New Build vs. Pre-Owned Home: Which Should You Buy?
00:05Well, hey, you guys. So if you live in a rapidly growing area like us here in Nashville,then you probably heard your friends debate all kinds of different housing strategies, right?Like get an older home that has good bones. No, get new construction.Get the tall, you know, skinny houses. Get the retro ranch style house. I mean, there's so many options out there.And because mortgage rates have been on the higher end over the last year or two,and because the cost of living keeps going up, people are having to compromise.what their home wish lists are.And this is a really tough discussion, I think,
00:41because priorities and expectations are shiftingand setting more into reality of what it looks like today.So I want to talk through all the pros and the consand remind you of the most important things to considerif you are a current or a future homeowner.And if you enjoy this channel and this kinds of content,make sure to subscribe.Only takes a second.
01:01It helps us out a lot.All right, first, let's talk about when the right,time to buy a home is. So to get into the housing market financially, you want to be in a greatplace. So what does that mean? I want you out of debts. And I want you to have a fully fundedemergency fund of at least three to six months of expenses. So that's really important because whathappens is if you are living paycheck to paycheck with a ton of debt and you have no savings and you goand buy a house, it's probably going to end up being more of a stress point in your life than ablessing. So I think it is really important to put yourself in a good financial position,
01:37and then you can go and buy. So once you're out of debt and you have a fully funded emergencyfund, then I want you to save up at least 5% for a down payment. And ideally, you would get a 15-yearfixed rate mortgage and that your payment is no more than 25% of your take-home pay. And that 25%I know is pretty conservative for a lot of people. But here's the deal. If your home and this one-lineitem in your budget is taking up, you know, 40, 50, 60 percent of your income, you're not going to havea lot left just to live on and to do other things. So again, within those boundaries is a reallygreat place to be. And listen, homes aren't appreciating assets. And they are a smart investmentover time. So I think being a homeowner is key to your overall financial picture long term.
02:22And I think it's wise to get into the game when you're ready. And if you check the points onwhat we just talked about, I would go ahead and jump in. Again,rates are, they're actually kind of coming down a little bit now that we're filming this videoand could continue to go down. So I always say, date the rates, but marry the house. So if youare in a position to buy, buy. But in order to reach that point, right, to get to this pointthat you have money saved or that you're getting out of debt, you want to take yourincome that you're making now and let it go as far as possible. And the best way to do thatis to plan that out, plan your spending for the month. And that is why I love every dollar.
03:00Every dollar is a great app to help you when it comes to your money, and to be intentional with every dollar, hence the name, goes of your paycheck.And it's completely free.So click the link below and you can create a budget just in a couple of minutes.All right.Now that you have an idea of when you might be ready for this step, let's chat about the common questions that people have when they're looking at what kind of home to buy.So some people say, okay, should I buy an older home, but it's in a better location?or should I move outside the city and afford, you know, maybe a new construction?Some people are even asking, oh, my gosh, are new houses even made to last these days?
03:36Because it just seems like they're going up so fast.Some people are like, well, it's an older home of poor investment.You get in there to redo it and you find all this other stuff.Or some people are like, well, should I just go ahead and go super cheap and, you know, gut the whole thing and do a rehab there?Or should I go real cheap and buy some cheap just to get into the housing market?I mean, there are so many questions, you guys.There are a lot of theories about the right way to invest in real estate,but in this housing market, it all comes back to supply and demand.
04:06And so there is still a housing shortage happening.There is.And that's why prices went up drastically during COVID,and we saw the effects of that a year or two after.And honestly, that's kind of why they're just staying the sameis because there is still a housing shortage.So when you look at buying a house, again,in your four walls is food, shelter, utilities, and transportation. So housing is in there,
04:30and I do think that there is a time to rent. I do not think if you're renting, you're doing somethingwrong by any means. Because if you're saving yourself time to get yourself in a financial position,then that's great. But again, if you have the means to go ahead and you're set up to jump intothe housing market, again, that's what I would do because I think long term, that's some of the best useof your money. Now, when people need a place to live, then companies know that they can, youcan build higher volume of homes and people have no choice but to buy them because there they are.So according to an article that I just saw, the average home is 32% more expensive than the averageexisting home during the same time period.
