Newly built homes usually cost about 6% more than older ones. For example, the typical price for a new home is $811,000, while an older home goes for around $768,050, based on research by CoreLogic.
This 6% difference has been pretty steady since 2002, although there have been times when it was higher, like during 2002-04 and from mid-2016 to mid-2020. There were also times when it was lower, even going negative (less expensive) between mid-2009 and mid-2011 during the Global Financial Crisis.
Kelvin Davidson, Chief Property Economist at CoreLogic, explains that new homes usually cost more because they need less fixing up and are often better quality with things like better insulation.
He also says that construction costs have gone up in recent years, which might be why new homes are pricier. Plus, lending and tax rules have favored new homes, making them more attractive to buyers.
However, Davidson predicts that the price difference between new and old homes might get smaller in the next year or two because building work is slowing down and more older homes are being sold. Also, changes to tax rules will make old and new homes more equal for investors.
In the end, whether new homes are a little or a lot more expensive, we need more of them to keep up with the growing population and make housing more affordable. If you're looking to buy a home, whether new or old, I can help you with financing. Just get in touch with me before you start your search.