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In this episode we discuss the many factors that are important in deciding if you should build a new home or buy an existing home, including
What are the pros and cons of buying new?
What are the pros and cons of buying an existing home?
What financial impact does buying a home have on your financial goals?
and many more!
Disclaimer: The information provided in this podcast is for general informational and educational purposes only, and is not intended to constitute financial, investment, or other professional advice, the opinions. expressed are those of the hosts and guests and do not necessarily reflect the views of any affiliated organizations. Investing in financial markets involves risk, including the potential loss of principle, past performance is not indicative of future results. Before making any investment decisions, you should consult with a qualified financial advisor, who can assess your individual financial situation, objectives and risk tolerance.
A transcript of the episode is provided below for increased convenience and accessibility. The audio should be considered the canonical version of the podcast episode. Errors in transcription may occur.
Stephan: [00:00:00] And we’ve seen that come up regularly, if I can put down. 3 percent or some of these loans, 1 percent for, especially we see, we hear the, of these physician loans that exist at 1 percent down, and they use that on a new home. And now not only do you have at most 1 percent equity in your house, but you likely have negative equity.
Kyre: Welcome to the scholar financial advising podcast with your hosts, Stephan Shipe and Kyre Latinen. The information provided in this podcast is for general informational and educational purposes only, and is not intended to constitute financial, investment, or other professional advice. The opinions expressed are those of the hosts and guests and do not necessarily reflect the views of any affiliated organizations.
Investing in financial markets involves risk, including the potential loss of principle. Past performance is not indicative of future [00:01:00] results. Before making any investment decisions, you should consult with a qualified financial advisor who can assess your individual financial situation, objectives, and risk tolerance.
Stephan: What I was reading this weekend was Apple’s new foldable iPhone. So what do you, what do you think about this? It is an interesting technology that you could fold a screen. I think we’re moving away from screens. I really do. I don’t think that with all the things that are happening in technology, I think the idea of, I just need a bigger screen.
So now how do we find a bigger screen is probably the opposite direction of where we’re going. Even Apple itself with the wearables and everything and the glasses for, was it meta that has the glasses now?
Kyre: Uh, it’s a pro it’s a prototype that’s still like five years away.
Stephan: No, but yeah, but the, but that idea it’s, it’s kind of odd that they’re moving to, cause the idea of the folding phone is that you could get a bigger screen, but it still [00:02:00] fits in your pocket.
So. I just, I don’t know if that’s the direction to go. It’s like the whole car conversation of like, what do you need? But you end up with all
Kyre: that extra weight, that extra like thickness. Like, I don’t know what the, now there are some foldable phones out there on the market already, and the people who own them seem to really enjoy them, but it’s hard to know.
Like how big of a market is that really? And is it a real
Stephan: opportunity? I don’t know. I don’t, I think it solves a problem, right? The problem is if you want a bigger screen. Then if you fold it in half, then it’s half as big, but I don’t, I don’t know if that’s the problem they should be looking at solving as is my concern.
When I saw that, it seems like it’s a, it’s a lot like their updates recently of. There’s updates, but we’re not doing anything spectacular here to reinvent. We’re on iPhone. What now? 16. Yeah, 16.
Kyre: But that number, there’s been more than that because the iPhone SEs and the original iPhone and iPhone three [00:03:00] G three GS, like, so there, there’ve been.
There’ve been more models than that. The iPhone five C snuck in there. So
Stephan: yeah,
Kyre: it just,
Stephan: uh, it’s, it’s interesting when I saw it because it’s Apple’s notorious for doing really well, taking something that’s been out and then making it perfect or close to perfect. Right. So foldable screens are out. They’re clunky.
There’s issues with them, all these. So if Apple can do it, it will. Undoubtedly be better. They’ll have better hinges. They’ll have better prod. It’ll be nicer unless the question is whether or not that’s going to continue to be the way they go. Cause I think that just opens up the opportunity for someone to truly disrupt that space.
They’re they’re on iPhone 16 now and they’re still doing the, well, someone else did it. We’ll just do it a little better. Someone else did it. We’ll just do it a little bit better, but we haven’t seen any major disruption. Yeah, especially in a time of AI, I thought they would be really leaning into [00:04:00] that a little bit more, both with the updates on the phone and the hardware, it seems like a perfect opportunity.
