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Trulia Dallas, Home Buyer in Dallas, TX

Is a newer home worth more than an older one?

Asked by Trulia Dallas, Dallas, TX Wed Apr 3, 2013

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Value is in the eye of the beholder.

A new home is "virgin" - no one has ever lived there before. There's no cleaning of the tubs and appliances, there's no worn spots on the carpet or evidence of the last owner. So, some people are highly attracted to new construction. They also get the advantage of having things done the way they want them - the colors, the style, tile here, wood there, carpet, too. They will be constructing houses next door or down the block for a while, unless yours is the last house in the subdivision.
But it's a lot like going to a car dealer and driving the car off the lot - what happens to the value immediately? It drops. You can't get what you paid for a brand new house back if you sell it the next month.

An old home shows all the 'character' of the era it was built. The charming shower in the master but no bathtub, the dial clock on the stove with coils for burners, an A/C that operates at 8 SEER, but maybe it has real wood floors. It won't have more than 6" of insulation in the attic and maybe cold, single-pane windows that don't easily go up and down. The plumbing may need to be rodded because the sewer is plugged or possibly cracked. The electric may have no GFCIs in the kitchen or garage, and sometimes aluminum wiring. Charming old house, but be wary.

The price of course will be lower on the old house, because it has depreciated in value. It could be functional obsolescence, like a 2x2 foot master shower with no tub, or it could be real. For the size, the price will be lower. I doubt it is really worth its price, though.

Somewhere in between you may have a 10 year old or 15 year old home that has some depreciation, some updating that's needed but otherwise is in good condition. Also the A/C may have been upgraded recently or the roof replaced last year. These improvements help the older, but not old, home hold its value. So, value for money is the question in this range of ages from brand new to old.

If your electric bills are a quarter of bills for an older home, those savings can pile up and easily make up the difference in a couple of years. You can also take an older home and do the upgrades and updates yourself to get close to the new construction quality and function. The tradeoff is both time and money over the lower priced older home versus the get it right the first time new construction.

My personal philosophy on cars is similar to that on homes:
a couple of years old gets you almost full functionality and quality at a price lower than new on the lot.
1 vote Thank Flag Link Thu Apr 4, 2013
Not all homes are built alike. Location, builder, finish outs will dictate the value of a home. This applies to both new builds and resale single family dwellings. You have to take all these factors into consideration when determine value. Remember home buyers buy location first, then price and condition second.

Feel free to call me if you have any questions! :)
0 votes Thank Flag Link Mon Apr 15, 2013
Speaking as someone who has lived in Dallas for several decades - and one who chose to live close to downtown, shopping, churches, etc - most in walking distances, there is a lot to be said for homes with solid construction, big rooms, quality etc.
I prefer old.
Best of luck!
- Dallas Native
0 votes Thank Flag Link Sun Apr 7, 2013
I think T.E. summed up a really great answer to this question. I'll just add, it really depends on the builder too. Unfortunately some builders have started using less than perfect materials and cheap labor.. meaning more errors and lower quality. I think its pretty easy to tell when you walk into a new build whether the home was just "thrown together". My preferred years of build are 1970-1990. Not too old to have many foundation/electrical/plumbing issues, but still built with quality materials and professional construction. Im not saying all builders are doing that, by any means.. but we all know we've been in a few model homes & thought wow are these walls made out of cardboard? *my two cents
0 votes Thank Flag Link Sun Apr 7, 2013
Not necessarily. Depends on where you arr looking to purchase. There are advantages to buying an existing home such as mature landscaping or an existing pool.
0 votes Thank Flag Link Thu Apr 4, 2013
No. a lot of older homes are built very well and have a lot of character but there are those people out there who believe new is better or more modern. In realestate location is king regardless of new or old.
0 votes Thank Flag Link Wed Apr 3, 2013
To short and too simple of a question, even if we were to compare the same sq.ft. of an older home to a new or newer home, the construction and floor plan will be different, and at the end the location of a property how well it is maintained, upgraded and updated, old or new often that really does not matter, unless nothing over the years has been updated.

At the end it depends truly on the buyers likes and dislikes, the location, lot size, floor plan and yes
quality whether we are talking about a newer or older home...
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0 votes Thank Flag Link Wed Apr 3, 2013
When valuing real estate you must first factor in the land, lot and location. Then, the condition and value of overall improvements on the land, often called "the cost approach."

This is why you will find a home from 1950 worth $1.5 million dollars, that hasn't been updated at all.
:-)

Hope that helps.

-JD.
0 votes Thank Flag Link Wed Apr 3, 2013
It depends. Price and location are big factors in home price. Age of home is usually not really considered because houses are usually priced based upon other houses around them.
0 votes Thank Flag Link Wed Apr 3, 2013
An older home in a desired neighborhood can be worth a lot. There are many factors that you would need to take into account when answering that question. It would really come down to exactly which newer home and exactly which older home are you talking about.
0 votes Thank Flag Link Wed Apr 3, 2013
Not necessarily. Depends on where you arr looking to purchase. There are advantages to buying an existing home such as mature landscaping or an existing pool. I have seen older homes that are better than new'!
0 votes Thank Flag Link Wed Apr 3, 2013
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