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Buy, build or renovate: What’s best for first-time home buyers?


With a short supply of entry-level housing for sale, getting your foot in the door you want could be difficult if you’re looking to buy your first house soon.

Nearly a third of Americans who’ve never previously bought a house say they plan to in the next five years, according to a survey commissioned by NerdWallet and conducted online by The Harris Poll among 2,007 U.S. adults in January 2020.

Before you join the house hunt, decide which type of property best fits your goals. Here are the pros and cons of buying a turnkey home, building a new house or renovating a fixer-upper.


What could be the downside to a move-in-ready house? All you need to do is move. But in today’s market, competition is fierce. According to data from the National Association of Realtors, in December 2019 the inventory of homes for sale in the U.S. reached its lowest level in more than 20 years.

“You have to be ready to go yesterday,” says Simone Plush, a real estate agent at the Washington, D.C.-area Century 21 New Millennium. Especially for first-time home buyers, the process can be “an emotional roller coaster,” Plush says. She encourages buyers to be swift when making an offer on a turnkey house. And taking steps like looking at houses priced slightly below your budget could let you afford a competitive bid that’s over the asking price.

When you’re feeling frustrated, Plush says, remember your “why” — the reason you’re house hunting in the first place. Reconnecting to your desire to have a backyard for your kids, for example, can help you maintain momentum.


New construction might sound intimidating and time-consuming, but unless you’re starting from scratch with an architect and a piece of land, it can be surprisingly straightforward and speedy.

“In many of our communities, home buyers have the option to purchase a quick move-in home,” one that will be ready within 30 to 90 days, said Jessica Hansen, vice president of communications for the Arlington, Texas-based homebuilders D.R. Horton.

Time frames can vary by builder and demand. Jeff Mezger, president and CEO of the Los Angeles-based builder KB Home, says his company needs an average of three to four months from breaking ground to move-in day. The average house search takes about 10 weeks, according to a 2019 NAR survey, followed by several more weeks to close on a purchase and get keys.

In the same survey, the most-cited reason house buyers gave for buying new construction was to avoid renovations or trouble with mechanical systems. Both these builders, like many others, offer home warranties, protection that buyers of existing homes may have to buy for themselves.

“When you close on a used home, you’re on your own if something goes wrong,” Mezger says. “With a new home, you still have that relationship with us.”

But these conveniences come at a cost: In the NAR survey, those who bought new construction paid a median price $85,000 more than those who purchased a previously owned property. Practicality may also depend on where you live. In an urban setting or well-established suburb, building anew may be difficult without paying to tear down an existing structure. In rural places, there’s plenty of land, but starting from the ground up outside a development may mean extra costs for securing access to water, electricity and more.


Renovating a fixer-upper is tougher than it looks on TV, but if a house has good bones, it might be worth trying to snag, especially if it’s in your ideal neighborhood. The NAR survey shows 26% of first-time home buyers said they compromised on condition in order to buy a home. Condition issues are unsurprising as the country’s housing stock ages. According to Harvard University’s Joint Center for Housing Studies, by 2019 nearly 80% of American homes were at least 20 years old, and 40% were at least 50.

“First-time home buyers should not be shy about houses that have good mechanical and structural components that are just ugly,” says David Pekel, a former contractor who’s now CEO of the National Association of the Remodeling Industry. “You can fix ugly.”

Pekel recommends working with an experienced home inspector to decide what needs to be done. A contractor can lay out the scope of work and potential cost. Pekel says most will charge a consultation fee that’s refunded if they’re hired.


Whether you choose to buy, build or renovate, there are various financing options. Beyond conventional mortgages and standard government-backed loans, there are construction loans and renovation loans suited for borrowers financing new construction or remodeling. A lender that offers loan products for the kind of property you want can guide you through your choices.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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