Looking to buy or build a home? Tips to help make the right decision
Average cost to build a home is around $300,000, per HomeAdvisor
(InvestigateTV) — A 2023 Harvard study found real estate inventory is 42% less than it was in 2019, leaving many to wonder whether it’s better to buy or build a home.
Brad Smotherman, a real estate investor out of Nashville, said one risk with building a home is the fluctuation in interest rate during the time it takes to build.
The National Association of Home Builders (NAHB) reports that it typically took 9.6 weeks to build a home in 2022.
Smotherman said another thing to consider is the overall cost.
“It’s always cheaper to buy existing than it is to build. There’s a lot of supply chain issues and labor shortage issues in homebuilding right now,” he explained, “So, that could also cause delays.”
Smotherman pointed out that often property taxes on newly built homes are higher than existing homes and urged potential builders to keep a close eye on their budgets and to expect unforeseen costs.
“You really want to make sure that you’re looking at the invoices and making sure that things are really being fluffed all the way. Or some home builders take on the risk of pricing and they have a set price in the contract that says, ‘hey, any risk of cost over overages are my issue, not yours,’” he said.
Tight housing inventory and other factors have caused a seller’s market. Smotherman recommended potential shoppers make sure they have a pre-approval letter for how much of a loan they qualify for before making offers.
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