What does a New Home Really Cost?
We all know that new home prices in Ontario have increased considerably in recent years. There are many reasons: the skyrocketing price of wood, supply chain delays and shortages in skilled trades. Moreover, increased housing demand is driving price increases across the board, new and resale homes alike.
Canadian Real Estate Association (CREA) home sales data shows that between December 2016 and April 2022, the House Price Index (HPI) of a single family home has increased by 75%. In Niagara the equivalent figure has more than doubled.
But taking a closer look at the numbers, it’s been home resales that have mostly been responsible for price increases. Statistics Canada, which tracks new home prices separately, shows that the price index of new homes has increased modestly, by only 25% over the same period – with Niagara’s increase much in line at 28.3%.
So what’s the takeaway here? The perception that new homes are much more expensive than resale homes of the same size is becoming less and less accurate. Moreover, when you start considering the benefits of buying a newly constructed home, the inherent value is becoming overwhelming.
There are so many intangibles that go into a new build and it’s not always possible to attach a precise cost or benefit associated with each aspect. For some systems – like energy efficiency – the initial incremental costs and long term savings can certainly be calculated. But others can’t be monetized. After all, what is peace of mind worth?
Let’s consider some of the ways a new home can allow buyers achieve value:
Ideal Square Footage
Most home builders offer a collection of available floor plans, so you can select a model that matches your ideal home size and layout. Whereas with a resale purchase, buyers often have to compromise based on what’s on the market – either buying larger or smaller than intended.
Energy Efficiency
Building Code has evolved by leaps and bounds when it comes to saving energy. Remarkably, homes built in the last few years consume only half the energy used by those built as recently as 2005. With superior materials, state-of-the-art mechanicals and airtight construction, a new home incorporates a lot of advances in the industry, achieving significant long-term savings for homeowners.
Expertise
When you buy a new home, it’s only natural to view your purchase as a “thing” – certainly a proud possession, especially given all the excitement of moving in. But it’s important to step back and consider all the expertise that went into building it. In essence, your home builder has overseen a hidden legion of professionals along the way:
- Architects/designers
- Land agents
- Municipal liaison (eg. building permits)
- Materials purchasers
- Tradespeople (HVAC, plumbing, fixtures, flooring, carpeting, windows, driveway, etc.)
- Quality control
Considering that all these intertwining, critical elements are essentially delivered in a single bundled price, the value is substantial.
The Value of “New”
Buyers of resale homes often understand that the purchase price noted on their offer is not the end of it. Wise buyers will anticipate the unexpected, maybe not right away, but certainly in the next few years. Perhaps a new roof, a new furnace or a new driveway. Moreover, buyers often have immediate renovation plans to upgrade their house to meet their lifestyle needs. With a new home, there are no surprises: your home is move-in ready the day it’s signed over to you.
Warranty
Unlike those annoying warranties on electronic purchases, a new home warranty doesn’t cost extra! All new homes come with Tarion coverage, for up to seven years for certain coverages. This represents built-in peace of mind that you just can’t get with a resale home.
Considering the extensive value built into a new home, especially in a market where the price gap between new and resale is rapidly shrinking, it’s no wonder that building new is the right decision for so many homebuyers.
Contact a Lucchetta Homes sales specialist to learn more about our available move-in ready homes, new home communities including LUSSO in St. Catharines and Riverside by Hunter’s Pointe in Welland, as well as exciting new future new home developments on the horizon.