For anyone who is considering moving, a big question is whether they should buy an existing home or purchase land to build a new one.
The housing market is always changing. Trying to determine what type of home is going to best suit your needs, while also making sound financial decisions can be completely overwhelming. The option to buy a home or build your own will inevitably come up, and trying to weed through all the advice can make your head spin.
Here is a list of pros and cons of buying land versus buying a house:
- Pro: Buying land and building allows you complete control
- Con: Buying land and building is usually more expensive
- Pro: Buying a house is less of a time and emotional commitment
- Con: Buying a house is less energy efficient
Homeownership is one of the greatest joys and greatest goals we all strive for as adults. But trying to decide everything from where to live, what type of home to purchase, how much can we afford – these are all big questions that come after the initial decision is made. As if this wasn’t enough, trying to determine if we would be better off buying land or buying an already existing home can bring even more questions into the mix. The good news is, that there are some very specific pros and cons to both purchasing an existing home and purchasing land on which to build one.
Recently, I was in the position of trying to decide if I wanted to purchase an existing home or build it from the ground up. No matter who I talked to, there were different (strong) opinions about both. Let me share some of the realizations I was able to come to before making my final decisions. Maybe one or more of these will help you make yours too.
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In the United States, almost 7 million homes were sold in 2021, and that number just continues to increase. Owning your own home has long been one of the biggest American dreams, and it doesn't seem to be slowing down.
There is a great sense of pride in having your own house, and it’s a great investment as well. As home prices continue to rise, having a paid-for home later in life can really add to your investment portfolio.
Plus, it’s just nice to know where you're going to hang your hat at the end of a long day.
As the housing market is as competitive as ever, trying to decide which strategy to use when buying a home can make a big difference in thousands of dollars as well as your mental health and emotional state.
House buying is one of the most exciting things you can do. But, it is also full of stress, worry, questions, and unknowns.
Thankfully, I’ve compiled some of the biggest pros and cons to deciding to buy a house versus buying land and building your own. Let’s dive in and help you begin to get a better idea of which option is going to work best for you.
1. Pro: Buying Land and Building Allows You Complete Control
For anyone who is seriously entertaining buying land and building their own home, this is going to be one of the biggest pros if you decide to go this route.
When you decide to build your own home, you will be able to have an enormous amount of autonomy over what you do and why.
Have you always wanted a master bedroom on the first floor? Done. Do you want a kitchen island big enough to seat eight people? Got it. Have you dreamed of having heated floors in your bathroom? All yours.
When you decide you want to buy land and build your own home, there are still a lot of decisions to make. And, if you are buying it with a partner or spouse, you will have to take into consideration someone else’s wants as well.
You may also be building in a neighborhood that has certain zoning restrictions as to what you can do, especially to the outside of the house.
But here’s the great news – when you buy a piece of land and decide to build your own home, every decision you make - good or bad - gets to be yours. No one can tell you that it’s weird to have two toilets in the master bath or that it’s dumb to have a kitchen that’s bigger than your living room.
Well…they can tell you those things. But you don’t have to listen to them.
Designing your dream home is amongst the top reasons people give for buying land and building on their own. And it’s easy to understand why.
2. Con: Buying Land and Building is Usually More Expensive
One major con, however, to buying land and building, is that oftentimes the cost is going to prove to be significantly higher, even if you don’t mean for it to be.
Of course, this isn’t always the case. But, there have been many studies done on the average cost of building versus buying and most conclude that to build a home, you will probably end up paying anywhere from 15% to 25% more than you would have to buy a home.
Granted, with that additional cost comes customized items that perhaps you couldn’t have found in an already existing home.
But, let’s face it…a big chunk of this additional cost comes from having budgeted a certain amount of money, to later find that expenses changed. And they usually don’t change for the better.
Perhaps you decided you really wanted heated floors in the bathroom, and asked your contractor to install those. Maybe you forgot to budget for the landscaping, or your spouse insists that the garage needs to be for three cars and not two.
And then there are also the unexpected expenses that have nothing to do with your wants and needs. Maybe the material prices went up during your build, or an item that is important to you is out of stock, and you’ll need to purchase something different that has a higher sticker price.
Whatever the reason, building costs can change radically during the project and if this is something that doesn’t fit into your budget, you’d be better off buying a home than trying to build one.
3. Pro: Buying a House is Less of a Time and Emotional Commitment
A big pro to buying an existing home instead of building one is the time and emotional commitment involved in building a home from the ground up versus buying one that is already in existence.
Even though there are lots of perks to buying a piece of land and building your own dream home, there is one big downside to that plan.
Time is precious. And your emotional state is too.
I’m not suggesting that it doesn’t also take time (and emotion) to buy a home or that building one isn’t worth it. But, building a home from the ground up takes a lot of patience, resolve, and willingness to sit back and enjoy the process.
Buying an existing home will also take some time and will bring a lot of emotional energy out for everyone. But building a home should be reserved for the person who really enjoys the journey as much as the destination.
If you are more the type to be excited about buying your home and moving on with the next stage of your life, buying something that is already in existence and finding ways to put your own personal touches on it (and in it) will save you a significant amount of time and emotional energy than building a house will.
4. Con: Buying a House is Less Energy Efficient
Finally, one of the top cons to buying an existing home is that not only will it be older, but it will be less energy efficient as well. And that can make a big difference in your long-term monthly expenses.
Home building has come a long way in the last few decades when it comes to energy efficiency and prioritizing being kind to the planet. Energy-efficient homes are also kind to your budget.
Studies have shown that people who build new can save up to 20% on their electric, gas, and water bills each month, versus someone who buys a house that was built fifteen or more years ago.
And the options are endless. Whether you want to install Energy Star appliances, low-flow toilets, automated lights, or sensor-ready heat and air control units, the enormous options for going green in a new home can be customized to your own interests and needs.
And how about solar panels? Many people have installed solar on their rooftops in older homes, but if you are building from scratch, it is going to be much easier to build your home with solar options in mind.
An energy-efficient building may not sound like the most exciting part of a newly constructed home, but believe me – you will appreciate the financial payoffs long term and will feel good that you are doing something positive for future generations on our planet.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling