Operating costs per dollar value are lower for newer homes, how much more can a buyer pay for a newer home and still keep the same first-year after-tax costs of ownership? How much more can a buyer afford to pay for house simply because it’s new?" ~ NAHB
(PRWEB) December 18, 2012
The American Housing Survey (AHS), sponsored by HUD and conducted by the Census Bureau, investigated homeowner operating expenses using data from 2011. Using their finding, the National Association of Home Builders (NAHB) recently released a report on household operating costs to help home buyers determine how much house they can afford to build,
By going with a new home, most homeowners save appreciably. "Because of considerable cost differences between older homes and new construction homes, if replacement costs for windows, insulation, and other updates are considered necessary, identified and added to home maintenance costs, it substantially increases the spread between homeowner operating costs of newer and older homes," says Butch, owner of Destiny Homes.
The Older The Home, The Higher The Operating Costs Per Dollar of Value.
Perhaps surprising to many, the National Association of Home Builders (NAHB) report concluded, "If annual costs during the first year of ownership are the constraint, this buyer can afford to pay $37,655—or 23 percent—more for a new house than for one built before 1960. The difference is a little more than enough to cover the price of an extra full bathroom". Liz Sprenger, Destiny Home's design therapist says, 'Homeowner's love having a couple thousand dollars to spare to decorate the home's interior".
Utilities, Home Maintenance, Property Taxes And Homeowners Insurance
The annual costs of operating a home include utilities, home repairs and maintenance, property taxes, and insurance, according to the report. As many homeowners are beginning to anticipate expiring homeowner tax cuts, the Lower Operating Costs Mean Buyers Can Afford a Higher-Priced Home report is all the more helpful. "Prospective buyers and homeowners do better determining how much house they can afford to build once they can more accurately budget home operating costs", comments Sprenger.
The report titled Lower Operating Costs Mean Buyers Can Afford a Higher-Priced Home—If It’s New published December 5, 2012 by Paul Emrath, Ph.D. is a useful resource for home buyers wanting to know what amount of funding they need to build the home of their dreams, or to determine if they should do a major home renovation versus build a new one. Summarized report highlights include:
- Operating costs to run a home - average $6,900 a year or more.
- The biggest budget allotments to operate a home are fuels and property taxes - around $2,500 or less.
- Narrowly defined maintenance costs (Includes painting, plumbing repairs, HVAC equipment, fences, etc. Exclude flooring, roofing or fixtures.) average $547 a year but decline as the structure becomes newer—from $564 a year for homes constructed prior 1960 to only $241 for homes built after 2008.
- Converting homeowner overall costs to run an average home - $3.77 per square foot.
- Operating costs per square foot decline regularly as the structure becomes newer. For homes built before 1960 averages run - $4.26 per square foot. For homes built after 2008 averages run - $2.92 per square foot.
- Operating costs as a fraction of value also decline regularly as the structure becomes newer, from nearly 5 percent of the home’s value for structures built before 1960 to just under 3 percent for homes built after 2008.
- In summary, homeowners should budget annual operating costs around 4.24 percent of the home’s value.
Again confirming operating costs of older homes are higher, the report's findings show the percentage of the home's value also decline regularly as the structure becomes newer, from nearly 5% of costs for structures built before 1960 to under 3% for homes built after 2008.
Overall, homeowner operating costs average $3.77 per home square foot and 4.24 percent of the home’s value. "As homeowner's debt drops, and household operating costs are trimmed, homeowner's have more discretionary funds to spend," Sprenger said. "Aggregate consumer debt fell again in the third quarter, by $74 billion, continuing the nearly four-year downward trend in household debt. As of September 30, 2012, total consumer indebtedness was $11.31 trillion, 0.7% lower than its level in the second quarter of 2012 and down $1.37 trillion from the 2008 Q3 peak", according to the Federal Reserve Bank Of New York November 2012 report.
Destiny Homes has built and renovated luxury homes in Minneapolis and the surrounding residential communities for over 35 years. Being intentional about much more than new construction, renovations, remodels and home design; quality, friendships, and customer service make up why Destiny Homes is a highly awarded Minneapolis home builder. If you are seeking an established reputable home builder in the Twin Cities area, give us a call at 952-934-5706.