Should You Buy a New Home or an Old Home?

Last updated on August 22nd, 2018
Should You Buy a New Home or an Old Home?

It’s time for another match-up, this time we’ll compare buying a new home versus purchasing an existing one.

For the record, some home builders will refer to existing homes as “used,” which sounds kind of silly considering it’s a house and not a car, but let’s continue on.

New Homes Are Untouched and Clean

  • The number one reason to buy a new home
  • Is probably the fact that it’s never been lived in
  • It also might have the newest amenities
  • And you shouldn’t have to repair or renovate anything

The most obvious benefit to buying a new home as opposed to old, existing, or used is that it’s brand spanking new. It’s untouched, it’s clean, everything is in good working order and nothing needs to be repaired.

That’s a pretty huge incentive to buy new. You won’t have to worry about the typical costs of homeownership for the first several years, right?

Another benefit to buying new is that the home (or townhouse or condo) should have all the latest amenities. Remember when it was all the rage to have stainless steel appliances and granite countertops?

Well, today’s new homes come with solar panels, energy-saving windows, smart appliances, USB outlets, electric vehicle charging stations, thermostats and door locks you can control with your phone, and other features that might make your used home look really old, especially a few years down the line.

Aesthetics aside, these upgrades could actually save you a lot of money each year on utility costs because they’re designed to be cost-efficient, not just handy.  You might even get a tax break!

Not only that, but many of these new homes use low-VOC paints and flooring, which are supposedly better for your health.

Additionally, new home buyers often get the opportunity to fine-tune the home they buy by selecting certain features, colors, styles, etc., and even financing any add-ons into the mortgage.

It’s Easier to Buy a New Home

  • It might be easier to finance a new home
  • Because home builders have their own mortgage divisions
  • So they’ll work with you to get the deal done
  • But still take the time to shop around and negotiate

And speaking of mortgages, most home builders have their own financing departments that make it easy to get a mortgage. Whether it’s the best deal is another question, but if you simply want in, your odds are probably better with a new home.  The builder has a vested interest to get you financing.

There’s probably also a lot less competition for a new home, seeing that you’re probably checking out a brand new neighborhood full of vacant homes to choose from.

You can even pick among different sizes and floor plans to get just the right amount of space, as opposed to having to conform to what’s available in the existing market.

You might be thinking, hey, this sounds great, sign me up now! Why on earth would I want a used home with dodgy popcorn ceilings and laminate countertops?

But wait, there’s more to homes than what’s inside.

Don’t Forget About Location…

  • Location is and will always be the biggest value driver
  • And new construction might be in less desirable areas
  • Or in the outskirts of urban areas
  • So take that into consideration as a tradeoff

Let’s face it; the old saying that location is everything in real estate is true. It’s always been true, and always will be true. That is, if you want to see your property actually go up in value.

And guess what. Brand new homes aren’t being built in the best locations. When it comes down to it, there’s no space for a new development in an established or central location.

Sure, you might see a new condo development, but new homes most likely won’t be that central. They’ll be on the outskirts of town, or in a “trendy” or “upcoming” area.

In other words, there’s going to be a commute if you buy new, and the location might be questionable at best in terms of value.

There might even be multiple new developments surrounding yours, with tractors and hammering construction workers doing what they do all day long.

With an existing or used home, you can buy in the heart of the city, or in an area you know well that is insulated by a lack of available space and construction.

That buffer means the property should hold up well in terms of value, even during a downturn, assuming the area isn’t subject to obsolescence. A used home might also give you the ability to walk to work, or to restaurants, bars, shops, and so on.

At the same time, a used home doesn’t necessarily have to be old inside. If you shop around, you might be able to find an old home that has already been remodeled to your liking.

And even if it hasn’t, that shouldn’t stop you from buying it and making renovations if it’s got good bones.

New Homes Are 20% More Expensive

  • You pay a premium for a new home
  • Apparently 20% more on average
  • So while costs might be lower for maintenance and renovation
  • Consider the upfront cost

Back in May, Trulia determined that new homes (built in 2013-2014) cost roughly 20% more than similar existing homes.

They also found that two in five Americans would prefer to buy a new home, compared to just 21% opting for an existing home and 38% declaring no preference.

But when it came to that 20% markup, only 17% would actually pay the premium to get the new house.

So to get this straight, you might have to pay 20% for a new home AND you won’t be in a central location. You’ll be in an untested location that might wind up being a ghost neighborhood in a decade if things don’t work out as planned.

During the most recent housing crisis, a lot of new homes were hit the hardest, whereas existing homes saw their values decline but prop back up over time.

Of course, if you opt for new you’ll probably have all the latest technology and no major issues. If you go with an older home, you might have major bills on your hands when the roof gives out, or you discover serious plumbing issues.

So you’ll need to do your due diligence when buying an old home to ensure the property is in adequate shape. Then again, I’ve heard really negative stuff about new homes too, with many claiming workmanship has gone to you know what these days.

In other words, you’re not out of woods if you buy new either, though there might be some kind of warranty in place for a while.

At the end of the day, it’s probably okay to consider both new and used homes when looking for a property. As long as you take the time to inspect the property and the neighborhood, negotiate the right place, and make sure you can afford the place, you should be okay.