Here’s a major change. Apple’s been needing some sort of major disruption. Yeah,
Kyre: and there have been a couple of these kind of like personal AI devices that you either pin on your shirt And they’ve got an integrated integrated camera, or it’s just like a little puck you carry around with you And they haven’t done really well.
I think in part because the hardware just isn’t there But it really does make me wonder That’s Apple’s wheelhouse Yeah, and it makes me wonder like You It’s an information density problem, right? And it’s a, and it’s a problem of who sees the information that you’re getting back. So I think like a voice assistant that you carry around with you, even if it has a camera and it has computer vision and can do all these kinds of things, I think that’s a real limited appeal to that because.
If you ask your, your AI assistant puck, that’s just, you know, like [00:05:00] pinned to your lapel, Hey, what’s that person’s name. First of all, they hear you ask it. They hear the response and, or any other personal information, not just something embarrassing. Like you forgot somebody’s name. Then I don’t think those voice assistants in public are the way to interact with it.
So then that brings up the question of, can you put that information on a screen? And then. But then what’s your input? Is it still your voice? So you’re talking to your, you know, your AR or VR glasses in private that all works really well, but out in public, what does that do?
Stephan: Yeah, the, that’s why I think some of that solved the glass glasses, right.
Of being able to have it wearable. Cause then you’re getting information shown to you. That’s not shown to everyone else. The input’s interesting. Cause now they have all this, Eye detection software where you’re pointing and clicking by just looking at different areas on the [00:06:00] screen, or we just go all the way for Neuralink and it knows what I want and it’s providing it to me in the glasses.
So that those are real technologies that are out there now. And again, I don’t think they’re tomorrow. We have that ability, but I think it’s pretty conceivable that in the next few years, a lot of that gets ironed out, especially with the speed that AI is going.
Kyre: Yeah. You just jack into the matrix and then you move and you go on from there.
Yeah, it’s really, yeah. It’s really interesting. Yeah. I just wonder how big of a market the folding, the folding phone is and at the premium price, because. The folding phones that are available now are just, they’re the most expensive, the most expensive phones. Like they are the cost of two individual phones, which one big screen is better than two, two individual screens.
But yeah, I wonder, I wonder what it would look like if Apple, if Apple
Stephan: moved into that space. Yeah, I just, there’s only a handful of companies that could do it [00:07:00] at scale, right. To actually be able to, and have the technology there to be able to do it. And I think that would be a great innovation move if they were able to pull it off, but, or the beauty of capitalism and somebody else comes in and Apple has become IBM and someone else comes in with a better startup and reinvents the way we think about.
Phones and communication. And that’s the, that is the risk of talking to somebody earlier today about that of concentration risk right now on the market, which I know we’ve talked about exhaustively in the past. That is one of the risks of that level of concentration so that the. The business market specifically in the United States is made for disruption.
It’s easy. It’s American entrepreneurship. It’s the ease of people being able to open up a business and then can continue to innovate and disrupt different industries, which puts a risk at large companies within a country. Yeah. [00:08:00]
Kyre: And it does make you wonder, like, What will the disruption, because it will come eventually that will, that will actually be, have a meaningful impact because operating systems are hard.
Computer hardware is hard, which is why, you know, we really only have a few viable options for operating systems. And frankly, for device manufacturers as well, uh, certainly for design, um, So what does that paradigm shift look like? And, you know, just classic disruption theory would state that, you know, it’s going to come from below the, the established players, they over serve and, and then we’ve, we’ve got some.
Low cost alternative option that may be bare bones, but we’ll, we’ll come in and disrupt from below, which is really what the iPhone did. The iPhone didn’t disrupt cell phones from above being a premium phone. It disrupted personal computers from below by coming at it and being a 500 computer in your pocket rather than, you know, [00:09:00] laptops and desktops and stuff.
And so much computing just happens on people’s phones now.
Stephan: Yeah, it’ll be interesting. And the, the move and the question will be, as we’ve seen here in the past, maybe 20, 30 years is the hardware component becomes less and less important. And that’s what we’re talking about now with the phone and everything of how much of that gets removed.
And is that the next iteration, or is it still a iPhone like product sitting in your pocket? You’re just not using it as much. Yeah.
