Owning your own home is part of the American dream, yet this has become increasingly difficult in today’s real estate market, especially if you want to purchase an existing home in the Portland area. With limited inventory and prices that have been on an upward trend for more than a decade, the opportunities for purchasing a home are few and far between, especially if you’re working with a limited budget.
However, buying an existing home is not the only way to achieve your dream of homeownership. Building a new custom home is not only possible, but it’s also a way for you to build equity, get more of the features you want, and finally get your dream home.
If you are weighing your options between building versus buying, or if you haven’t even thought about new construction, consider these reasons to explore building a new home.
Oregon Housing Shortage
Home prices in Portland have been on an upward trend since the early 2000s. Between 2003 and 2006, home prices grew at a significantly faster annual clip of 14.09 percent. After home prices crashed nationwide in 2007 and bottomed out in 2012, the Portland area began to see a strong average annual growth rate of 9.85 percent. While the market cooled for a few short years in the mid-2010s, the 2020 pandemic heated up the Portland housing market once again.
Today, Portland is a seller’s market. This means that there is a limited supply of homes, which forces buyers to compete with one another, resulting in higher prices and quicker sales that benefit sellers. For this reason, Portland metro home values have gone up 19.9 percent over the past 12 months. Based on data from Zillow, Portland metro home values have increased by 114.6 percent since 2012.
Portland Housing Prices
One of the most visible effects of the housing shortage is the steady increase in price for Portland-area homes. According to Zillow, the median home value in Portland is $558,685, and it is predicted to continue to increase over the next year. For potential homeowners, this means the longer you wait, the higher the sales price will be. Combined with potential increases in mortgage rates and income growth rates that are not keeping up, existing homes are likely to become less affordable over time for most people.
However, increasing prices and lower inventory levels have not slowed down the market. On average, homes sell after 44 days of being on the market. For potential buyers, this means you must make fast decisions and be ready to make an offer on a home that suits your needs. Though some homeowners may be comfortable with this scenario, it often means settling for a house that is just good enough rather than getting exactly what you want in a home.
Building New in Portland
With limited inventory, increasing prices, and shorter time on the market, buying an existing home is not a viable option for everybody. However, building a new home could very well be an option, especially if you work with a Portland homebuilder that has experience with affordable custom homes.
In mid-October 2021, there were about 400 homes for sale on Zillow priced at $500,000 or less, and many of the most affordable options would require extensive remodeling and repairs, so those costs must also be factored into any comparison. There are also about 100 lots for sale under $300,000, many of which require little site work because they are in an urban area with existing connections to utilities, and the lots have already been graded.
The starting prices for Adair Homes in the North Willamette Valley range from $164,999 for a 1,094-square-foot home with two bedrooms and two bathrooms to $406,999 for a 3,495-square-foot home with four bedrooms and 2.5 bathrooms. Even after factoring in the costs of land and site development, it’s easy to see how building a new home can be financially comparable to buying an existing home.
These numbers are just for the city of Portland and do not include the surrounding areas. If you’re interested in living in a Portland suburb, it’s easy to do the same type of comparison for yourself. It’s even easier when you’ve got real numbers to work with, so consider talking to a builder about your options as you explore new home possibilities.
Benefits of Building New
Building a new home comes with a broad range of benefits compared to purchasing an existing home:
You know how the home was built.
First, you know exactly how the home was built, what materials were used, the location of wiring and ductwork, and every other detail. You don’t often get this information when buying a home that was built decades earlier, especially if it has been remodeled in the past.
You can customize the home.
Second, you can customize your new home to suit your current and future needs. Buying an existing home in a tight real estate market often means you have to compromise on getting exactly what you want. When you build new, you can get more of your wish list, and best of all, you get to make all the decisions about what you would like to prioritize. For example, if you want to upgrade the tile in the master bath but save on the finishes in a powder room, you get to make that call and apply those savings elsewhere.
You will spend less time on maintenance.
Third, a new home means new appliances, which translates to less maintenance, fewer repairs, and better reliability. When you build new, you know you won’t have to replace the furnace for a long time, and the water heater isn’t going to break down in a few years. For many people, this means you don’t have to put away as much in an emergency fund for a few years, so you can put more into the initial investment in the house. On the other hand, if you buy an existing house, you usually need to keep some money in your pocket or maintain a home equity line of credit to make unexpected repairs or purchase new appliances when the old ones fail.
Your new home will be more efficient.
Fourth, new homes are also built to better standards than older homes. They are more efficient, which means they cost less to operate, so you save on monthly expenses. They are also more comfortable because they’re less drafty and keep out more noise through better-constructed walls and higher-quality windows and doors. New homes also use more modern heating, cooling, and ventilation systems to maintain the desired interior environment.
Your new home is ready as soon as you are.
Finally, when you build a new home, everything is ready the day you move in. You don’t have to remove unwanted carpet, clean the cabinets, or paint over last decade’s trendy paint colors. You get to choose the flooring, finishes, and paint colors, so your home looks exactly the way you want it to from day one.
The process of building a new home might take longer than the process of buying an existing one, but this isn’t necessarily always the case, especially when housing inventory is low and homes are moving fast. When looking for an existing home, you have no idea how long the process will take. This can be challenging for families that are renting or who need to sell a home to finance purchasing a new one. When you build new, the timeline is predictable, and you have plenty of time to plan around your move-in date.
Adair Homes: Your Portland Homebuilder
If you’re looking for homebuilders in the Portland area, get in touch with a Home Ownership Counselor at our North Willamette branch office in Aurora. Even if you’re not sure whether you’re able to build, our team will work with you to help you determine your budget and choose the floor plan that matches your needs. We can also help you secure financing, so don’t worry about getting prequalified before you come in. Schedule an appointment today to get started.