The main questions I would hope to see answers to:
- What were the worst parts of the process? Any regrets?
- What made this the right decision for you? Before… and after?
- How this compares financially to buying an existing house - if things are otherwise comparable?
- How this might compare to buying a “good bones” house and doing a lot of renovation to update it?
A little background if you’re curious. We have a 30 year 2.99% mortgage. But… life circumstances have changed, and there are more important things than money. We’re trying to move significantly closer to my immediate family. My in-laws were 20 minutes away, but moved to their dream retirement home hours away. We’re going the other way towards where my dad and siblings live. And as a social bonus, it’s also where I used to live, and have a mildly frozen social circle waiting there to thaw and remake. As of this post, we’ve seen (I think) 27 houses, and put offers on three, but have yet to come to terms. The houses we look at are either really nice, and accept an offer by Thursday when we plan to see it Saturday… or they sit on the market for months, and we go see them and find out why! Perhaps the biggest frugality challenge is that we’ve spent some time, money and sweat updating this house, and we don’t want to do that again immediately upon moving. We want to focus on relationships and adding a new canine family member. But we would like a “reasonably” updated home as far bathroom / kitchens are concerned.
This weekend, we’re going to start seeing some “new house” developments and see if it could be a good choice for us. Of the homes we’ve put offers on, two were very nicely updated, and the third was built 6 years ago, and great quality (but the lot itself was kind of a mowing maintenance nightmare, so I think we dodged a bullet when it didn’t work out.) We don’t know for sure what our current home will sell for, but we estimate a bottom of the barrel floor of $550k, with optimism it’ll sell close to $600k. If we spend $100k less than this sells for, our ~6.5% (ish) fixed rate 15 year mortgage will be readily doable, and we won’t be spending a great deal more in mortgage interest. The area we’re moving to is generally lower cost of living in comparison, so that’s one saving grace. But the housing market is much friendlier to sellers, unless you set your standards for housing very low. Homes in the $250k budget tend to missing all appliances and floors. $300-350k typically gets you an OK home in a mediocre neighborhood with largely old bathrooms and kitchens. $400-450k starts to approach the sweet spot, with some compromises. Once we hit $500k and above, there are occasionally some really nice houses with OK property and locations, but they also get multiple offers and sell in the opening week. There are strangely almost no houses in the $550k-700k range, and then you start to see mansions with 1+ acre lots. We kind of wish we could have a modest ranch house on 0.5 - 1.0 acres, but we’re flexible on land as long as it’s good for a dog!
Most new houses are in developments with 0.25-0.4 acres, starting at $380k-450k depending on how ideal the location is… but quickly ramping up towards $500k and beyond once you account for a sun room, granite countertops, tile showers and decent floor options. (Though I don’t know any of this for sure yet - we’ll hopefully learn a lot this weekend!)