Kyre: Yeah, and the extent that the hardware can be removed really is all about pushing things to, to the cloud and to have remote compute. But, you know, obviously the risk of that is your personal data.
I don’t know. It just seems like through time people are willing to give up more and more of their personal data for less and less in return. Part of what I was reading this week was the article on television manufacturers and how televisions are [00:10:00] sold at cost or below cost. Because monetize your viewing habits.
That the TV set has its own image recognition. Software built into it. So regardless of what you’re watching, the TV manufacturer is getting all of your watching habits. And for, for some of these televisions, if you’ve ever set it up, so it connects to the internet, even if you’re not using their built in apps, it may still track what you’re watching because it just tracks anything that goes across the screen rather than, you know, just what’s, you know, being used in an app.
Um, And the market has gone that way and consumers don’t seem to be concerned. But I also wonder how much people are really aware of what their televisions are watching and gathering about them. And like Walmart bought Vizio and there’s only one reason for them to do that. And that is to [00:11:00] gather information on people’s watching habits so that they can better target their products.
To those individuals and to sell ads, Walmart has the goal of being one of the biggest advertising companies. And this is part of that push into that space that makes, makes you wonder if there will in the AI revolution, if there’ll be a core group of people, or maybe even broader who appreciate on device compute, because it protects your, it protects your data.
Stephan: I think so. I would love a, uh, a TV that didn’t have ads. That we’re running and whether they’re from apps or anything else, just, uh, where’s the HDMI port and I can download what app I want to download on there. So you can download a Netflix app or download anything else, but it just shows up as a blank slate opposed to.
Essentially a huge billboard in your living room,
Kyre: right? You want to just a dumb screen and that’s the way that my tv is set up because I use an apple television So [00:12:00] my tv is a smart tv. It’s got all of this stuff. It’s oled. It’s you know Got all the fancy bells and whistles and stuff and I literally have never connected it to the internet not even once I got out of the box.
I turned it on and I plugged my apple tv into it Because at least I have more confidence about what’s being collected And the netflix app on the apple tv You Doesn’t know what I’m watching in the Amazon prime app. Now, of course, they each know what I’m watching within, but there, but there’s no like unifying aggregator of all of my watching data, like you have on some of these televisions.
If you’re, if you’ve connected them to the internet and you’ve used any of their, any of their built in connectivity features at all. I guess that would be a thing that would be, that would be hard for someone to compete with Apple against. And that’s where they’re really setting themselves apart in the market is that they have on device AI, and that’s just the, the key to all of this advertising that they’re doing on device AI.
So [00:13:00] your personal information stays local. Because we’ve seen that if people’s prompts, they get incorporated into the data and can be leaked to others that are asking similar questions. So there’s a risk of people’s personal identifiable information getting leaked out of an LLM, um, even inadvertently.
So it makes me wonder to what extent that’s a solvable solvable. To what extent that’s a solvable problem, or it’s just something that maybe people don’t even care about.
Stephan: Yeah. Yeah. It’s a, we’ll have to plan for that. That’s a whole discussion right there. Data privacy in today’s world with AI, especially when it comes to banking and.
How to protect in two factor authentication and all these different aspects that are now available, whether they’re key cards or even USBs that I’ve seen now that will constantly switch around your, your password as you use them. [00:14:00] But it does bring into today’s topic or question for you on this idea of devices in the home, smart devices, and whether or not you’re connecting to the internet, do you have the capability to connect them to the internet in your home?
One of the big questions that comes up especially today in the Environment of extremely high home prices, especially on a historical level and competing with extremely high construction costs as well due to inflation input costs. When someone comes to you and you have somebody asking, trying to decide, should they build a new home or should they buy an existing home?
That may need some upgrades. How do you help walk through that problem? What are, what are the main considerations that you’re looking for? Or if they are looking at existing homes, what are the things that show up really high in the list of saying, these are going to be problems and what you need to look out for?
I mean, even all the way down to the like asbestos days, right? Maybe we’re not going that far back, right. And building a lead paint, but, but maybe home built in the [00:15:00] past 30 years. And, and some, which I think is pretty realistic. If somebody buying, especially at. A home, it’s an established neighborhood. They come in 20, 30 year old home verse.
They could go to a new neighborhood and build. What are some of the things they’re thinking about from a, especially from a financial standpoint?
