy. In Oklahoma, you could be paying up to 5% of the house value during closing. New homes may cost more, but preferred lenders can be used to cover a fraction of the cost. Used homes usually are paid for by both the lender and the seller. In most cases, the seller will not pay for the full cost of closing unless there are rare circumstances. 

Insurance:
Insurance for new homeowners is also considered more affordable than existing home insurance because new home insurance covers homes that are built in the last two years or that are under construction. The buyer will likely be paying less for coverage when buying a new home than if a buyer were paying for a used home. In fact, newer homes are 45% less insured than used homes

Two-Year Warranty:
At Ideal Homes, we also offer a two-year warranty on your new home. Our company is the only homebuilder in Oklahoma that offers this kind of warranty. It is technically two separate one-year warranties in which the first year covers homeownership which could be structure adjustments and the second year is an additional one-year warranty that covers major systems within the home such as plumbing, electrical, and heat/air. 

So, before you decide on purchasing a used/existing home, consider that your expenses may be more significant than expected. It is tempting to go for the better and less expensive-looking option, but is it the best option considering all the hidden costs that come with it? My advice is to consider a new home and take advantage of the benefits these homes have to offer!

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