The cost vs. benefit of buying a new home in Las Vegas

Most of the home buyers that we have worked with have one overriding concern when looking at homes: The price.

As a general rule, you’ll pay more for a newly-built home than you will if you buy an existing home.

Nationwide, for example, the median price of a newly-constructed home was $330,800 in the third quarter of 2019 according to the U.S. Census Bureau.

The median price of an existing home was $274,000. That’s a $56,800 difference, which is slightly more than the so-called 20 percent “new home premium.”

Keep in mind that the list price of the new homes is for the basic model and doesn’t include upgrades, which can cause the price to rise significantly.

One final note when it comes to the price of a new home: Negotiating on the price, an option when you purchase an existing home, is typically not an option available to you when you purchase new construction.

A mortgage payment is comprised of the loan’s principal, interest, property taxes, and homeowner insurance. While all aspects of the payment should be considered when purchasing a home, we’ll take a look at the two most significant.

Property taxes

Taxes levied on an older home are typically lower than those for a new home. But, that doesn’t tell the whole story because, for the first year to two years, taxes on a new home may be significantly lower.

Why? Because current-year taxes are based on the value of a home as of January of the previous year.

For example, if a home was completed in June 2020, the taxes for the property will be based on its value in January 2019. Most likely, at that time, there was no home, just a dirt lot. So, for the remainder of 2020, the homeowner would pay property taxes based on the value of a plot of dirt.

In 2021, the homeowner will pay taxes on the home’s value as of January 2020. Remember, the home wasn’t completed until June, so the property’s value was still quite low, ensuring another year of low property taxes.

This difference can be significant, possibly saving the new homeowner up to $250 a month for up to two years. We aren’t tax professionals, though, so this is an issue to run by your accountant.

Consider that fourth “leg” of the mortgage payment — insurance. The new home definitely wins when it comes to homeowner insurance, generally being less expensive to insure.

The primary reason for this is that, with newer and more cost-effective building methods, new homes cost less to rebuild or repair.

There are additional factors to consider, however. These include:

• The home’s location – homes built in areas with weather risks (floods, wildfires, etc.) will cost more to insure than new homes located outside these areas.
• Proximity to a fire department – insurance rates are typically less for homes located in close proximity to a local fire station.

No, home maintenance costs aren’t a part of a monthly mortgage payment, but they do factor into comparing the cost of owning a newly-built home vs. an existing home.

Although new homes can have problems, many builders offer a home warranty. As a general rule, you can plan on almost a decade of repair-free ownership when you purchase a newly-built home.

One aspect of the new-home purchase not often addressed is the home’s energy efficiency – a true money saver over the purchase of an existing home.

New homes are built with newer, better insulation and energy-efficient windows, for example. This significantly cuts the cost of heating and cooling the home.

As homes age, the need to repair things happen more frequently. This is why older homes in a managed community, such as townhomes and condos, typically have higher HOA fees.

There are a number of other benefits to purchasing a newly-constructed home, including that you can choose the floorplan that best fits your family’s lifestyle, you can choose the location within a neighborhood and, if you can afford it, you can choose upgraded features for the home.

Don’t believe anyone that tells you a Realtor isn’t needed when buying a new construction home. It’s the exact opposite! You will need a professional and licensed Realtor to represent your side of the transaction. The new home builders on-site agent is not your protector so get that out of your head now. That agent’s salary, commission, and/or bonus is based on selling you something or more of something. Having your own Realtor means you have someone on your side throughout the entire build process and builders don’t tack extra cost into building the home for you because you are represented by a Realtor. If you’re interested in viewing newly constructed homes, reach out to us. We’re happy to help you avoid some of the more common pitfalls in the process. We recommend our Preferred Partner: Residential Realtor. This team of Realtors has been buying and selling homes in Las Vegas since 1974. These folks are good and you will benefit by using them.

Thank you for reading our post, “The cost vs. benefit of buying a new home in Las Vegas.” For more Las Vegas home Buyer tips, information on moving to Las Vegas, Las Vegas real estate market news, information on Las Vegas homes for sale, buying a home in Las Vegas, or general real estate information please visit our website www.lasvegasrealestate.com.