Is a Newer Home or Classic Construction the Better Investment?
When you set out to find your dream home, it can be very tempting to shop primarily for things like location (very important), square footage, number of baths and beds, and of course, the price. When thinking about what else you are looking for in your next home, it can also be tempting to consider desired amenities like a fireplace or a gas furnace, as your second tier of criteria.
Rarely do most prospective homeowners consider what return on investment (ROI) they are looking for in a home. If they do bring ROI into consideration, they are most likely to consider it in terms of price, the market, and the home’s location.
One big component of a home’s potential ROI, according to experts, is the home’s age and general condition. So, which is the better investment – an older home, or newer construction? If it were that simple, builders would be tearing down all the older homes to build new ones. So, here is the case for each, and a potential way to have everything you want, while still protecting your investment.
The Case for New Construction
Most of the case that can be made for newer construction bringing the highest return on investment has to do with how new the systems and materials in a new home actually are. The logic here is that a new home will have all new plumbing, all new and up-to-code electric wiring and fixtures, all new heating and cooling systems, and so on. It will also be made of brand new, unworn materials.
The case against new construction generally has to do with two things – the quality of the materials and components used to build and finish the home, and its architecture. The old adage “garbage in-garbage out” applies to a considerable amount of new construction, and a poorly constructed, cheaply banged together, cookie-cutter design of a home, no matter how new, will not shelter your investment as well as a properly maintained older home.
The Case for a Vintage Home
The case for vintage homes doing a better job of retaining and building equity primarily has to do with two features of older homes. First, they were typically made utilizing better quality materials than are affordable these days, and often were built with a better degree of craftsmanship than most of us can now afford. Secondly, they have architectural style, generally speaking, that is somewhat timeless and likely to continue appreciating in value.
The case against older homes is dependent on two things, as well. One, if the home has not been updated to reflect contemporary tastes in floor plan and flow and has not had its systems updated as well, then it will likely not provide a great return on investment. Secondly, if the home were built using cheaper materials, as is the case in many quickly built subdivisions from decades gone by, then it will likely have little architectural value and require upgrading to preserve its value.
The question isn’t really whether to buy new or vintage construction if you’re looking for the greatest ROI. The question is more nuanced than that. New construction completed using solid materials and reflecting some architectural style can provide just as good an ROI as a well-maintained vintage home with updated components. With that in mind, the goal is to buy either a future classic, or a timeless one.