Is it cheaper to build or buy a house?
If budget is a top concern for consumers, in Pennsylvania, they are better off buying an already existing home, according to a recent report from Storage Cafe. Based on land prices per median lot size, regional costs of making a contract with homebuilders and administrative costs compared to median home prices, Pennsylvania residents will spend $183,000 less buying a pre-existing home, the most in the country.
“The administrative and municipal costs to prepare a property to build a home, even before purchasing materials, make it very challenging for homebuilders to build affordable homes,” said PAR President Al Perry. “These local and state regulations contribute to the high cost of building in the commonwealth, which further contributes to the low inventory of homes.”
According to the report, the total building costs of a new property would be about $528,000, while the median single-family home list price was $345,000. With a median land price per acre of $54,000 and a median lot size of 0.26 acres, the site estimated it would cost $14,000 for land and $466,000 for construction in Pennsylvania.
Across the country, it is less expensive to buy than to build, saving about $6,000. The total building costs were $421,000, while the median single-family list price was $415,000. Ultimately, building a house is more cost-effective in 18 states, mostly on the West Coast and in the South, while buying a pre-existing home is less expensive in 28 states. (Data wasn’t available for Alaska, North Dakota, Rhode Island and Vermont.) In Hawaii, consumers would save nearly $500,000 to build instead of buy, thanks to the high costs of pre-existing housing.
While building a home may seem like an ideal way to obtain a dream property, for those looking, it may be more affordable to purchase a pre-existing home and instead do home improvement projects and renovations to find those dream features.