Data reported in National Mortgage News points out the price gap between resale and new homes has been closing in recent years. Historically, new homes have had an average selling price significantly higher than resale homes. But due to the rapid appreciation of resale home values within the last decade, the price gap between the two housing products has shrunk. Currently, the price delta between new homes and resale homes is the lowest it’s been since 2010.
“This is a great time to buy a new home,” explained David Brodsky, broker/owner of the Austin real estate brokerage, David Brodsky Properties. “Because the price of a newly built home has historically been higher than the price of a resale home, buyers have been quick to overlook a brand new home as a good value opportunity,” he said. “But new homes offer a wealth of value for homebuyers, especially if a buyer isn’t interested in putting money into upgrades or renovations after they purchase their home.”
New Homes vs. Resale Homes Price Comparison
In the U.S., the average new home sold for $324,467 in June 2018. That is 28% more than the $254,200 price for existing homes, according to data from John Burns Real Estate Consulting. The current price gap is down from the 37% price difference in 2015. It’s also the smallest difference since the end of 2010.
According to National Mortgage News, the main reason for the shrinking price difference is that existing home prices are rising faster. Housing demand is high and housing inventory is low, which is pushing up resale prices. Concurrently, new home builders are working hard to fill the demand for housing while also providing an affordable product that’s within financial reach of the average U.S. homebuyer.
Developers Rise to the Inventory Challenge
The challenge for builders is two-fold since the price of land and the price of materials is rising. In order to provide affordable housing stock, builders are focusing on creating homes that have fewer upgrades and are farther from job centers.
“Home builders have been doing a good job of providing much-needed housing inventory in response to high housing demand,” said Brodsky. “They’ve also been rising to the challenge of making affordable and efficient homes, while at the same time providing value to the consumer. Considering the shrinking price difference between new homes and resale homes, I think that more buyers should start looking at new build as an affordable, valuable option.”
To learn more about the value that a new home can provide, reach out to David Brodsky Properties. Our Austin real estate strategists offer expert consultation and guidance that will help you determine if a brand new home is right for you.
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