Warning: session_start() [function.session-start]: open(/home/content/14/5809414/tmp/sess_kmqkvgvu7i1a1mj122kiu0hg92, O_RDWR) failed: No such file or directory (2) in /home/content/14/5809414/html/_comment.php on line 14

Warning: session_start() [function.session-start]: Cannot send session cookie - headers already sent by (output started at /home/content/14/5809414/html/_comment.php:14) in /home/content/14/5809414/html/_comment.php on line 14

Warning: session_start() [function.session-start]: Cannot send session cache limiter - headers already sent (output started at /home/content/14/5809414/html/_comment.php:14) in /home/content/14/5809414/html/_comment.php on line 14
Home shopping: Is buying new a better buy?

Home shopping: Is buying new a better buy?

sc2pilot
March 14, 2013
− Whether you buy a home now depends on why you`re buying one. If you`re buying a home as a long-term primary residence, by all means now is the best time ever. Interest rates are as low as they are going to get and prices are more or less reasonable. If you`re buying a RENTAL investment property, now is also a good time, because again it`s a long-term investment where someone else is paying the mortgage. If you`re buying on short term value and value alone (i.e. a flip), don`t. Values are headed down once interest rates start coming up (and they are already on the upswing) so there are real risks against principal. Rising interest rates take buyers out of the market, especially in the lower and middle class, and that`s huge. 15 year rates are right at 3% and 30 year rates are just south of 4%. These have both moved up 0.25% or so in the last 3 months, and if they move up another 0.25% or heaven forbid 0.5%, it will be a real drag on the housing market. For example, the payment on a $200,000 30 year loan goes up $60/month from 3.75 to 4.25%, and at the typical 26% conservative front end ratio, someone`s income must be about $200/month more to support that - $2400/year. That may not seem like much, but in the statistical distribution of income earners in the $75k-100k/year range, that will still lock out hundreds of thousands of buyers. Put another way, the principal on a 30 year loan moving from 3.75% to 4.25% drops from 200,000 to about $188,000, so to keep the same number of buyers in the market for a $200k home, the price has to fall by $12,000, which is 6% of the home price. That`s huge. A 0.5% movement in interest rates will drop the value of a $200K home by 6%. 13 1 Reply

Jack B Wilkins sc2pilot
March 20, 2013
So, if I follow your reasoning correctly, prices should have skyrocketed over the last few years since interest rates have been falling.....but strangely they didn`t........ While your reasoning does make some sense and interest rates do have an effect on the market, you not considering supply and demand........That`s what really moves prices and there`s pent up demand because people were afraid to enter the market for the last several years because of falling prices........If someone can no longer afford a $200k house, but they want to get out of their parents basement, they`ll probably settle for a $188k house (or even $150k)...... 0 Reply

Olga Gouroudeva
March 14, 2013
I`m wondering where are all those millions of houses which were on sale a couple of years ago? All bought? Or still on banks` balances or Fed bought them out? 12 1 Reply

NYCdude88 Olga Gouroudeva
March 14, 2013
Still sitting with deadbeats living for free, otherwise the banks would need to claim losses. Instead all the MBS are being sold to the taxpayer at full value. Once the banks get rid of all the toxic waste and transfer it to the gov, there will be a crash of epic proportions since banks wont care anymore 11 1 Reply

Olga Gouroudeva NYCdude88
March 14, 2013
Thank you for replay. So, all those houses are hidden from the market. I do not expect anything good from this optimistic new permits numbers. 6 Reply

Starfly Olga Gouroudeva
March 14, 2013
The houses that are being built are being sold... that multiplies the jobs added by not just construction but household goods spending. The excess shadow inventory, if present, is not having a very adverse effect on the market. 1 Reply

Olga Gouroudeva Starfly
March 14, 2013
Thank you. I am thinking that the shadow inventory does not effect the market only because the market is not aware about this inventory. But if it was the picture would be much less optimistic. 5 Reply

Eric Mooney Olga Gouroudeva
March 14, 2013
There was an article released today that due to recent laws foreclosures have been held up which is creating an artificial shortage in the housing supply which in turn are driving prices up faster than they normally would be increasing. 0 Reply

Guest
March 14, 2013
Out-gassing of all of the toxic fumes from the building materials: New "You`ll spend an average of $18,000 on a new roof" What the heck? Our roof was $3,000, how big are people`s houses? 8 2 Reply

Водолей Guest
March 14, 2013
Still, why don`t they build those roofs from a long-lasting material such as clay, slate tiles, etc? No, they build them from crappy Asphalt! 5 Reply

