• Like new cars, new homes lose their value the moment they are purchased by their next owner.
  • Older homes retain their resale value better, especially when they are located in a desirable area.

Not too long ago, I got a call from a couple who was moving to the suburbs. As has become the norm, the first thing they said was, “We only want to look at new construction.”

That can be a tough request. The towns in my market have been coveted for over a century because of their proximity to the lakefront, their great schools and the ease in commuting to the city.

Finding new construction can be a challenge.

In this particular situation, it only took one tour to show them all the available new construction within their price range; new construction comes at a premium price, and everything that was new and in their price range was either too small or in an undesirable location.

It was at that point that they reluctantly began to look at used homes.

Who said new means better?

As someone who grew up in an older home and always purchased vintage, I’m a little perplexed by this fixation with new construction. While I get it — it’s a lot easier to have newer appliances, finishes and features — new is just new … it’s not necessarily nicer or better.

New construction looks all the same to me, with the same kitchens, bathroom finishes, colors, features and rooms.

Boring.

An older home has history and character.

I think the real question should be, “Is this newer home going to be a better long-term value than this older home?”

The answer to that question is not always easy to determine; each house needs to be looked at individually.

Some of the older homes are phenomenal — beautifully constructed with quality materials, real plaster and lovely hardwood floors. They are in older and established neighborhoods, often closer to town, the beach and schools.

While they may need some updating or renovating, they are still wonderful homes.

Granted, there are also a lot of older homes that are functionally obsolete or in terrible condition and should probably be razed. The initial price may seem like a great value, but you’ll lose money if the house turns out to be a money pit.

Conversely, while it’s enticing to buy a new home, some of them are ghastly. The materials used are cheap or substandard and the designs lack imagination.

They command a premium because they are new, but, once again, new construction does not necessarily mean better construction or better value.

The value of location

An old home in a desirable location is going to have a greater value and long-term resale capability than a brand new home located near the toll road.

Just as with new cars, new houses lose their premium value once they’ve been used. That new home will eventually become a used home, and it will depreciate in value because of its less-than-optimal location.

I have found that that the hardest houses to sell are the ones that were built about 20 to 30 years ago and are in marginal locations. Many of them are even selling for less than their original new construction sales price.

Why?

Because they are not new and they are not in highly desirable neighborhoods.

I encourage my buyers to think long-term because long-term value is not necessarily a function of the age of a house.

So what about my only-new-construction buyers? Well, they ended up buying a wonderfully renovated 100-year-old home two blocks from the lake … and they love it!

Ann Jones has been a respected Realtor on the North Shore of Chicago for nearly 15 years. Her primary market is the Lake Forest/Lake Bluff area but serves clients along the shore as well. Follow her blog at anns-blog.com or on Pinterest.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×