The National Association of Home Builders says its new study shows that home buyers can buy a more expensive, newer house and still have the same operating costs as owning an older existing home.
NAHB examined data from the Census Bureau and Department of Housing and Urban Development’s 2011 American Housing Survey to determine how utility, maintenance, property tax, and insurance costs vary depending on the age of a home.
Houses built prior to 1960 have average maintenance costs of $564 per year. On the other hand, homes built after 2008 have average maintenance costs less than half that — $241, according to the study.
For homes built prior to 1960, operating costs average nearly 5 percent of the home’s value while the average was less than 3 percent for homes built after 2008, the NAHB study found.
The study also took into account the first year after-tax cost of owning a home by its age, examining the purchase price, mortgage payments, annual operating costs, and income tax savings. “A buyer can afford to pay 23 percent more for a new house than for one built prior to 1960 and still maintain the same amount of first-year annual costs,” according to NAHB.
New houses tend to cost more than existing homes, so the mortgage payments will likely be higher — but the lower operating costs of a newer home will give buyers annual costs that could be about equal if they purchase a lower priced, older home with a smaller mortgage payment but higher operating costs, NAHB says.
“Home buyers need to look beyond the initial sales price when considering whether to buy new construction or an existing home,” says NAHB Chairman Rick Judson. “They will find that with the higher costs of operating an older home, they can often afford to spend more to buy a new home and still have annual operating costs that fit their budget.”