Buying a house. Do you build or renovate?

In My Humble Opinion
1

My wife and I might be in the market for a home later this summer. We’ve been doing some preliminary searching, and we’re trying to decide between a few options. I’m not looking for advice, but I’m just curious how others feel.

One option is to build a brand-new house. It would be pricey, but we could get the options that we want easily, and it would probably be a few years before it had any major maintenance expenses. There’s a home builder around here with a good reputation, so I’m not too worried about the stereotypical “shoddy new home construction.” I’m fond of this home plan, but it’s probably way out of our price range. This is probably more feasible. But how quickly do options like nice countertops and Pergo floors add up? It seems like it could be easy to go in over our heads.

Another option is to buy a condo. I know that HOAs and condo boards aren’t popular around here, but we lived in a nice condo in St. Louis a few years ago and liked not having to take care of the yard or pay to fix the siding or the roof. Of course, you do pay for the no-maintenance lifestyle, and there aren’t many decent condo options up here, at least that I can find. The condo market seems to be saturated with downtown high-rises, which aren’t an option for me, my wife, and our two kids. And most of the condos seem to be built with the builders-grade crap that you end up having to replace after a few years anyway.

Of course, you can also buy an existing house. My wife has become quite enamored with some of the small towns around here, and we’ve looked at a couple of 80- to 100-year-old homes, but there are flaws - small kitchens, small closets, bathrooms that are are down the hall or on a different floor than the bedrooms. And there’s always something to fix. We actually looked at a 5-bedroom, 2-bath Victorian listed for $195,000 last weekend, just to see what you can get for that kind of money. But as soon as we walked in, we realized it would need an incredible amount of work. It would basically have to be gutted to studs and rebuilt, inside and out. And we don’t have time for that. That’s an extreme example, but even our 30-year-old house in Kansas City ended up needing thousands of dollars worth of work in the 2 1/2 years we lived there.

My wife likes to read parenting blogs like Dooce, where crazy young parents with small children tear out and rebuild their bathrooms and kitchens. We are not fixer-uppers. The thought of cleaning the dishes in the bathtub or tearing out a vanity and replacing it make me want to curl up into a little ball. In our last house, we tried to repaint our bathroom. We got most of the walls done, but we never did finish painting the trim, and we just lived with it half-painted for about a year.

So what would you be inclined do? Buy new? Buy old and renovate?

2

I am actually finding myself in the same predicament. Our current home is too small for us and I am unhappy with anything on the market. We own 5 acres near our current house and being an Architect I can design something that is more keeping with our needs and wants.

However our current house is within a few years of being paid off and the new home would have a mortgage, albeit one offset by selling our current home. Last time I looked into something like this builders were swamped and thus the prices were out there. However now with the economy my guess is that pricing for subs, etc would be good as many would do it at cost just to stay in business.

I do have the advantage of experience in the field and knowing the pitfalls. Depending upon your relationship and communciation styles you could do this, but I will also tell you that it potentially could put a great strain on your marriage.

If you are just talking a spec home selected from a variety of existing plans from the contractor (which it appears you are) then you likely will be able to keep costs down. They likely have packages that include this floor and this fixture and these appliances for this price (similar to a car dealer). Thus they contain the pricing increases for you.

However if you are talking a full custom home where you get choices over everything, you need to be quick and concise with your decisions. If you are the types of personalities that can’t make a decision, or continually second guess each other and thus give conflicting direction to your builder–you will incurr costs and overruns that will make your head spin! I have seen it time and time again. But if you can envision what that shade of blue will look like and not have to repaint then it is doable. But if you decide you don’t like the location of a wall after it is framed and want it moved 12 inches to the east…well that will cost you!

Good luck with your decision, and I will struggle with mine as well. Feel free to PM or email me any questions you might have or ask here.

3

A lot depends on your current situation - what you want in a house and what you can afford. I think it is pretty safe to say that new construction will be considerably more expensive. A lot of existing real estate is quite depressed right now, but labor and materials costs to build new are not similarly depressed.

Of course, if you have a very specific idea of what you want and will not be satisfied with anything else, building your own house may be the only way you would be guaranteed to get EXACTLY what you want. On the one occasion that we seriously talked with a builder, it was quite surprising how quickly a few modifications/changes increased the price beyond our comfort level.

A new house will very likely be better insulated, and more energy efficient.

Many people are overwhelmed by the sheer number of decisions they need to make WRT new construction.

The other consideration is location. If you really want to be in a certain area, you might not have a lot of buildable lots available.

That 2d house looks very nice to me. But if I were buying a home right now, I’d be looking at existing homes. I would look for a home with “bones” and flow that appealed to me, and I would find a general contractor to inspect it for me to ensure that it was structurally sound, and to identify whatever big-ticket items may exist.

Keep us posted.

4

Hi SanibelMan,

I’m in a similar situation here in Madison, but trying to sell our condo and find a single-family home. I think there are a lot of options out there for you right now in the Madison area, including plenty of 10-20 year old houses that wouldn’t require huge renovations. I think you’ll increase your odds of finding something you like in Madison if you look in the $210-$250 range. But you can find a lot of nice houses in the outlying towns for much cheaper. Happy to talk more about this topic if you want.