JFCanton Водолей
March 14, 2013
Ease of installation (same reason as the sketchy construction; I love seeing how they frame windows in renovations in my neighborhood). And habit too. For flat roofs, the industrial rubber stuff probably makes the most sense, but residential roofers are familiar with tar, so that`s what they use and just keep building it up and up and up. And somehow this isn`t assumed to be a structural problem... I pulled 2" off much of my roof while replacing it. 1 Reply

Водолей JFCanton
March 14, 2013
Ease of installation? Makes sense only if you have to re-install it every 5 years. Like crappy Asphalt. And habit too? What habit are you talking about? Habit of spending extra $$$ every 5 years on a new roof? Show me people with those kind of habits? No, they just want you suffer forever with those maintenance, replacement costs. Forever! 4 Reply

Guest Водолей
March 14, 2013
"Ease of installation? Makes sense only if you have to re-install it every 5 years. Like crappy Asphalt." My last asphalt roof lasted 25 years in the northeast. 5 1 Reply

JFCanton Водолей
March 14, 2013
Habit of the people offering the services. And probably initial cost is a factor: even faux slate is going to be more material cost than shingle. Suppose that the shingle roof is $5K cheaper. A lot of people are going to buy the cheapest even if it`s going to be the least durable. When it comes to roofs, people will also re-cover rather than re-do. On mine (where I did replace asphalt with EPDM rubber), it probably took me five times as long to remove the old covering as it did to install the new. If a homeowner is paying a contractor, you know that`s going to cost a pretty penny. 1 Reply

xpm Guest
March 14, 2013
Depends on what type of roof also. We changed new roof a couple of yrs ago---spanish tile. The cost: 29k. 1 Reply

Tony Manero Guest
March 14, 2013
My 42-inch GE refrigerator is $8,000, assembled in Kentucky. Your roof must have been installed by illegals for that price. 0 Reply

Guest Tony Manero
March 15, 2013
To each their own but why in the world would someone pay $8,000 for a refrigerator? I guess it is fun to show it off when people visit your house? 7 Reply

Водолей
March 14, 2013
New houses? Build from crap (AKA pressed particles) on the 1/4 acre lots? The ones that are built by cheap illegal labor force and which require constant maintenance $$$ right from beginning? I think in our days if you want a quality house - you would have to build your own! 4 1 Reply

JFCanton Водолей
March 14, 2013
This isn`t really a new problem. The back two joists on my c. 1900 rowhouse---which were spaced 4` apart---were made of 4x4s, the last of which was CUT DOWN to enable a flat ceiling below. And somehow that held up (mostly on an interior wall) for 100 years... probably not a benefit that we would enjoy with bad modern construction, as much as the physical materials have been reduced. Construction by someone with an incentive to minimize the cost of labor is always going to be a bit cheap. 2 Reply

kevin tate JFCanton
March 14, 2013
Nothing like what`s been constructed since 2000...... 0 Reply

kevin tate Водолей
March 14, 2013
Can I get an Amen!!! Most folks have no idea, just how crappily built are homes constructed during 00`s........... 1 Reply

JFCanton
March 14, 2013
I`m not buying the energy numbers listed at the bottom here ($710 for my area as of 2006). My boss has a home built in 2006---large, with a third story, but not atypical for new construction---and the first year he complained about paying $600 a *month* to heat it with a heat pump. 2 Reply

Megan JFCanton
March 14, 2013
Those numbers are meaningless. They can vary a lot from house to house. What I found makes a big difference is aggressive thermostat management. I know so many people who complain about their large utility bills yet leave their house at constant temperature all day and all night. 2 Reply

Водолей Megan
March 14, 2013
Yet, regular constant temperature all day and all night should not cost you $600 a *month* 2 1 Reply

Megan Водолей
March 14, 2013
What area? What size house? What orientation? (Windows facing south and so on). Plus I`ll bet you the $600 bill doesn`t just include heating. What about appliances, lighting, and so on? I have lived in parts of the country where a badly situated 3000+ sq ft house could easily cost $600 in utility bills in the winter months if you`re not careful. 3 Reply

Водолей Megan
March 14, 2013
Windows facing south? LOL Whatever! Do you have windows on only one side of your house? 0 2 Reply

Megan Водолей
March 14, 2013
No but how many windows you have facing south, what kind of windows they are, etc ... The orientation of your house as well a the presence of trees that might shade the house, the existence of an underground basement...... There are a lot of factors that influence thermal exchanges between a house and the outside. 2 Reply

Водолей Megan
March 14, 2013
And by the way, what "windows facing south" has to do with the heat? The Sun raises on East and sets on the West. 0 1 Reply

capjack Водолей
March 14, 2013
Solar radiation. Assuming your house is rectangle with more and larger windows on 2 sides (like a ranch) and not a square box, window orientation makes a difference. If in a cooler climate face the house east or west so the sun will shine on the longer side with major windows in both the morning and evening. If in a hot climate face the house either north or south so the sun never shines directly into the windows. 3 Reply

