Is It Better to Buy or Build a House?
At the end of every custom home project, the champagne is flowing and congratulations are on the menu. Inevitably, the joke will be told: “I could have bought for less!”
Ha ha, clink clink…we know that most jokes are 50% true (which is what makes them funny). So, is that true? Can you buy a new construction home for less than you could renovate or build custom? ABSOLUTELY! Can you buy the SAME new construction home for less than you could renovate or build custom? ABSOLUTELY NOT.
In construction, there’s almost always a cheaper option. That’s why commoditizing your building team is so dangerous. Construction is not about the cheapest option, it’s about the best value. A custom home is exactly that – it’s customized for you…for your needs, for your family, for your lifestyle, for your aesthetic. A developer is building new construction homes that appeal to everybody, and their primary goal is to make money. So, their value proposition on quality of construction and materials will be different than a custom home builder.
You are not a developer, you’re a homeowner.
If you are deciding whether to buy or build a house, you need to understand your own value proposition. If you’re looking for a “flip”, forget it. Home prices nationally are not increasing at a rate that allows for any significant profit margin. Only professional developers can make money building real estate, and their margins aren’t as good as they used to be either. Despite what DIY Network and HGTV want to tell you, homeowners are not developers. Being a developer is a full time job and requires a specific set of knowledge and skill. If you’re looking to move in 5-10 years, you likely will not get a return on your investment by the time you’re done paying your architect, engineer, and real estate broker.
However, if you’re looking for a long term home and have a $1M+ budget, there is no doubt that your best option is a custom built home. A custom built home will be a gift to you for decades – offering you all the joys that details both subtle and overt can provide. A custom home will stand the test of time and be worth more decades from now than a developer built home ever will. You will not need to do major renovations to make it market ready when the time comes.
Do you know how many of our clients laugh bitterly at that joke? None of them. Do you know how many of our clients toast us with tears in their eyes while standing in the home of their dreams?