According to a new report from Realtor.com, buying a new home could save you a ton of money in your first decade of homeownership. But those savings depend on where you live.
On average, U.S. buyers who choose a new home end up with $25,335 in savings over the course of 10 years. That chunk of change could offset the higher price tag of a newly built home, even if it doesn’t show up as up-front savings.
The hidden savings tied to buying a newer home can mostly be attributed to two major factors: energy costs and new systems that don’t require maintenance or upgrades out of the gate. New homes might lack the aesthetic charm of their classic counterparts, but they excel when it comes to energy efficiency.
“Homeownership is not a onetime expense, and the ongoing costs of owning a home are where new construction really shines,” Joel Berner, senior economist at Realtor.com, said. “Buyers who focus only on the listing price are missing a significant part of the financial picture.”
Older homes are much more likely to have drafty rooms that allow warm or cool air to escape, a phenomenon that adds up considerably when it comes to paying the bills. The same goes for older windows, which are more likely to have air leaks and single-pane designs that aren’t as effective at maintaining a controlled climate compared to the insulating boost from modern multipaned glass.
Preexisting homes are also much more likely to come with aging cooling and heating systems that lack the efficiency of more modern systems. If an HVAC system, a water heater, or even a roof requires an upgrade a few years after buying, that’s one more hidden cost on top of a home’s asking price.
National differences
The perceived perks of buying a new home can shake out very differently depending on what corner of the country you live in. In New England, newly constructed homes save buyers the most on average—but those homes also list for a lot more.
In Massachusetts, a new home spares buyers almost $39,000 in hidden costs within the first 10 years, but could command a price tag with a 47% premium compared to an older home. New Hampshire, Maine, Rhode Island, and Vermont aren’t far behind, saving new homeowners anywhere from $34,000 to $36,000, but only Vermont has a new-home premium under 45%. Because paying for heat accounts for the bulk of an average energy bill, New England’s exceptionally cold winters loom large for home shoppers there.
Buyers who want to prioritize newly built options should break down the math in their area before diving in. While homebuyers in New England might not make their savings back given the high premium on new homes, that isn’t the case everywhere. Realtor.com found that buyers in 16 of the country’s 300 biggest metro areas could cover the higher cost of a new home with the amount of cash they’d save from unneeded repairs and lower energy bills within 10 years. The top markets that strike this balance include San Diego; Salem, Oregon; Madison, Wisconsin; and Billings, Montana.
In the analysis, Realtor.com’s Berner explained that the anticipated new-home savings in these markets might actually add up to even more. “These savings estimates are actually conservative,” he said, noting that HVAC warranties, more flexible price negotiations, and rate buydowns can boost savings further. With electricity bills soaring nationwide, those factors can make a new home an enticing option for savvy homebuyers, depending on where they live.
