Buy or build? Market observers say both have advantages and disadvantages

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As inventory of existing single-family properties in the Spokane area’s competitive housing market has dipped to record-low levels, more buyers are considering the option to build their own homes.

“There’s a gigantic influx of people wanting to build new homes due to lack of existing homes,” said Corey Condron, CEO and owner of Spokane-based homebuilding company Condron Homes. “We are seeing a very high percentage of out-of-area buyers and they are coming from the I-5 corridor.”

Building a new home gives buyers from Washington’s West Side and others the ability to customize their budget, features and amenities, Condron said.

“You don’t have to settle. Your budget is all you have to settle on. You get what you want, and get to pick out all the colors and amenities,” Condron said. “That’s a big advantage of building a new home.”

Condron said maintenance expenses are typically lower for new construction, compared with existing homes that could require more upkeep.

“You are getting a brand-new home. You are 20 years down the road before you are looking at major expenses,” he said.

New construction provides buyers with an array of options, but the homebuilding process brings its own set of challenges, such as increasing costs for land, lumber and labor.

Framing lumber prices have jumped more than 200% since April 2020, causing the average price of a new single-family home to increase by more than $24,000, according to the National Association of Home Builders.

“We are also up against a very slim inventory of land to build on … that’s another factor constricting us,” Condron said.

Homebuilders are wait-listing clients for new construction because of extended building times caused by a shortage of skilled labor and the pandemic’s impact on supply chains, Condron said, adding his company is transparent with buyers about building time frames.

The nationwide median sales price of new houses sold in February was $349,400, according to data from the National Association of Home Builders. March data was not available at deadline for this story.

Although building a new home takes longer than purchasing an existing home, buyers may be able to avoid bidding wars occurring in the existing single-family home market, Condron said.

“If you can find new construction, there’s a chance you won’t be competing with as many people. The downside is you have to wait to get your home built,” Condron said, adding the homebuilding process can take more than a year.

While it could be beneficial for some buyers to build their own homes, it might make more financial sense to purchase an existing home for others.

The median closing price for single-family homes on less than 1 acre was $341,750 in March, according to data from the Spokane Association of Realtors.

“Existing homes are typically going to be a little bit less money per square foot,” said Eric Johnson, president of the Spokane Association of Realtors. “A lot of times with buying an existing home, you have the landscaping included. The window coverings are there. There tends to be more things included in a resale home versus new construction.”

Installation of fencing and landscaping could potentially add 5% to 10% to the cost of a new home, Johnson added.

A key benefit of purchasing an existing home is buyers can close on the property within 30 to 60 days, compared with waiting for more than a year to build and move into a new home, Johnson said.

Condron encourages buyers to research both options to figure out whether building a new home or purchasing an existing property is right for them.

“It doesn’t hurt to test the waters and see what’s out there,” Condron said. “New construction will always be there. If you find an existing home, great. If you don’t, take the step to see if you can build.”

“It doesn’t hurt to test the waters and see what’s out there. New construction will always be there.
If you find an existing home, great. If you don’t, take the step to see if you can build.” Corey Condron CEO and owner of Spokane-based Condron Homes