Водолей capjack
March 14, 2013
Its a bit funny to see how people who are willing to waste 30 years (just think about it - 30 years !!!) of their lives and pay $500K for a box of pressed particles worry about "solar radiation" and "windows orientation". it reminds me a situation when slaves take care of the quality of their chains. 0 2 Reply

Megan Водолей
March 14, 2013
In communist russia, chains take care of you. 4 Reply

Водолей Megan
March 14, 2013
In communist USSR we never had millions of homeless people while there are empty houses sitting on so called "market". 1 2 Reply

Tony Manero Водолей
March 14, 2013
The big cost is land; they don`t make land anymore. Comparison to slaves ? For most people , it shelter and home. You`re babling. 1 Reply

Водолей Tony Manero
March 14, 2013
500K for a 1/4 acre of land? Only if it has a gold mine on it! Do you really think that is costs so much? Now Forget about money, think about time you have to spend to deserve that shelter? 30 years!!!!!!!!!!!!! And even then try to miss paying your property taxes ones and you will see who really owns our shelter. 1 Reply

JFCanton Водолей
March 14, 2013
If you`re gonna pay $500K for the box, you might *have* to worry about energy efficiency, right? Developers NEVER lay out projects according to optimal sun orientation, though (at this point, any windows at all on the sides are something of a premium). This kind of question is for people who haven`t picked the development yet, or who are buying their own largish parcel. One group we better not hear complaining about this: those who bought two-story living rooms. -Real- quality in construction is something that was bound to suffer when prices went up the way they did. The industry age-tests materials as thoroughly as possible; it`s not like the pressed chips are junk. And we don`t have access to mass quantities of wood that`s as good as old frame construction used. But we don`t really know how these new houses are going to age in reality, which accelerated aging can`t duplicate perfectly. If we`re tearing down postwar stuff now, we will probably be tearing down boom-era stuff in 50 years; the difference will be that MUCH more value was tied up in the boom-era stuff. 1 Reply

Водолей JFCanton
March 14, 2013
“And we don`t have access to mass quantities of wood that`s as good as old frame construction used” Yeah, right. The richest country that dominates the whole planet doesn’t have access to mass quantities of long-lasting material to build darn HIGH QUALITY shelters for its own citizens? Why necessary wood? Ever heard about brick? Concrete? We are living in the 21st century, when we can find a more practical and lasting material, than just plain wood or pressed cardboard particles. How come they find good material to build skyscrapers? Face the truth: they do want you to suffer forever with low-quality shelters, so you have a constant headache to repair, repair, maintain, maintain…. 0 Reply

JFCanton Водолей
March 14, 2013
The materials used for individual houses are going to be a good cheaper than the ones used for skyscrapers. That`s unavoidable, at least on the mass market. You can get better stuff, but you have to pay for it. Somebody shopping in a subdivision probably wants to pay for the things he can see, like nice countertops, and isn`t so much worried about the permanence of the construction beyond the period of his ownership. Maybe this is an American trait; maybe we have to be around longer before we figure out that this is a problem for our future generations, or at least a missed opportunity. Personally, I would choose brick if I were building a new house. If I`m going to undertake that effort I want it to be standing in 300 years. 2 Reply

Водолей JFCanton
March 14, 2013
"The materials used for individual houses are going to be a good cheaper than the ones used for skyscrapers" True, and it will continue that way because seems like nobody cares. Noone even talks about finding at least something in between. Something that doesn`t break and produce a hole if I kick it with my foot. Something to justify those inflated idiotic prices. "Maybe this is an American trait" No, this is an American GREED. And this greed is so strong, that major population in this country doesn`t realize that their greed already doomed this country. Because of this greed people lost their common sense, so they are so enthusiastic with going into the 30-year mortgages to borrow a lot of money in order to "invest" into a depreciable cardboard box (or shelter, call it whatever you like). That way those lunatics get an illusion that they "build equity" by living in a lifetime debt, by working overtime, then staying in car traffics just to get "home", eat some microwave GMO crappy food and sleep. So the next day they can do the exact same thing over again. And when the weekend comes - they spend them mostly at Home Depots (repair and maintenance), and by TV to watch stupid football. 1 Reply

Megan Водолей
March 14, 2013
Have you ever seen what happens to a brick structure in an earthquake? I`ll take wood over anything else where I live. You`re obviously as inept at seismology as you are at thermodynamics. 1 Reply

JFCanton Megan
March 14, 2013
It`s really the potential lack of reinforcement that makes brick dangerous in a quake. I suppose frame is better in a severe quake because there`s less weight to fall on you, but then (as SF and Tokyo found out), wood burns. I think real brick construction would hold together fine, but for a long time actual brick structure has been a custom or niche thing. Usually it`s veneer. My rowhouse is interior and has what amounts to real brick construction: beams into pockets. But when the end unit next door was renovated, they completely rebuilt the back and exposed side walls because the originals weren`t tied in properly. 1 Reply

