Build, Buy or Bust Out the Blueprint
By Ed Carroll
When it comes to choosing your next home, everything really boils down to three true options.
You can build a home – if you have a plot of land.
You can buy an existing home – but the market will dictate what is actually available to you.
Finally, you can remodel the home you own – but there are potentially structural limits to what you can do to your home – not to mention the inconvenience of having construction.
All three choices are valid. All three have distinct advantages and disadvantages. While your budget will assuredly factor into your decision, if all three paths are open for you, it’s worth your time to consider each.
So, where is the best place to start? According to some builders in the Cleveland area, it depends on what your goals and reasons are.
“That’s a constant question that I get, depending on the lower price points of my homes,” says Andrew Gottlieb, president of Keystate Homes in Bedford Heights and president of the Home Builders Association of Greater Cleveland. “Those tend to be first-time home buyers. You know a lot of my buyers that are doing my custom homes, those are going to be a lot higher (in cost).
“So, people who are maybe buying their first house, their goals are to have space, maybe for relatives, and they are looking at it living there for the next 20 to 30 years. (For older buyers,) we should be thinking about doing ageing in place, for example we see a lot of homes with elevators. We’re doing homes with first floor master (bedrooms). And we’re trying to look at some of the things that maybe will help them in the future as they age in place.”
Rodney Simon, owner of Simcon Homes in Orange, had similar sentiments on the choice.
“So, depending on your age demographic, it really depends on where you stand as far as what you want to put it into remodeling, building or buying,” he says. “Building is great even though costs are high, but the problem is we don’t have vacant land. … Now in today’s economy, … it’s the scarcity of land. If you want to be in Orange, Beachwood, Pepper Pike or something like that, you can end up in a teardown, which are going plus or minus $400,000 today. It becomes very expensive.”
Gottlieb highlights another benefit of newer homes: they’re far better not only for the environment, but also energy costs.
“I think the advantage of building a new home is you’re going to have the latest technology,” Gottlieb says. “It’s going to be energy efficient. It’s going to have the latest trends, certain things you can’t do with a remodel. A good example is 10-foot ceilings are very popular in new homes.”
But Gottlieb also points out an advantage buying has over building.
“By buying your next home, your advantage is existing inventory,” he says. “It’s going to be more readily available. If you’re for something historic or timeless, you’re not going to get that with a new build. And that’s your mid-century modern, that’s your classic ranch or split-level that you see in Solon, Pepper Pike, Beachwood. You just won’t get that in a new home.”
Simon says many people he speaks with are turned off from buying due to interest rates. He said the current 30-year interest rate is around 7%, which he also said was more of a normal rate than what people were used to in the 1990s.
“A lot of people just don’t want to go into a buy,” Simon says. “We’re so used to having the low rate, which we’ve all had for years. … We’ve been very spoiled over the last few years of having a 2-3% interest rate. It really took people by surprise when they have to pay a 7% interest rate.”
He also says this concern generally applies more for younger buyers compared to older ones.
“A lot of older people are staying in their home now, and they have the cash for the remodeling or are using an equity line,” Simon says. “However, they’re paying for it. It really isn’t that much of a strain on them, because they can generally afford it. But for that first-time home buyer in that younger generation, what I see with them is they’re purchasing the South Euclid, University Heights, Shaker Heights, that starter entry home. The problem they’re running into, is that this generation wants everything (already) done. They want everything, even though it’s their starter home, want a new kitchen, want new countertops, they want new appliances.”
Simon says another issue is that those types of homes are difficult to find and are often overpriced.
“When these younger generations start looking beyond those items, they’re seeing that these houses that have been flipped aren’t as great of quality as they thought they were,” he says.
Gottlieb says issues like these often make people turn to the third option – remodeling.
“A remodel is a little bit on the best of both worlds,” he says. “You don’t get the new technology on the structure as much as you would on the structure of a new build. But you get a lot of the remedial effects of technology. … So, you might get a remodel that you’re going to do a basement waterproofing system, so you don’t have weak basements that you would see it in an older home. You get the benefit of the new trends and styles of finishes. That’s the lipstick. That’s the glitz and glamour of the tile, the cabinet sand the countertops. You get to make it your own.”
Gottlieb says other benefits of a remodel are that the house is already settled, unlike a new home, which needs time to set. You can also open up certain walls and change the floor plan – to an extent. He notes the structure is one thing you can’t change with a remodel.
Simon says the clients he helps with renovations often choose the option because it just makes more sense for them than the other two choices.
“We’re getting involved into a lot of whole house renovations and remodeling,” he says. “A lot of bathrooms, kitchens, great rooms, basements, outdoor living spaces. People are thinking, ‘Hey, I have a great lot. … I think I’d rather take my money and stay in my house and possibly put half-a-million dollars into it and really get everything the way I wanted in my existing home.’ The downside to that is, you’re disrupted for a year of your life.”
However, he says there is potentially an answer to make the disruption easier.
“People are renovating their houses in stages now,” Simon says. “They’re having someone like us come in and remodel their master bathroom and bedroom, possibly gutting the whole thing. They don’t have kids living in the house anymore, so they can move into a different suite in their house. And we can take apart the bedroom, the closet, the bathroom and really redo it, top to bottom and give them exactly what they want at this point in their life.”
Ed Carroll is a freelance journalist.