Custom Home Building versus Buying an Existing Home

With housing affordability (reedconstructiondata.com/news/2008/12/housing-affordability-improves-but-will-not-boost-home-sales) improving and mortgage rates (mysanantonio.com/business/81017677.html) hovering near historic lows, the timing is right for purchasing a new home. And in this buyer's market, there are a lot of options to consider. But before settling on the style and number of bedrooms, you'll want to consider the different segments of the housing market.


Resale homes represent the largest percentage of the market. Constructed years, or even decades ago, these houses reflect the needs and the tastes of previous owners. They may be outfitted with outdated fixtures and technologies, and have deteriorating construction. Buyers of these homes often fall in love with them for their character, their location or their good-enough fit with their needs, and accept the necessity of investing additional time and resources in renovation and restoration.

Spec homes are built based on the speculation that a buyer can be found during or shortly after construction. These new homes may be designed with up-to-date floor plans and features to accommodate current preferences. When purchased before completion, a buyer may be able to select some finishing touches. But this type of home construction may also be designed to minimize cost and maximize profit for the home builder, potentially leaving homeowners with less than premium materials and designs that are not as contemporary.

Custom homes are built according to the buyer's specifications, usually on land they already own. While this type of new home construction represents only ten percent of the market, it gives the homeowner the most control. Working with an on your lot custom home builder, the buyer determines all facets of home constructionfrom site selection to the home's style, size and floor plan, types of windows and doors, flooring and siding, and all the detailscabinets, lighting fixtures, drawer pulls, paint colors, etc.

While on your lot home builders are often considered large home builders, they can also accommodate today's trend towards ight-sizing. (blogs.consumerreports.org/home/2009/02/rightsizing-mcmansion-mortgage-meltdown-gopal-ahluwalia.html?INTKEY=I95BOE0) These days a custom home builder may work on smaller homes starting around 1000 square feet. Benefits include keeping material and labor costs to a minimum (potentially in the low $100,000 range), and customizable floor plans.

In keeping with cost-consciousness and green lifestyles, another benefit of working closely with a new custom home builder is the opportunity to incorporate the latest energy- and resource-efficient products and trends. According to the National Association of Home Builders (NAHB), Today's homes are built twice as energy efficient as new homes a generation ago, making them more affordable (nahb.org/fileUpload_details.aspx?contentTypeID=3&contentID=104677&subContentID=249116) to own and operate. The latest in energy-efficient materials include windows with low-emittance (low-E) glass coatings, upgraded insulation, high efficiency HVAC systems, house wraps and tight construction.

Federal tax credits for Consumer Energy Efficiency may also be available for new home construction, covering 30% of the cost of materials and labor for systems such as geothermal heat pumps, solar water heaters, solar panels and residential fuel cells. Note that in order to qualify, these systems must be placed in service before the end of 2016.

An added bonus for those considering purchases of custom homesCurrent costs (hbrnetwork.com/building-materials/construction-costs-profits-both-down-from-peak-levels.aspx) of building a new home are relatively low,according to Jason Dickens, president of the Athens Area Homebuilders Association. 2009 lumber and other material prices have dropped considerably when compared to 2005. Right now is a very good time to build a house.

So, while the purchase of an existing esale or spec home will more than likely entail some compromises, a custom home is a cost-effective investment that offers incomparable rewards in function, esthetics and satisfactionand the fulfillment of owning the home of your dreams.

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