Kyre: Yeah. Well, from a financial standpoint, and we’ve, we’ve talked, mentioned this before you want to know your budget ahead of time and you want the budget on the house to be determined after you figure out what your target savings goals need to be.
You know, what we see so often is that people buy the house first and then figure out what can they save after that. And we, we want to avoid that. And knowing what you can afford is more than just what your payment on your loan is. So, you’re gonna, you’re gonna make your payment on your loan, you’re gonna pay your house insurance, you’re gonna pay your taxes.
Right? And then you’re going to have any type of maintenance upkeep and updates that you want to do to a property over the time that you [00:16:00] live there. So when you look at and compare a brand new build to an existing home, especially in this 30 year old range or so, yes, that older home is going to be much cheaper and a cost per square foot to get into it versus a new build.
But of course, What are you getting? You’re getting 30 year old building code, first of all. Um, so you may not have. Um, hurricane straps or other things that would get, that would give extra, extra structural rigidity or, or other benefits to your property, right? The house might not be as well insulated as a new house.
So your energy bills are going to be higher. The age of that home may also mean that you’re going to start to need To do some major upgrades or, or repairs, you’re going to need a new roof. You’re going to need new major appliances, [00:17:00] maybe heating and air or. Certainly any of the kitchen appliances or, or you may need to, you may need to replace all of your outlets and your light switches in your home, you know, because nothing will hold, nothing will hold a plug that gets put into the receptacle.
You might have to replace or update your electrical panel. Um, there’s, or windows, right? Old windows get leaky, right? They stop functioning. They stop opening and closing. Yeah. You can re. Refurbish them, but you could, you know, just suffer with, with windows that don’t work, but that’s the comparison that we’re making versus a new build.
That will be everything brand new. And most builders will put some sort of warranty on their product, you know, 10 years on structure, and then, you know, it’s kind of falls back from there. So those are a few things that you can think about just when you’re Right off the bat. Are you going to want [00:18:00] to update the kitchen?
Are you going to want to update the bathrooms? Are you going to want to change the flooring out? There are lots of things that on an existing home May need to be done as that’s going to add to that total cost and I would encourage people when you’re comparing a new build Versus buying an existing home is to make that list up front, go ahead and make it and compare all of the things that you want to do or will want to do.
And stretch that timeline out. It’s not a five year decision. You know, this is like 10 or even 15 years in terms of, Oh, if those projects are on that list in that window, then you should definitely be considering them in terms of the cost of the property up front.
Stephan: What are, I know you were a connoisseur of building science information.
Some of the things you mentioned are things that could be knocked out pretty easily. If there’s, uh, you know, switching out outlets, uh, even swapping out electrical panels, even a roof for is relatively [00:19:00] easy to bring somebody into the, what are some of the things that if you were looking at a house that would be kind of non negotiable.
Like that is not going to be an easy fix where if someone, if some house needed that an existing home needed it, you’re going to have to live with the fact that that science is old because there’s no way of updating it. Right. What, what things come to mind?
Kyre: Yeah. I mean, The first one, and this is what, this is one that will have the biggest impact on like the livability of the home from like a comfort standpoint is just the way that it was insulated older homes are, are leaky homes and there’s this old kind of, um, wisdom, I guess, that, that houses need to breathe, that a house needs to breathe because, you know, if there’s any water or moisture that accumulates anywhere that, that.
That breathing of the house will help dry it out and, and make it last for longer. Uh, but the problem with that is a breathing house means you don’t control the air that comes in and out [00:20:00] of it. So under older building standards, you know, you’re going to get a lot of air exchanges. So the outside air comes in and what would cause that like if your house is hotter than it is outside then you’re creating a convection current and it’s carrying all of the warm air out of your house into your attic if it’s a vented attic and then that leaks out outside and so that creates a low pressure zone in your house and sucks in the outside air.
But where is it sucking it in through? It’s sucking it in through the cracks in your walls and in your siding and in your receptacles and maybe even through your attic and it’s bringing anything that’s in those wall spaces. Into the breathable air of your house, right? So on a, on a new build, you can do things such as advanced insulation.
You can even insulate if you even, if you have a slab on grade, you know, those can be potentially very cold floors, but you can insulate a slab on grade. So you can do a lot of things in [00:21:00] the build stage that are very hard to retrofit later. From that comfort standpoint. And if you really want to go high end, you can do, you can do other things such as, you know, in slab radiant heat and other things like that, that will make your home extremely comfortable that are just so hard to retrofit after the fact.