Водолей Megan
March 14, 2013
Seismology? This is a MYTH that they use to justify building crap and selling to people for hundreds of thousands of dollars. They build skyscrapers in seismic zones. Tokyo is full of them. 0 Reply

JFCanton Megan
March 14, 2013
Naturally. This individual does use the automatic thermostat, but also keeps the heat up way higher than I would. To look at it another way: DoE is saying that new standards will allow the cost of heating an average new house to be about the same as the cost of heating my interior rowhouse to 60F. Possible? Certainly. But that suggests expensive materials. The idea of a 50% reduction in cost itself suggests expensive materials. 1 Reply

Guest JFCanton
March 14, 2013
Sounds like some people I know who have their heat at 75 degrees in the winter and AC at 70 in the summer. Can`t they decide at least on a constant temperature? 3 1 Reply

disqus_Im4OiQpCsG
March 14, 2013
Buy now regret later ! 4 2 Reply

Tony Manero disqus_Im4OiQpCsG
March 14, 2013
Any your plan when you`re 65 is renting from a greedy landlord ? 1 Reply

disqus_Im4OiQpCsG Tony Manero
March 14, 2013
Pay a greedy landlord or a greedy bank ! 0 Reply

Chad Ladwig
March 14, 2013
Should have done it a year of ago 1 Reply

Blair Kuhnen
March 20, 2013
Nice article and I agree with the general conclusions. I work with homebuilders, but only recently bought a new home. This was our seventh home and first new one. I can share one thing I did not even consider and should be part of and new vs. used discussion. That is seller attitude. My builder wants me to be happy and has another 10 homes to sell in the subdivision. They were willing to bend over backwards if necessary to ensure we were in good shape. Maybe I just lucked out with a good builder, but I think my experience not atypical. It was refreshing to be in a position where, even after closing, the salesperson and others were still trying to make us happy. One other observation is that in a favorable housing market (we are in Austin, TX), there seems to be little premium to be paid for new homes. In weak markets, there seem to be resale bargains. Happy hunting. 0 Reply

kevin tate
March 14, 2013
Just say NO, wait till after the second housing bubble has hit.....Let the Hedge funds eat dirt. 0 Reply

Ryan Salo
March 14, 2013
With no money down loans still available through USDA and low down payment through FHA, now is an amazing time to buy. Let me know if you need any questions answered about the process. Ryan Salo






Start a Conversation - Add Comments

Your Comment: ( Please enter all fields and security code. )

Name:
Email:
Website:
Topic:
Comments:
 
Word Verification:
 

Latest Comments

Mortgage purchase applications have been dead - stock_investor | Dec 17, 2012 01:06 PM ET More false optimism, this is a nation of uneducated social check consumers. Unless these houses are going under section 8 no one will be buying them.
... - by income5c

US Mortgage Applications Rise in Latest Week; Rates Fall - TxChristopher | Dec 12, 2012 09:14 AM ET We had absolutely no problem recently getting financed to build a new house, contrary to what most seem to constantly say. If you have good credit and all you... - by 3b2bmo

Ask yourself this before you buy a house - Bill Williams Mar 1, 2013 Homes have rarely been more affordable. Home affordability index graph from the NAS compiled by the St. Louis Fed. A 100 means that median income family can afford a ty... - by bob245

Housing is still in the doldrums - RadicalModerate | Feb 27, 2013 07:50 PM ET Out here in a midwestern red state, housing is still in the doldrums and will probably stay that way for years. We will soon have a major defense contractor... - by JT84

Banks Told To Review Their Own Foreclosures - countdown_to_facebook_ipo | Feb 13, 2013 08:30 AM ET Sharks being asked to report on other sharks. Priceless.

PINKFLOYD1 | Feb 13, 2013 08:34 AM ET The banks will get out of all this ... - by Fish24



Home shopping: Is buying new a better buy?

Real Estate Agent Directory

Are you looking for a real estate agent in your area? At housing news blog, you can search for your local realtor and real estate service by using our agent search features.

Real Estate Agent Directory

Get listed!

Are you a real estate agent? Get listed for free with us! Complete a real estate agent profile form and get listed in a few days. Click on the link below to get started!

Free agent profile!



Warning: Unknown: open(/home/content/14/5809414/tmp/sess_kmqkvgvu7i1a1mj122kiu0hg92, O_RDWR) failed: No such file or directory (2) in Unknown on line 0

Warning: Unknown: Failed to write session data (files). Please verify that the current setting of session.save_path is correct () in Unknown on line 0