Lastly, you should make sure you actually want to own as opposed to rent because owning comes with many more responsibilities, whether you buy new or used.

Advantages to Buying a New Home

  • Brand new, clean, no major issues
  • Move-in ready (no wait or work to be done)
  • Cool new technology
  • Green features could reduce utility costs and/or provide tax incentives
  • Trendy design
  • Ability to customize
  • Can finance additions into mortgage
  • Possibly easier to get financing with home builder
  • Less competition, more choices on floor plans

Disadvantages to Buying a New Home

  • More expensive than buying used
  • Location probably isn’t ideal
  • Despite being new, workmanship might be questionable
  • Could be subject to costly HOAs, even if it’s a house
  • Neighborhood dynamic is unknown
  • Property values might be more volatile
  • Construction nearby (eyesore and noisy)
  • More cookie-cutter, less unique

Advantages to Buying an Existing Home

  • Possibly cheaper
  • Better, more central location
  • Can buy in an established school district
  • Can own in a more reputable and recognized neighborhood
  • Old house might have new upgrades
  • You can always renovate if need be
  • Older houses tend to have more character, custom design
  • Could actually be built better than a new home

Disadvantages to Buying an Existing Home

  • Harder to find an existing home (less inventory)
  • Might have major problems you don’t initially notice
  • Financing could be tricky (if unpermitted work, etc.)
  • Could still be more expensive than buying new
  • Fewer amenities, especially as homes get more tech-integrated
  • The neighborhood might be in decline
  • More competition to get your offer accepted
  • Might have to settle for a smaller, less ideal home to get right location

Lock in a lower rate.


  1. gautam September 10, 2015 at 4:18 am -

    Hi…good pointers for buying a home for someone like me who is currently looking to buy one. I have a question though and would appreciate your advice?

    Is it worth buying a house (existing) that is ready to move-in for about $150K more than buying a house where one has to put 80-100K for renovations?

  2. Colin Robertson September 10, 2015 at 11:00 am -


    There are a ton of factors to consider. For example, do you want to deal with all that construction? Is there something specific you have in mind? Do you have the cash on hand to pay for it all? Or do you just want something move-in ready and are willing to pay for that convenience? You may also favor one property over another for other reasons not mentioned. It’s really a personal decision/preference rather than a right or wrong answer.

  3. Lara January 8, 2016 at 12:03 am -

    I am getting close to retirement. I wanted to downsize but through looking and looking I have found a house I think I really like. It isn’t much smaller than what I am in but it is in a wonderful neighborhood and actually cheaper then the smaller houses I have looked at.. It is older with good bones on a very large lot…almost 1/4 of acre. with my down payment I could get really reasonable payments. I am just trying to think of the long run for my retirement years and what will be best. Any Advice? I love the location, I guess I am just not sure because I was thinking I should get a really small house. I have a large family and it is hard for me to break down and do it but I know I need to think of my future.

  4. Colin Robertson January 8, 2016 at 10:40 am -


    It’s completely your decision. Conventional wisdom says to retire without a mortgage and to potentially downsize, maybe even to a single-story home, but the one-size-fits-all guidelines don’t appeal to everyone for one reason or another. Do you love the home, can you handle the payments, will you miss your old home, does it make sense financially, etc., etc.

  5. Jane Sebow January 13, 2016 at 11:03 am -

    I am very interested in purchasing a new home (new development with 12 homes). The unit I like does not include a 2 car garage, it has 2 tandem uncovered parking spots with an electric gate. How much will this hurt my resale value?

  6. Colin Robertson January 13, 2016 at 11:37 am -


    I’m assuming the difference in value would be dictated by the value placed on the two-car garage in that particular area…so it can vary some neighborhood to neighborhood. If you feel it will materially affect the resale value you could try to negotiate with the builder for a lower sales price.

  7. Amet June 20, 2016 at 2:48 pm -

    I am in the process of buying a home. So far what we liked is a brand new home. Its expensive but its new. The only issue i have is that its not located on the best spot of the town. Its not bad but it may not be the best when the time comes to resale the house the area is developing, the city made a lot of improvements in the neighborhood and just built brand new and huge recreation park across it.
    My dilemma is whether i should buy this or wait and look for an older house in a better location in terms of future sale possibility. what do you think ?

  8. Colin Robertson June 24, 2016 at 4:13 pm -


    Location is one of the most important aspects of a home, and also the one thing you 100% cannot change. I always look at it like this – if it bothers me, it’ll probably bother prospective buyers when it comes time to sell it in the future. Good luck!

  9. Victor November 20, 2018 at 3:57 pm -

    Should I buy a relatively small house in really good school district or a bigger house in relatively not so good school district?

  10. Colin Robertson November 26, 2018 at 11:34 am -


    Depends what you care most about – if you have children and want them in a certain school, that may be more valuable to you than more space. If you don’t have kids and/or really want additional space, buying the larger home might be the ticket. Really comes down to preference and finding that right home wherever it might be located. It also depends how much of a premium buyers are placing on a certain school district if looking at purely the investment.

Leave A Response