A home where the roof does not leak and the exterior does not need painting. With many existing homes Americans buy comes a punch list of upgrades and repairs. That is likely why so many want a new home, one in which they will be the first resident. The catch for developers is that many people will not pay for a home in which no one has lived before.
Source: Thinkstock
According to a new study from real estate research firm Trulia:
For the same price, 2 in 5 of Americans (41 percent) would strongly or somewhat prefer to buy a newly built home instead of an existing home. Just 21 percent strongly or somewhat prefer an existing home, while the remaining 38 percent have no preference. However, new homes cost more. Trulia calculates that new homes built in 2013 or 2014 are typically priced 20 percent higher than older homes of a similar size and location. Among those who strongly prefer a new home, less than half — only 46 percent — are willing to pay at least 20 percent more to purchase a new home versus a comparable existing home.
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The primary reasons for the preference are indeed modern features and the ability to customize. People can walk into exactly the house they want. New home developers have to risk that they will have to discount the homes they have built, or hold them and pay banks for months based on any loans they have taken out for construction.
Areas with the most single-family construction vary sharply, mostly by region and size of market. The top markets for single-family home construction are in the Carolinas and Texas. The markets with the least are in big cities, some of them older industrial cities such as Detroit and New Haven.
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Top 5 Housing Markets with the Most Single-Family Construction |
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# |
U.S. Metro |
New single-family units permitted in 2013, per 1,000 existing housing units |
|
1 |
17.2 |
|
|
2 |
15.0 |
|
|
3 |
12.7 |
|
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4 |
12.7 |
|
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5 |
11.9 |
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Source: Census; Among 100 largest metros |
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Top 5 Housing Markets with the Least Single-Family Construction |
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# |
U.S. Metro |
New single-family units permitted in 2013, per 1,000 existing housing units |
|
1 |
New York, NY-NJ |
0.4 |
|
2 |
0.8 |
|
|
3 |
1.0 |
|
|
4 |
1.1 |
|
|
5 |
1.3 |
|
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Source: Census; Among 100 largest metros |
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