To Buy or to Build

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Building has long been considered a money-saving alternative to buying by many people, but is it always the better value? Turns out it’s not so cut-and-dried. Depending on the person, this answer can be incredibly simple or very complex. Like with everything, the needs of the buyer or builder is what will dictate the decision to either buy a home or build one on an empty lot.  Here are a few of the most important factors that should affect your decision making:

1. Materials

Like anything, the cost of building materials fluctuates with the economy based on supply and demand. If materials and supplies are expensive at the time, building may not be the best choice. Custom and specialty materials also up your costs, and may make buying a custom home the better value.

2. Building Plans and Preparation Costs

Many new home builders mistakenly believe that once you have bought the land, it’s yours and you can do whatever you want to on it. We often have customers come in looking for raw landing, asking us if this is true. This isn’t the case. Depending on your location, you may be restricted from building on certain parts of your property due to environmental conservation rules. Before you can build, you may have to apply and pay for inspections and reports to determine where and even if you can build. California law also requires land owners to apply for permits for any new construction on their property, and have plans drawn up by an engineer or architect (not cheap!). All of these costs, along with leveling the land, well drilling, and electric installation fees can add up to a much more expensive experience.  

3. Location

If you’ve ever talked to a real estate agent, chances are you’ve heard us use our favorite saying of all time, “location, location, location!” That’s because it is the single most important factor that determines a property’s value.  Location is the difference between a 1000 Sqft fixer-upper being worth $50K (in a very rural area), or $1M (in say, Beverly Hills). If the home values are soaring in the location you want to live, building will be your best bet for value and homeowner equity (the amount of the property’s market value that you own free-and-clear). At our location here in Aguanga, the current real estate climate is in favor of buyers not builders.   Just West and South of us in Temecula, Orange County, and San Diego the home values are higher and provide more advantageous conditions for builders.  

The three criteria above are usually the biggest factors in determining which path a prospective homebuyer (or homebuilder!) will take. Occasionally, these criteria do not play such a large role and personal preference and the desire to build one’s own custom home is the motivating factor. It is true that in no other situation do you get the customizability and control over your future home than you do with building your own. We’ve seen truly great results from either path people have taken. 

Of course, we are in a unique position to help no matter whether you want to build or buy. Our broker and agents can help locate the perfect move-in ready home for you. If buying is not for you, here at DCH Real Estate we are also representatives of Pacific Modern Homes, the premier maker of pre-panelized homes. With Pacific Modern Homes, one can receive the simplicity and benefits of engineered plans as well as the ability to customize one of the offered floor plans, or start from scratch and have complete creative control of the whole process. 

No matter how you want to move forward, here at DCH Real Estate we can help you through the entire process as we strive to make sure you are completely satisfied with your home buying or building decision.  If you would like to discuss the topic of this newsletter in more depth, please feel free to give us call at (951) 767-2400 to talk to one of our qualified specialists.