Home Buying in Austin>Question Details

austinhomebu…, Home Buyer in Austin, TX

Is buying an existing home or new constuction a better investment in Austin TX?

Asked by austinhomebuyer, Austin, TX Mon Dec 10, 2012

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Couple of thoughts and a question for you. For buyers who are not 'investors' you certainly could choose to purchase new construction OR an existing home and to well - it really depends on the area, how new of a home (features, etc) you desire.

The larger caveat, and this applies to home buyers who intend to occupy or investors, its how long you intend to hold.

In most new construction projects the builder(s) phase in construction. This deliver of brand new product over time tends to dramatically temper the appreciation. Depending on the phase and build out, you may see little to no appreciation in a new construction area.

In existing areas of Austin that are built out with established neighborhoods, you'll likely find a more robust appreciation rate in the short to medium time frame.

My question. From your post, could you clarify what your goals are and whether you are an investor or home owner who intends to occupy the home yourself?
0 votes Thank Flag Link Mon Dec 10, 2012
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0 votes Thank Flag Link Sun Nov 16, 2014
It really depends on your goals. Will you be purchasing the home as a rental or do you want a property that you can remodel and flip? Many investors prefer purchasing newer homes to minimize the maintenance costs as they use them as rental properties. Builders also may offer better incentives at the end of their fiscal year when they do not want to carry inventory into a new year. It is best to compare all of the factors when analyzing an investment. You want to make sure that you are purchasing at a competitive price in comparison to comps and also that similar lease comps are getting rental rates that will yield you positive cash flow. If you would like to discuss this further, please call me at 512-695-5144 or email me at kristee@theleadersrealty.com. I have extensive experience working with investors as over a third of my business is working with investors.

Sincerely,

Kristee Leonard, REALTOR®
Broker, GRI, SFR
512-695-5144 Cell
http://www.theleadersrealty.com
0 votes Thank Flag Link Sun Dec 30, 2012
There are a lot of variables, but normally Resale homes are the better value and easier to sell because they are in the heart of the city. Due to the growth in Austin and surrounding areas over the last ten years Downtown is no longer the center. The Arboretum is now the center of our "merto area" because of the development in Cedar Park, Leander, and Round Rock.

New homes are harder to sell if you hold onto them less than five years as the builder is probably still building out the neighborhood and its tough to compete with all of their incentives. Not to mention your going to be living in a construction zone, so plan on buying some new tires because construction debris is hard on tires.

Good luck!
Betina
0 votes Thank Flag Link Thu Dec 20, 2012
The current center of Austin will not be the center of town in five years. Our little city is growing fast and the center of Austin is moving as a result. Avery Ranch was previously considered the far North end of town. Now Leander is expanding and the D.R. Horton's large land purchase, Leander will absorb Georgetown within the next ten years. What does that mean for home prices? It means Avery prices will go up. Downtown, which will be the new South will see price increases. The fact is, there are many great areas in Austin in which to buy. Our market is up 8.74% in home sales prices over this time last year. The average appreciation over a one year period would be 3-4% so this alone tells you our market is thriving even in the current economy.
0 votes Thank Flag Link Tue Dec 11, 2012
You will almost always pay more for building a new construction home over an existing home. This is just a fact. Unless you can get a great deal on a spec home of some sort.

_______________________________________
Don Groff
REALTOR® | Mortgage Broker
Keller Williams Realty | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Mon Dec 10, 2012
So a new construction home in Brushy Creek costs more than an existing home in downtown Austin??? Be careful about giving misinformation to buyers. This would only be correct if you were comparing exact apples to exact apples in similar neighborhoods.
Flag Tue Dec 11, 2012
This depends on many factors. Location is the biggest factor as price is driven first by area. Second is schools and area specifics. Third is style of home and lot amenities; pool, multi-car garage, trees, lot size. Fourth is interior layout and square footage of the home. Fifth is amenities of the interior.

