Every day, Americans wake up to work toward their version of the American Dream. For most, owning a home is a crucial part of accomplishing this goal, but having a home goes well beyond ownership.
Your home is your home because it has everything you want in a home. Whether you build or buy, your home should reflect your tastes, values, lifestyle, and personality. As with all big decisions, you should know what external factors play a role in the homebuying process. From there, you can weigh the pros and cons.
For potential homebuyers in Phoenix, we have compiled a list of factors to consider before deciding. Ready to start taking steps toward finding your dream home?
The Phoenix Real Estate Market
When considering purchasing an existing home in the Phoenix area, be sure to keep an eye on the market. Between 2020 and 2021, median home prices in Maricopa County increased by 27 percent, according to Arizona Regional Multiple Listing Service (ARMLS). In Q1 of 2020, the median listing price for a home in the Phoenix area was $292,000, compared to $400,000 one year later.
The housing market is currently in solid standing, and if your income isn’t increasing at the same rate, it will be difficult to keep up with the cost of purchasing a new home. With a 13.4 percent decrease in available homes, as reported by ARMLS, the Phoenix market has relatively low inventory numbers. These low inventory numbers have led to an appreciation rate greater than the rise in wages, which is one of the biggest concerns in market affordability.
Additionally, affordability is becoming a real issue in the Phoenix area. Home prices are rising faster than income growth, meaning many people in the Phoenix area cannot get as much for their money. This is one of several reasons to consider building a new home instead of purchasing from the existing housing stock.
To Buy or to Build?
Many people searching for a new home assume that buying an existing house is more affordable than building a new one. Although this is sometimes true, it’s not always the case. When comparing the median Phoenix listing price of $400,000 with Adair Homes’ base pricing —oftentimes you’ll find that building new can be comparable to, if not more affordable than, buying an existing home.
If you’re still not convinced, let’s take a look at two scenarios in Phoenix.
A 1,092-square-foot home built in 1961 with three bedrooms and two bathrooms is currently listed for $295,000 on Zillow.
In the same neighborhood, you can find a similarly sized lot for $85,000 or a smaller site for as low as $48,500. Adair Homes’ Meridian floor plan in Arizona ranges from from $250,000-$270,000 for a four-bedroom, two-bathroom home that’s 1,950 square feet. Even when you factor in the cost of site development, you can see how building new can serve as the better option than buying an older home. You might even be able to build a bigger home for the same budget.
Keep in mind that customization is possible for both, but renovating a home that you purchase will create additional costs in materials and labor. With a custom home from Adair, the costs for add-ons or design adjustments are accounted for in the base price.
Pros and Cons of Buying an Existing Home in Phoenix
Of course, there are plenty of reasons to consider buying an existing home. Here are a few main benefits:
It’s relatively easy to get a mortgage from a range of financial institutions, including banks and independent mortgage brokers. In fact, your bank probably offers home loans at the going market rate, and you may even qualify for a mortgage that requires little money down. However, when you do this, it takes a long time to build up equity in your investment, so make sure you have the right savings and debt-to-income ratio.
Buying an existing home is a familiar process. Even if you have never done it before, you know people who have. It’s easy to gather information about the process, get tips from friends and family, and obtain referrals for realtors and mortgage brokers. This isn’t always the case when you’re building a new home because it’s likely that fewer people you know have done it.
Faster Move-In Time
When you buy a home that is already built, you get to move in as soon as you close. This is a major advantage for people who need to secure housing relatively quickly. However, you never know how long it will take to find a suitable home for sale.
Additionally, there are sometimes unpleasant surprises you discover only after you have purchased the home and moved in. Maybe the air conditioner hasn’t been maintained, the roof leaks, or the ceiling cracks, indicating issues with the foundation. Even with a home inspection, there are always risks when you buy a home, especially if you plan to remodel. You don’t know what you’ll find when you start tearing down walls, especially in an older home.
Pros and Cons of Building a New Custom Home in Phoenix
When you build a new, custom home, you can get exactly what you want. Here are a few of the benefits of building a new home:
Even if your budget doesn’t allow you to get every feature right away, you can plan for them so adding upgrades later is easier. You can also prioritize decisions based on your budget. For example, if you want a gorgeous master suite to relax in every day but are less concerned about the finishes in the guest room, you get to make that choice.
A More Predictable Timeline
If you’re searching for an existing home, it could take just as long to find a home because:
- You will need to find a home within budget, which can take months to a year or longer.
- You will need to negotiate with sellers on price, especially if the home needs substantial upgrades.
- You will need to get an offer accepted and close the deal.
Plus, if you find the home of your dreams, you risk losing it to a buyer that is more attractive to a seller, and this can be an unfortunate experience. During this time, you could be building your dream home instead of going to endless open houses.
A Brand New Home
Another significant advantage of new construction is that everything under the roof—and also the roof itself—is brand new:
- Your appliances aren’t going to require any major repairs or maintenance for many years to come.
- The materials used to build your home are of the highest quality.
- Your utility bills will be lower because the home was built using modern techniques to increase energy efficiency.
- There are no harmful materials in the home, such as asbestos or lead paint.
- The electrical wiring is new and applied by a professional, and you know where all of the conduits are because you have the plans.
In other words, you know the house as well as the designers who put it together, providing reassurance that buyers who purchase an existing home don’t have.
A Home You Helped Design
It’s incredibly satisfying to live in a home that you helped design. Every time you put away the dishes in the perfectly positioned cabinet or step into the bathtub you carefully selected, you feel the benefits of your decisions. It’s difficult, if not impossible, to find the perfect home from the existing real estate inventory, but when you build new, you can have the home of your dreams.
The Benefits Outweigh the Challenges
There is no doubt that building a new home can be challenging:
- There are a lot of decisions to make.
- The permitting process takes time.
- You can’t control the weather, which can create delays.
- The subcontractors may not be available when you need them.
These are good reasons to work with an experienced builder that can guide you through the process and ensure that you stay on budget.
Building a New Custom Home with Adair Homes
Adair Homes may be new to Arizona, but we have been building custom homes for decades in the Pacific Northwest and have more than 20,000 satisfied customers:
- Our Home Ownership Counselors know all of the challenges you might face along the way and are there to guide you through them.
- Our superintendents know how to keep a new build on schedule and budget, so you can rely on them to keep the project on track.
When you build with Adair Homes, our unique process allows you to generate immediate equity. You can secure a construction loan that allows you to put five or even zero percent down and have up to 20 percent equity by the end of the building process. You can do this by participating in the construction process, including managing subcontractors for site development and doing some tasks yourself, such as setting up utilities, cleaning up the site, and painting. The more you can participate, the more equity you can build.
If you’re interested in learning more about building a custom home in the Phoenix area, visit the Adair Homes North Valley branch to speak with a Home Ownership Counselor about the possibilities. You can schedule an appointment online or give us a call at 480-739-3944 to get started on the path to your new dream home.