If you’re torn between buying or building a home, understanding what each option entails will help you make a more informed decision. Here are the pros and cons of each journey.

As the seller’s market continues, many first-time homebuyers are deciding which route is best for them: buying an existing home or building a new one. While the right answer varies from person-to-person, there are several pros and cons for each option. As the housing inventory shortage continues, new construction has grown in popularity but the demand still outpaces the supply, so many buyers look to existing construction. Understanding what each option entails will help homebuyers make a better, more informed decision in their home buying journey.

Buying an Existing Home

Existing homes are often referred to as resale homes. “Resales are properties that are previously owned and re-selling not new.”

How To Know If an Existing Home Is The Right Choice For You

Sonia Graham, Realtor with JPAR Maryland Living advises that “Existing homes are a great choice too  – you can tell if the bones are good; neighborhoods are established. Maybe you want something with good bones and a vintage feel that you can also update.”

Things To Consider With Existing Homes

Graham states in the Annapolis-Baltimore area that approximately 65% of recent sales are existing construction and that, “we are in a seller’s market here in Maryland. Homes are being priced really well, however, because of the lack of inventory, homes get sold at higher than listing.” This is true across the U.S. In September 2020, existing home sales increased by 9.4% from the previous month and 20.9% increase from last year for a total of 6.5 million homes.

• Total housing inventory declined from the prior month and one year ago to 47 million, enough to last 2.7 months at the current sales pace. What this means for buyers: There are less homes to choose from.
• Existing homes prices were up 14.8% from September 2019 and according to the National Association of Realtors “September’s national price increase marks 103 straight months of year-over-year gains.” What this means for buyers: You may pay more for less home depending on your budget.
• In September 2020 properties remained on the market for 3 weeks – an all time low according to NAR. What this means for buyers: The market is fast paced and requires buyers to decide and act quickly to secure a home.
• Eighteen-percent of September 2020 sales were purchased by cash buyers according to NAR’s data. What this means for buyers: Buyers must make strong, clean offers to compete against the large portion of cash buyers.
• For homes that sold in August 2020, homeowners had just over 3 offers on their home according to NAR. What this means for buyers: Expect that you will have to compete and present your highest and best offer every time.

Buying A New Construction Home

Housing starts, or new construction, rose 8.1% from this time last year, according to National Association of Realtors’ Chief Economist, Lawrence Yun. Sonia Graham says that 37% the Annapolis-Baltimore home sales have been new construction. And there’s a reason the new construction has grown in popularity: it’s helping to ease the housing shortage.