5

Thanks. We’re still at the point where we’re trying to decide what neighborhood or suburb to live in, and the school districts are a big part of that.

The Madison schools just announced $30 million in budget cuts, which doesn’t instill confidence in me. My son is a first-grader in a Sun Prairie elementary school now, and he’s doing really well, but I’m not sure about Sun Prairie schools at the middle- and high-school level.

Plus, Sun Prairie seems to be undergoing something of a white flight problem at the moment. A lot of apartments and condos built in the last couple of years have gone Section 8 and there seems to be a lot of panic about that. So I don’t want to buy a house in the neighborhood where my son’s school is if the property values drop in the next 10 years.

So then, do we move to the West Side, where houses seem to be $20 or $30,000 more for the same square footage? Or do we move to an outlying town, like Stoughton, Waunakee or Columbus? We could build a 4-bedroom house in Columbus for $209,000, but that gives me a 30-mile commute. There’s still a lot that we have to learn about the area before we can decide for certain.

6

No kids, but I’ve heard good thing about the Verona and Middleton-Cross Plains school districts, and I think Waunakee too. Have some friends in Waunakee who like it, and between Waunakee and the airport is Westport, which seems nice. There are parts of Fitchburg where kids go to Verona schools (Richardson St. / Lacy Road area).

We’ve looked at Cross Plains and you can get quite a lot of house for the money, but like Columbus, you’re looking at a longer commute. I think I’ve seen some nice places in Cottage Grove and I think Veridian has a development just East of I-39, not sure what it’s called, though. I’m also somewhat intrigued by Oregon, but it would be too far a commute for my job.

North of the beltline (Nakoma, Westmoreland, Midvale, etc) the houses get older but I’ve seen plenty of places with new roofs, updated kitchens, etc.

7

What I might recommend is this:

GO to Home Depot/Lowes/Whatever builder supply places are in your area. Start at the bottom. Go look at floors. All sorts of floors, carpets, area rugs, hardwood, laminate, vinyl and tile. Get an idea of what you like and how much it costs. Look at colors, textures and everything there is. Ask questions and find out about stuff like padding, and grout and whatnot. Next visit, look at wall treatments - paint, paper, fabric wall coverings, stucco, paneling. Then go look at bathrooms, and then at kitchens.

Now, think about that victorian for $195000. You say it would need to be gutted and you just are not the handy type. How about getting the contractor to do the work for you. If you are willing to have a house built for you, why not have one remodeled for you? Nobody says you HAVE to do the remodeling yourself. If you do the research on exactly what you want in your house, it will make discussions with a contractor go much smoother.

See, I see all these houses up for sale, and it is a waste. They will sit there empty and rotting because nobody will buy them, they have to have their own perfect house when there is nothing particularly wrong with a used house. There are 4 brand new houses going up on spec on the road I am on, with 3 houses that are pretty much the same sitting there for sale. People will probably move into the brand new ones instead of the ones that are 4 years old.

8

“This old house” is a show for people with money. Having owned a 1870’s Cape I would advise you to build new. New houses are energy efficient and you can build it the way you want it rather then renovate. Just in energy savings alone and resale value I think new is a better investment. You will pay more per month but nothing will need replacing for many years. I loved my old house but did not have the money for the reno’s that would have made it what I wanted it to be.

9

With all the houses that are sitting out there for sale, can you build today at the same cost you can buy an existing house?

We sold a house 2 years ago, at about $200. The lot was worth probably $30k. I know that it cost close to $50k to side it and reroof it a few years before that. I don’t think I could have built and finished the rest of the house for $120.

10

Mark me down as “build a new one”. You can now build a highly efficient, and ZERO maintainence house, for a reasonable price. Think about it-a house that you won’t have to spend any money on, for 30 years!
I have a 90 year old house which needs constant attention, and I am getting sick of it!

11

I don’t think the option is silmply build new vs buy 90+ year old house. There are a ton of existing houses for sale that are less than 10-25 years old which have many of the efficiency benefits of new construction. And only a fool would think that even a brand new construction will be guaranteed bulltproof. There is one guarantee about home ownership - something always breaks or could be improved. And you don’t have a super to call to fix it.

One benefit of older homes is that many of them have a level of detail that are uncommon in newer construction - and prohibitively expensive to construct new. Of course, you need to have your eyes open about the hassles and costs you will undoubtedly face. Also, many older homes have the benefit of being in established neighborhoods, closer to many town centers and such, as opposed to new construction plunked down in a cornfield somewhere. Which may or may not matter to you one way or the other.

12

I can tell from your post that you’d be SOOO much happier with a new build. Some people aren’t built to tackle home renovation. Accept who you are.

Yes, buying an old house and renovating can be a good investment, but it sounds like the stress of being in the middle of renovation would outweigh any dollar amount you might get back.

Go with the new build and don’t look back.