Are resales less expensive than new houses?

by Dian Hymer

December 02, 1995

About four out of five home buyers purchase a resale. A resale is a house that is not new and that has had at least one previous owner. It's usually less expensive to buy a resale than it is to buy a brand new house--if you consider the purchase price alone.

But an older house may need refurbishing or retrofitting with new systems, such as heating or plumbing. And an older home is usually less energy efficient, depending on how old it is. So, an older home can end up being more expensive than a new house when all factors are considered.

Many home buyers will only buy an older house, despite the fact that it may be outmoded technologically. One reason for this preference is that older homes tend to have architectural distinctiveness and uniqueness. Older homes are often located in neighborhoods that were developed over a period of time, by various builders. They offer a variety of architectural styles.

Depending on the era when a house was built, it may have been built with a high level of craftsmanship and with a quality of building materials that are hard to find in the building trade today. Older homes are often loaded with architectural details that are expensive to reproduce today.

Older homes in established neighborhoods usually have the benefit of mature landscaping. New homes projects often look sterile by comparison. Not only does it take time for the landscaping to mature, it can be costly.

Location is one of the primary reasons for buying any house. One benefit of buying resales is that they were usually built in the best locations available at the time. New homes projects are frequently built in areas that were considered undesirable decades ago.

Older neighborhoods are often centrally located, with good access to jobs and shopping centers. Short commutes save time and money. New home developments are often built on the out-skirts of town and are, therefore, less convenient and may lack facilities. The schools are often better in the more established neighborhoods than they are in newer areas.

FIRST-TIME TIP: Maintenance will be higher on an older house if major components such as the plumbing, heating, electrical, roof, major appliances or drainage system need repair or replacement. Before you buy, find out the age of the major systems. Have they been updated or are they original? Ask the sellers to provide you with a list of repairs and modifications they have made to these systems, including when they were made. Also, find out how much it costs to heat the house, and if it has been insulated.

Another consideration is that most older homes often aren't built to modern building code requirements. Older houses can be updated, or retrofitted, to current code--for a price. Also, older houses may contain materials that are environmentally hazardous, such as asbestos or lead.

An older home has been put through the test of time, so you have the advantage of knowing how the house has performed. A defective foundation, or drainage system, may not be immediately apparent in a new house. It may take years for these kinds of problems to develop. With a new house, you don't have the benefit of witnessing how well the house has stood up over the years.

THE CLOSING: Owning an older house is usually more demanding of your time, energy, and money than a well-built new house will be. Older houses require more maintenance on an on-going basis. But, living in a charming older house is immensely pleasurable, if you can afford it.