Many people will place the value of an older home higher if it is well kept, in the right neighborhood and offers more than new construction. This however works both ways. An experienced agent like me can help you to define your needs better.
0 votes Thank Flag Link Mon Dec 10, 2012
As a very busy Realtor and the owner of a new home-building company, I see both sides of the coin. The reality is in most cases, a new home is going to be more expensive to purchase then a resale. It is very similar to buying a brand-new car versus a car that is a couple of years old that someone else has taken the depreciation on. You are paying a premium to have a brand-new home that no one else is ever lived in, but unfortunately you cannot pass that luxury on to the next buyer. Therefore typically it is better to find a good resale in a well-established area, unless you want to buy the home and live in it for a very, very long time. Usually, I find better deals for my clients in the resale market than I do in the new home market, but of course that can vary depending on the incentives a new homebuilder has.

If you're not yet working with a good Realtor and would like some excellent no-cost professional assistance in this matter, feel free to contact me and I will be happy to represent you and steer you in the right direction, depending on what your needs are and what your financial goals are regarding the home. I represent buyers like you at no cost, and am a Realtor with Keller Williams Realty, Austin's #1 Real Estate company, Ranked #1 by Buyers and Sellers! (JD Power and Associates 2012).

Joe Jarusinsky, Realtor, Keller Williams Realty, 512-261-4415
0 votes Thank Flag Link Mon Dec 10, 2012
Jan Gerace, Real Estate Pro in Austin, TX Renting a newly constructed home has its cons. 1.) You will most likely need to charge a higher rent to get a good return on your investment due to the costs going into a new home is typically higher than that of a resale. 2.) If you are to sell this home in a few years, home value could potentially decrease due to renters are not as caring with the property as the owner occupant. 3.) Investors tend to purchase properties in the renting areas. And of course there are some other factors to consider like your goals and what your plans are with the property.
0 votes Thank Flag Link Mon Dec 10, 2012
Hello Austin Buyer,
Resale home or a NEW built?
Well that is questions for an individual preference.
Resale homes :
you will know your neighbours who they are presently.
Kind of area that will has been kept up or not ?
Over grown green old trees... etc etc.
But New built you will get a warranty from the builders.
Plus lately there is not much of a price differnece.
New homes have recent tech. savy energy efficiencies.

Contact a Realtor who will represent your interest in the transaction.
0 votes Thank Flag Link Mon Dec 10, 2012
As with most questions--it depends....it depends on the builder, the area, etc. Lots of builders are giving "incentives" for buying a new home with them--but they mark the house up so you don't realize it. Your BEST bet is to get a Realtor to represent you--the builder's salesperson represents the builder--that way, you have negotiating power on your side! Hope this helps!
0 votes Thank Flag Link Mon Dec 10, 2012
Are you looking for a certain rate of cash flow? Only interested in long-term appreciation? If buying as your residence, don't worry about the "investment" unless it is the last factor to consider in a decision. Many buyers focus on how a property will appreciate rather than how they will live in the home. The latter is generally more important.
Web Reference: http://www.crowehomes.com
0 votes Thank Flag Link Mon Dec 10, 2012
Hello,
It's a question that has no one answer unfortunately. Each area and the options available help guide us to the right answer. I just helped my daughter select a "new" home. After careful consideration of the existing inventory, prices and age versus the available "new" construction it became obvious in this case a "new" home was the answer. Why: 1) Age 2) Energy efficiency 3) Features 4) Community Amenities 5) Location 6) Schools within the ISD 6) The lack of additional lots/development within the neighborhood thus limiting the builders ability to reduce values at closeout.

Best wishes. I'd be happy to assist you if you choose to contact me directly. I do not follow these posts.

Bill Austin ~ 512-709-6343 ~ bill@teamprice.com
0 votes Thank Flag Link Mon Dec 10, 2012
Every situation is different, but I think in almost every case I've seen preowned homes are a better deal when you factor in all the costs.

Somewhat like buying a car....probably not the terrible economics of buying a car, but somewhat the same principal.

It may also depend on how long you plan to stay in the home. Six months or a year, I would think for sure the preowned is probably better on resale.....should be very close to your purchase price in many cases. One year old new purchased home, well the buyer might rather buy from the builder with warranties in place and getting never used, never touched product. I hear this often from buyers. Why would I buy "that" house when I can get a new one from the builder at near the same price.
0 votes Thank Flag Link Mon Dec 10, 2012
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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That's really hard to say. Some areas have more new homes in Austin but tend to be farther away from downtown. The downtown area has fewer new homes but tends to command a higher rent, lower vacancy and premium renters, something I would take over a home farther away from downtown.
0 votes Thank Flag Link Mon Dec 10, 2012
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