IT'S NEW FOR YOU

Why Settle for a Fixer-Upper When a State-of-the-Art
Home Doesn't Cost Any More to Own?

If you think your first home has to be somebody else’s fixer-upper, think again. You can likely buy a new (or almost new) home with all the modern bells and whistles — and not spend any more per year.

Using data from the Census Bureau and Department of Housing and Urban Development’s (HUD) 2011 American Housing Survey, NAHB found that a newer home — even a more expensive one — can cost the same or less per year to own and maintain than an older home with a lower up-front price tag.

NAHB’s study first looked at how utility, maintenance, property tax and insurance costs vary depending upon the age of the structure. It found that homes built before 1960 have average maintenance costs of $564 per year, while homes built after 2008 average $241 per year.

Similarly, operating costs average nearly 5 percent of the home’s value for pre-1960 structures, while they average less than 3 percent when the home was built later than 2008.

The study then compared the first-year, after-tax cost of owning newer and older homes, taking into account the purchase price, mortgage payments, annual operating costs and income tax savings.

This data showed that a buyer can pay 23 percent more for a new home than for a home built before 1960 and still maintain the same first-year costs.

In other words, although mortgage payments may be slightly higher for a new home, operating costs will be lower, meaning the outlay is about the same for a higher-price new home than for a lesser-priced older home.

Other benefits of new homes include open-space floorplans, creative storage options and entertainment resources that cater to modern lifestyles. Plus newer homes are far more energy efficient, many built to certified green standards.

Of course, NAHB’s study compared more expensive newer homes with less expensive older ones. That isn’t always the case; in today’s market, depending upon the neighborhood, many comparable newer and older homes cost roughly the same at the outset.