In this episode we discuss the costs and benefits of building a house vs. buying. We also look at how resale value plays an important role.
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Hello and welcome to this edition of Homebuyer's School. I'm our your host, Karl Yeh. This is Cory McDonald with Brookfield Residential, Community Manager.
Today the question we're going to answer is:
What is the cost of building your home versus buying your home? and what are the positives and negatives?
Absolutely. I think to start off with, with building your own home there's I think a smaller market.
Benefits of building your home
We're typically looking at larger pieces of land, more expensive estate style homes where you're buying a piece of land and then independently contracting out builders and trades to build your dream home.
The benefit to this is they're usually choice locations, so we're looking at just outside the city, on bigger parcels of land with great views and the ability to customize at that point.
So you get basically whatever your heart desires and the style of home, your dream home typically, and putting in slides from your upstairs to your downstairs or the full height windows to the ceilings.
Things like that commonly is the benefits of going in that route.
Benefits of buying your home
I think most buyers are going to fit into the realm of building with a current builder/developer.
Most of the land is already owned by developers and they're selling that land off to builders who are able to buy larger parcels of that land and have the credibility and the background to do that properly.
I would say that the benefit is obviously the price, because these builders typically have a little bit more of a buying power, the amount of buildings that they're doing ...
They're buying inventory for more than just one or two homes typically, so they get costs down for the cost of the trades, cost of supplies, and even the efficiency, so even building times are a little bit quicker as well, especially as we get into the more price sensitive homes.
If we're looking into the condos, the town homes, or even smaller single-family homes, you're not going to be able to do too much customized buildings from the ground up if you're looking at finding something affordable in that price range, so the biggest benefit of that is the affordability.
I think second to that is because these builders have been doing it for so long, or a little bit longer, they have the experience of what functionally works in a home with professional design teams to know there's a purpose behind why certain floor plans are doable, and why others maybe don't make sense.
I've seen it a couple of times when people do make specific customizations on their home and then they move in and they're really excited, and then they decide it doesn't work.
Yeah. It reminds me of that Simpsons episode where his brother asks him to build a car, and then the car turns out to be no one in the market actually wants it except for him.
I think that's one thing that you need to take a look at too, is the resale value. If you build something that's crazy but fits you, eventually you're going to have to resell it.
Or you die and somebody inherits your home, and they're either going to have to live with what you chose or they're going to have to try and sell it, right?
So 100% is those builders have that in their mind. Part of that lifestyle that you're living, what the seller of the home or what the builder is trying to do is we're a service industry ... We're trying to service what fits your lifestyle, the style of home, the community that you want you and your family to live in.
Part of that is also the re-saleability of your home in the community, and if we have a bunch of those Homer cars as our houses, that's going to play into how you're going to be able to sell the home down the road too.
Right. Let's say, for example, if you are planning to build your own house, and I know you mentioned that developers would sell it to builders. Can you actually buy it from a developer?
Let's say I want that specific ... Just that little piece of land. I want to build my dream house in that specific area.
Can you go actually like to a developer and say here's my money, I want to own that little parcel?
Some developers do that, and again we are looking more specifically like estates or that area, or outside of the city more specifically.
Generally no if you're trying to find something in the middle of the street that's already predetermined to be with Builder A. If you go to talk to the developer maybe they do, but I haven't heard too many stories of that.
Awesome. Thank you very much for that information. Thank you very much for joining us, and we'll catch you next time.
Let us know if you have additional home buying questions that we can answer by submitting them in the comment section below.
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About Cory McDonald:
Cory has been working for Brookfield Residential for over 5 years and has had the opportunity to