The decision to build a house is not one to take lightly and should be done with caution. There are many things to consider before you make your final choice. There’s the location, the price, and even what style of home you prefer. So if you’re asking yourself the question: “Should I build a house now or wait?” there are some things you should consider before making your decision.
Factors such as the housing market, mortgage rates, and more could play a role in deciding whether or not now is the best time for you to purchase a home.
Here are the questions you should ask when deciding if now is a good time to build a house.
Do I have the time to build a house?
Building your first house is a lot more involved than buying your first home. There are hundreds of decisions to be made, and if you’re the one doing the work on-site yourself, you are looking at months, possibly years in terms of time, and labor.
When we built our second home, there were a lot of challenges. It was a custom home and everything needed a decision, and if you don’t decide quickly, things grind to a halt.
Building a house means you are constantly discussing things regarding the home. What is needed, what goes where, and how it will impact your life in it. These decisions are all done conceptually since you can’t see the product until after the home is done.
Can I wait to move?
Building a home takes longer than buying an existing home. If you are looking to move within the next year or two, building a new house is not an ideal option for you. Building a home takes a lot of time and effort, and if you are not in it for the long haul, buying an existing home may be better.
What is your budget?
Building your own house typically costs more than purchasing an existing one, but that doesn’t mean you can’t find something affordable. However, with building ahome, there are many added expenses, including lot premiums, connection fees, architectural fees, and construction costs which can add up and make your budget tight.
Can you handle additional expenses?
Even if you have a budget and are great at sticking to it, be warned, there will be unexpected costs. For example, lumber prices can jump; drilling may need to go an extra 50 feet for a well.
In the end, every home-building decision costs you more money and you are always balancing between what you can afford to do now versus the cost of doing it later. Not to mention things like property taxes will be higher than you expect.
Sure you will likely have a list of things you want in a new house, but the total cost of all of them will be higher than you anticipate (I’m looking at you: appliances and granite countertops). If you can roll with the uncertainty building can be a great choice.
But if the idea of rising costs of lumber prices and other materials involved in building a custom home have you worried, then finding your dream home may be best found through home sellers and not building your own.
There is often pressure to build something more luxurious than originally wanted in order to compete with other buyers causing you to spend more than you originally planned.
Is it time to move?
If you have been in the same home for years, then building a new one may be the perfect opportunity to downsize or give yourself more space for your things. Not having to worry about reselling a home could also be a big bonus if you’re not in a rush to sell and buy again.
If you want to enjoy the amenities of a long-term community and have some extra money, building a new house may be an excellent choice for you. It isn’t all about price and sometimes it’s worth paying a little more if it means living in a new home doesn’t mean sacrificing your style or freedom of choice.
What is the real estate market telling you?
Building a house during a seller’s market may save you money but that doesn’t mean there aren’t hidden costs. A hot real estate market means you could be facing material shortages and rising prices, while you can lock in some prices, other times prices skyrocket and can leave your budget in pieces.
Ask an experienced real estate agent if they expect the market in your area to keep rising or if it will flatten out in the near future. They usually have a good idea of housing inventory and the effects of rising mortgage interest rates can have on home prices.
This can give you an idea of where or not building a home can save money over buying an existing house.
A balanced market means you can likely buy a home with some time to spare but a hot market means you will be see bidding wars and other things which can make building your own house a more appealing part of it. It certainly was for us when we built our custom home.
Will you need help with financing?
Financing your house will be different than financing a pre-existing home because it is an entirely new project. The interest rates on construction loans can often be more expensive than traditional loans.
Additionally, if you are currently in a home with a mortgage, you will need to be able to cover two mortgages with your finances. This can put a financial burden on your budget and it’s a good idea to ask yourself if it’s something you want to go through.
Do you have land or an area in mind?
Often when we decide to build a new home we forget that we need to find an acre of land to build on (or less depending on if you are deciding between country vs city living). This is another cost you will have to finance and finding a parcel of land to build on can be one of the hardest steps in the whole new construction home building process.
If you are using a custom home builder get them to check out the building lot to make sure it’s a good lot for building on, or use industry experts (drilling experts, realtors, etc..) to help you decide if a particular lot is right for you and your family.
Are you ready for the responsibility?
Don’t kid yourself, just because you aren’t swinging the hammer, there is a lot of responsibility.
Building a house is hard work and it’s something that will be with you for quite some time, so be sure you can handle all the decisions that come along with building a new home. This isn’t just an investment in your future but also your quality of life, so be 100% sure you are ready for this commitment.
Are you good at making decisions quickly?
Building a house means you have to decide quickly with decisions. Often your builder will need decisions on a spur of the moment basis because the tradespeople (electricians, plumbers, etc…) are at the house and need you to make a decision before they can move forward.
This means that you will need to decide quickly a decisively on an ongoing basis. If you struggle to make decisions or don’t have the time to commit to the whole process building a house may not be right for you. Building a spec house might be an easier option.
Is now a good time to build a house?
Ultimately your personal situation will help you decide if now is the right time to build a house or if you should wait. If you are already in your own home think of what you can afford, the time involved, and the strain a 1 to 2 year project can put on your family. While there are many advantages of building a home (you get exactly what you want) there are some hurdles in getting there.
If you are ok with that then now can be the right time to build, but if you are unsure or don’t have that long of a time frame, buying existing homes or picking a spec home can be a great way to upgrade your living space while not committing to a year-long or more process.
Buying a pre-existing home may be the better option but it doesn’t necessarily mean it’s the best choice for you. Take your time and weigh out all of your options before making any hasty decisions.