2 New Construction Cost and Value Myths, Debunked

Inventory shortages and underbuilding explain why there aren’t more available new construction homes, but why isn’t there more demand for them?

According to the Zillow Group New Construction Consumer Housing Trends Report 2018, 38 percent of total buyers include new construction among all the home types they consider. Only 11 percent of total buyers purchase a new construction home.

To better understand why, Zillow Group conducted a supplemental study with existing home buyers who seriously considered new construction during their search. Between a new construction home and an existing home, respondents identified new construction as the best choice for quality. But when asked which home they think offers the best value, 62 percent of study respondents pointed to an existing home.

Here’s how to debunk two of the biggest myths about the cost and value of new construction homes — and change the mindset of home shoppers.

Myth #1: New construction homes are more expensive

How to convince buyers otherwise

1. Offer warranty details.
2. Provide information on the updated, efficient and sustainable technology you use in your homes.

Details

Home buyers who reject new construction for an existing home due to a higher listing price might wind up putting a lot more money into their purchase — and sooner than they expected.

While necessary costs like property taxes, utilities and homeowners insurance are part of every homeowner’s budget, most new construction buyers avoid many of the maintenance costs existing home buyers might face soon after move-in, thanks to an accompanying warranty.

A recent analysis by Zillow and Thumbtack identified several common costs to calculate what homeowners around the country can expect to pay in annual expenses. The nationwide average cost of tasks like housecleaning, lawn care, carpet cleaning, central air and heating system repairs, gutter cleaning, and pressure washing is about $3,070 per year. Labor costs vary in different parts of the country, so these jobs can be much more expensive depending on where someone lives.

With the housing shortage causing existing homes to stay in service longer and age faster — in 2007, the median age of homes sold was 21 years; in 2017, it was 34 — the cost of even the most basic upkeep on an existing home can pile up.

Myth #2: Existing homes have more proven value

How to convince buyers otherwise

1. Share all your customization options and community features.
2. Highlight neighborhood safety and security details.
3. Offer proof of craftsmanship and quality materials.

Details

Competition for the limited supply of available new homes has caused the premiums on newly built homes to reach record levels. In recent years, home buyers valued newly built homes about 35 percent more than the average home in a given ZIP code.

For even more insights about today’s new construction home buyers, check out the Zillow Group New Construction Consumer Housing Trends Report 2018.