Um, yeah, putting a roof on or swapping out windows. Those are a lot more approachable.
Stephan: They’re big projects, but they’re, they’re doable from a, from a, could you hire somebody to go knock it out?
Kyre: You build a house knowing that you’re going to eventually need to replace those things. Um, anything structural.
So wherever you have load bearing walls, if you want to knock a wall out and move some and reconfigure the interior space of the house, any location of a load bearing wall, you’re, you’re going to have a limited ability to move that around. Yes. You can take out load bearing walls and you can replace them with.
With, uh, headers. So you can put [00:22:00] headers in place that will carry that load. Uh, but then you have like built down cased openings that maybe that’s not what you wanted when you thought you were going to blow out that wall. So understanding anything that’s load bearing the location of any plumbing, uh, especially if you don’t have a basement now.
Unfinished basements are great because that gives you access to the first floor. So if you want to run new plumbing or even electrical from below, you can get a lot of access to it. But the location of any plumbing in the house is, is going to be very expensive to move. So if you need to add a new bathroom or, or reconfigure or, or something like that, then include that in the, in the potential of, you know, it’s just going to be a hard thing to
Stephan: do.
Is that something that you’re recommending in the due diligence period? People are bringing in contractors to come price out some of that, or if you’re zillowing around on the weekend, is that something that you’re just throwing into chat GPT, [00:23:00] give you some estimates of what costs are and coming up with a rough estimate, at least so you know what the comparable idea would be.
Kyre: Yeah, that’s a great question. My, my process on that would be first. You know, find a house that you like, and then, and then once you’re to the point of wanting to make an offer or getting under contract, um, make that list of all the changes, because maybe you don’t want to move any walls and then you don’t have to retain the services of anyone to come in and actually give you that for most residential.
Contracts, you’re going to get a home inspection. In fact, for, I should, I would maybe even change that and say for all, you should get a home inspection on it. There’d be very, very few instances where I wouldn’t recommend an inspection, but Some inspectors have the ability to identify load, load, bearing walls and things like that.
So you’d have to just interview your inspector. Don’t just go with your realtors, favorite inspector, right? You know, go ahead and get a list and interview [00:24:00] them and find out the things that they can look for and, and identify. We, we love old houses. I don’t know why they just have all this charm and history and character.
But if you are looking at buying a really old house, and I’m talking about a hundred year old house, then you need to find an inspector who is. Used to looking at a hundred year old houses and can identify those types of problems that would be different in an old house. Like, does it still have a knob and two electrical in it?
Or, you know, are there structural issues with the foundation or what has been retrofitted? Like that, how has the AC, if a hundred year old house has AC in it, how has that AC been retrofitted to the home? A lot of that will just stem from that very first starting list of. These are the things that we would want to change about the house.
And then that can lead you to the professionals that you’d need to retain as you’re doing your inspections. And when you’re in your due diligence
Stephan: period, [00:25:00] what about from a new home perspective? And so we have obviously tons of pros for the new home of everything’s new. You’re building it to spec today.
You’re. Potentially adding in all the, the newest building science that gets included. It’s you’re not going to have to worry about moving a bathroom afterwards. What are the downsides besides the cost? So if we take that one out, that obviously building a new home, higher cost per square foot. No question.
What are the other downsides that you typically see that somebody says, I bought a new home and I wish I didn’t do
Kyre: X. Yeah. So to start, I’m just going to say it will depend upon how this new home is being built. If you’re going with a large national builder that is a track builder, um, they can very frequently have a lot of great options in terms of floor plan.
Their cost is certainly going to be the lowest of, of any, of any builder. Now you’re going to get what, [00:26:00] What’s referred to as builder grade, everything, right? Maybe the cheapest carpets, maybe the cheapest slot in range, maybe, maybe, you know, vinyl siding instead of hardy board siding, or, or maybe it’s not spray and insulation, maybe it is fiberglass, right?
So you’re going to, you’re going to move down market and all of those, and that’s maybe fine to get the. To get that price down, but just because you’re building new. And I know that the, some of these national builders have these reputations of just churning out houses. Like they can build a house in three months, start to finish and people occupy the home and then they find that things are messed up, right?
