Buying an older house in the USA is more expensive today than building a new one.
There has never been a more challenging time – or a more expensive time – than now. The housing market in the United States faces a crossroads due to the current economic and political climate. The intriguing point? Recent political(eventually economic too) shake-up with Donald Trump’s victory in the 2024 election. Heralding economic policies that could further influence the housing markets.
By 2024, the average American will pay $425,000 for a home — and that number shifts state by state. The cost to construct new homes leaped to its extraordinary growth by over 50 percent since 2019.
What caused this massive leap? Experts say that it might be due to rising demand, dwindling inventory. Also, the climbing interest rates has reshaped the real estate market landscape a lot in recent years.
With inflation beginning to stabilize yet wages lagging, buyers are pondering whether older homes—often requiring a bit of TLC—are really worth their hefty price tags.
The Rising Costs of Existing Homes in 2024
While it costs them a good deal to get started, many find it to be a much better value and less compromise. It’s like rushing to get that last piece of pizza at a party when you’re looking for a house today. The demand for pieces is high, and the prices are astronomical.
An existing home is expected to cost $407,200 on average as of October 2024, according to the National Association of Realtors. Don’t kid yourself; that is just the median; your dream home with a swimming pool and landscaped backyard will cost much more.
Guess what? There’s less choice and more competition this year since housing inventory shrank another 10%. Imagine a line of desperate buyers fighting over a house with a shag carpet from the 60s. When you combine that with mortgage rates around 7.5%, it’s no wonder people are second-guessing their buying decision.
Construction Costs of Building a New Home in US
Now, building a house isn’t exactly a walk in the park unless you consider wading through an ocean of Pinterest boards for ideas. As the National Association of Home Builders points out, since 2019, construction costs per square foot have climbed more than 50%. Add rising material prices, labor shortages, and good old-fashioned supply chain mishaps, and the bills mount up like a squirrel scampering up a tree after a nut.
For some buyers, though, building their own home makes sense. Just think about it: you’re designing your living space just like you want it, leaving no leftovers from weird wallpaper, squeaky floors, or certainly no leftovers from some questionable decor choice made by the previous owner. Have fun with modern amenities and energy efficiency; this brings down utility bills and even fewer headaches in the long run. (No slight against those adorable old homes, but come on; some are fixer-upper nightmares.)
Impact of the 2024 Presidential Election on Real Estate
Following Donald Trump’s win in 2024, consumer confidence soared to a 16-month high, per Reuters. That’s right, even amidst all the debate showdowns and social media squabbles. For many Republican-leaning buyers, this victory has sparked hope for lower taxes and less red tape, potentially making home ownership more achievable.
But let’s not get carried away here—those lofty interest rates and soaring home prices haven’t magically vanished.
What Real Estate Experts Are Saying?
Realtors are tuned into these shifts. Lawrence Yun, Chief Economist at NAR commented, “Many buyers are now opting for new construction as a long-term investment, particularly in markets where existing home prices have surged beyond their perceived value.” In simple words: if you’re dropping big bucks, why not get exactly what you want?
Builders are also stepping up their game, dangling carrots like price cuts or fancy upgrades to woo buyers. According to the NAHB, over 67% of builders are now offering sweeteners like free granite countertops or that spa-like shower you’ve always wanted.
Conclusion: A Market in Flux
So, the dilemma is at a three-way stop. It’s not easy to buy an existing home versus building one-it’s layered in complexity, like a good tiramisu.
There is history and charm in existing homes, but there are hidden costs and potential headaches. To build new can be very stressful with its high cost of upfront money and overwhelming from all the decisions made. It offers clarity and customization.
In a nutshell, do your own research and crunch a few numbers before buying or, better yet, planning to construct something that just feels right to you instead of making it just in line with market trends.
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