05:08And aesthetics have become a major priority for buyers in the last 15 years with the rise ofsocial media.But if new neighborhoods are built in a hurry, sometimes you're sacrificing the qualityof the house just to get in.And if you're spending 32% more, then you're spending 32% more.then you may not have the margin that you need to make larger repairs down the road.So again, don't just go buy your house to compete with your high school friend that's on Facebook, right?You want to be in a position where you're like, okay, yeah, this is smart,
05:39and this is wise for the barriers and the boundaries that I have for me and my money.So that may mean, you know, not going and buying a brand new house.But I know the hard thing is, too, people are struggling because a lot of people are staying in their homes longer.and so those older homes, again, aren't up for sale.So, again, I want you to be wide because I don't want you to be house poor.So if it's not a new construction, that's okay.And again, some of the new construction, you may be sacrificing quality as well.So we're thinking about that.
06:09All right, one common complaint that I hear people talk about is the monopoly on real estateand popular destinations.So vacation homes seem to be snatched up really quickly by investors or hedge funds groupsor Airbnb flippers.And so there's this idea when you go into a touristy city, sometimes some of the real estate there, right, is gabbled up by these entities.And so I've heard more and more of people seeing this and complaining about it.Some states are even putting some regulations around this.So again, this is an effect, I think, of housing costs going up.
06:43But when it comes back to this idea that you can control what you can control, that's what's important.And so getting yourself in a position to be able to enter that market.enter the housing market when you can.But the more popular the city you're in,the more you're probably going to run into this.So in response to this competitive housing market,people have started trying to get some creative solutions.And like anything, some of these strategies
07:06has some pros and some cons.So for example, centrally located homes,they're convenience, but they've usually been there the longest,so there may be some imperfectionsor even paying for some repairsthat maybe you don't see that will be coming up.But on the other hand,homes outside the city are usually new,
07:22but you're going to have more of a commute,and it's a little bit uncertain on how well they're made.So according to research, quoted by Realtor.com,lots sizes between 1990 and 2016 decreased from 8,250 square feetto 6,970 square feet.Again, with supply and demand,it's more profitable for builders to go inand build more homes in a smaller area.
07:48So, you know, I think about Green Hills in the Nashville area.It's a really popular place, and people have been building small homes with these big yards,and now people are knocking down the homes and they're buying, you know, they're building two orthree homes, or they're building a gigantic house where it used to just be a little house.So people are doing what they can to get what they want, but we're seeing real estate changeso quickly.Now, with all this info, with all these opinions circulating around, here's what I want you to take away,is there may be a place in your heart that you're going to have to compromise.
08:20So unless you win the lottery or maybe you're an heiress to a throne you didn't know existed,there's probably going to be some compromise to your wish list.And again, I think we've gotten more realistic as the years have gone on.It was a real gut punch about 18 months ago.But I think people that we're now seeing there wasn't a bubble.Prices are the way they are.So now what are we going to do about it?And so again, whether it's sacrificing the location, if it's sacrificing the type of house that you were thinking about, the yard,
08:48whatever it is, you have to know your priorities and your non-negotiables and then everything elsemay be up for grabs. And that's okay because I also want to remember your home. Yes, it should be along-term investment. You want to be in it for at least five years just to get the realized gainsand everything. But man, you can move. Like there is a place that you could look up in a decade from nowand be in a different home. And that's okay too. So I don't want you to wait for the perfect solutionbecause usually there's not going to be.You're going to have to sacrifice something, and that's okay.But I want you to financially be wise about it.
09:24So again, making sure that you're in a place to buy a home wisely,like we talked about at the beginning of this episode, is so, so important.So I hope that helps, again, getting back to this ideathat you have the ability to control, which you can control,and in the housing market and all of this, it's a really big decision,but I want you to be as informed as possible.So if you're thinking about buying a home,or even selling a home, make sure to check out a Ramsey trusted real estate agent.
09:50They really take the Ramsey message and use that when it comes to buying or selling your home,and they help you stay on the plan.So make sure to check them out.I'll leave a link below so you can contact a pro near you.And make sure to share this episode with a friend who maybe needs a great real estate conversation.So if you found this helpful, make sure to check out my episode about easy ways to pay off your mortgage early,so you can click the link below if you are listening on podcast to make sure to hear that as well.All right, you guys, remember to take control of your money and create a life you love.
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