Doors don’t shut or, you know, the. Rafters aren’t secured to the walls in the attic. And I know this sounds like crazy, like, how could that be? Or like a drain on, on a sink was never connected. And so you start using the sink and it’s like flooding water into the bathroom or, and I wish these were hyperbolic, but [00:27:00] even on these brand new builds.
So just to stay on theme of inspections, I would encourage inspections. By a third party of a new build as well, just to make sure that you have eyes on everything. So that’s, that’s number one. Um, yeah, this know what kind of builder you’re getting engaged with, like, are you going to be able to bring your own custom plan?
Um, Are you going to have to use one of their stock plans, which is fine. Sometimes they have a wide variety, but sometimes they’re not, they’re very limited, um, and then get a feel for your builder’s process, right? Building a house is normally, you know, a six to nine month, maybe year long process. So if you’re trying to get into a home quickly, then the new build just isn’t going to do that for you.
It’s, it’s going to be a long process and it could potentially be very stressful. Because you have to make all these decisions and it’s fun at first, you know, you pick out the floor plan. You’re like, oh, this is [00:28:00] great. This is so fun. And then, you know, by about month five, you’re like, I’m really just ready to be in this house.
Stop asking me questions. And you know, the bigger builders, you’re going to have package A, B, or C, and that’s just going to be it. Now, the more you move to the custom end, then you’ll have more of these decisions to make. You know, there’s, you know, old jokes about someone’s marriage being strong enough to survive a new build just because of all of those factors.
But I think it’s a good point, right? You have to, you have to think about the process of the build. And the other thing to note is on a build, as you go through it, there’s going to be emotional ups and downs. That house is going to look very different and feel very different at each stage of the building process.
You know, when that slab goes down, you’re gonna say, man, this, this place feels huge, but then as soon as you frame [00:29:00] up walls, you’re going to question you’d be like, this is so tiny, like there’s no space anywhere in this house. How did we build something? You’ll, everything was a mistake. Right. And at different phases of the build, this, this The house will feel different at every stage and just know that it isn’t actually the house until it’s, it’s actually finished.
Um, so just keep that in the back of your mind. Now, a lot of those are non financial considerations, except for maybe moving up or down market on a custom versus more, more, uh, track builder. Um, but do note that new builds, they, they are not going to appreciate as quickly as the other. The other property in the area, right?
Cause they have that premium built into them already. And. You know, the worst part of their depreciation curve is happening at the beginning of their life, just like in a vehicle that we don’t have a 20 percent depreciation on a, on a, on a house, the way that we would on a [00:30:00] car. But, uh, your brand new build is unlikely to appreciate as quickly as the existing homes that are in the area.
And if you’re building that home in an established neighborhood, then the rate of appreciation is also going to have some headwinds because It’s being compared to more than likely older homes. So you’ll have to, you have to think about that as well in terms of the financial implication of building a brand new home, building in an all new neighborhood, maybe the homes will appreciate more similarly to each other, but a brand new, especially the more custom the build, the, the harder it is for that, that home to really maintain.
The average rate of appreciation during the first 10 years of its life.
Stephan: That’s an issue of comparisons, right? If, if I’m going to, if you build a home and it’s brand new in a new neighborhood and there’s all these lots [00:31:00] available, and then you decide to leave that home and go sell it. I would have to pay a discount to you because my alternative is I could go next door and build the exact home that I want.
And I don’t have to deal with the finishes that you want, what color tile you put in somewhere, what type of floors. So the value has to drop slightly in that case. The same situation goes for existing neighborhoods to your point. If you’re building a new house in the neighborhood, then the comparison is, well, if I’m going to buy that house or an existing house, if I wanted to buy almost new pricing, I could go to another neighborhood and buy almost new pricing.
So you do have to be careful of the, the size house that’s being built and the location that it’s in, uh, for all of those, all of those reasons. But that is one that comes up a lot, especially with, uh, loans that don’t have a big down payment for new homes. And we’ve seen that come up [00:32:00] regularly. If I can put down 3 percent or some of these loans, 1 percent before, especially we hear the, of these physician loans that exist at 1 percent down, and they use that on a new home.
And now not only do you have at most 1 percent equity in your house, but you likely have negative equity in your house because it’s depreciated a little bit. Plus the underlying, what I’d consider kind of the, the built in negative equity of selling. If you try to sell the house, you’re immediately taking a.
Six to 10 percent hit right off the top to be able to sell it. So if you’re not putting down at least 10 percent on a house, you’re, you’re, you have negative equity in that property. Yep. Day one. Exactly.
Kyre: Yeah. And that point on, you know, building in a large neighborhood with available lots is couldn’t be better made, right?
Because you’re not going to be able to get out of that house as long as there are. New houses being built [00:33:00] built in that neighborhood and you’re certainly not going to see the value that you think your house is worth As long as they’re building new houses in that neighborhood You want to be the last lot you want to be the last
Stephan: lot?
You want to you want to be the reason for all the construction going down the road? So that way when you’re built all construction stops and the neighborhood is no longer a construction zone It is an established neighborhood with plenty of houses built in.
Kyre: Yeah, and that’s another thing like we we looked at a house in a neighborhood one time that um Gorgeous house, but it was the first one and we were going to be signing up for four years of construction traffic and noise and everything.
If we were in that house and it’s just like, you know, we can’t do that. Like it’s, it’s not worth it. And it wasn’t being priced as a, Hey, let’s get people into this neighborhood, like kind of price. It was, they’re trying to get their full, you know, you know, retail value for it. So it’s just not going to be worth those other problems.
And in [00:34:00] a new build neighborhood, you’re unlikely to have established trees. And for a lot of people that matters, they don’t want to look like they’re moving into some, a place that was just clear cut. You want big climbing trees that you can put a swing on or, or something like that just can provide shade to the yard and, and maybe a nicer atmosphere and feel established versus new neighborhoods where you’ve got that little sapling out there.
And so does the neighbor
Stephan: exactly and in 30 years, it’ll be a beautiful road That’s right. Now. There’s a lot of three and four foot trees down the road, right?
Kyre: Or or in 30 years, all those trees will be dead We we lived in a neighborhood and the the builder had put a Bradford pear in the front yard of every house in the neighborhood Which I like they’re gorgeous trees, especially when they’re in bloom and you know The the leaves are are very great.
It’s an awesome shade tree except and you’re laughing and why are you laughing? They’re horrible [00:35:00] at 30 years old Yeah, they all die so They didn’t even quite reach 30. They were hitting 20 And because all the branches for a bradford pear all basically emanate from the same spot Straight up in there straight up in the air and yeah, there’s no branching really happening.
You’ve got Six feet of a trunk. And then all the branches just go straight out from there. Um, so they crack under their own weight and that’s what was happening. Every storm. And the neighborhood was about 20 years old. Every storm, another Bradford pair, which is split right down the middle in somebody’s front yard.
And it was like clockwork. So, um, you know, five or six homes in the neighborhood every year, we just have these split Bradford pairs in their front yard and ours was still there. But when we moved to the new owners, just took it out preemptively. So there are, there are things to think about whenever you’re, you know, When you’re moving in to [00:36:00] either established or, or new neighborhood and whether or not your, your new build can accomplish some of those, some of those things that you’re looking for.
Stephan: Yeah, no, I think that’s a great way to look at it. There’s so many personal aspects to buying a home or building a home. And there’s no, I don’t know if I’ve ever come into a situation where there’s a. A pure right or wrong answer of whether or not you should buy new or buy an existing because some people have needs that need to be met with a new home or they would like to be met with a new home, right?
You reach a certain level of wealth and you say, you know, I really would like. I’ll lay out this way. And the only way I’m going to get it this particular way is if I build it that way. And it’s a lot that I like, uh, they’ve purchased a lot. They, everything is set up perfectly for, for their custom home.
And they’re willing to forego some of the. appreciation of the home waiter to have the benefits of the consumption of buying and building your own home. [00:37:00] And others have no need, or they know that this isn’t going to be the home that they’re going to be in for a very long time. Maybe it is a 10 year home, 10, 15 year home that they’re going to be able to just still a long time from home standards.
Um, and it’s going to serve the purpose of having kids in the house or whatever needs that would be until they’re in college. And then they’re going to go build the home that they want to build for the reason would be. I think that was a great wrap up of that very personal decision that has many, many financial implications from day one of building inspections all the way to what tree not to put in the front yard.