Buying a home or buying land and build your house?
Buying and renovating a home or building your own home is one of the biggest investments you will ever make, and therefore one of the most important.
Both options are loaded with decisions, emotions and feelings, since housing is probably where we will spend most of our time.
The questions you hear most often are, what is better, to buy a house or to build one, is it more profitable to build a house than to buy a flat, or what would be cheaper, to buy or to build?
Of course, the decision on the million dollar question often goes beyond the economic issue, and many other important factors should be taken into account. This means that for each person the balance leans to one side or the other, depending on their priorities.
Let’s then analyse the factors to be taken into account when it comes to buying or building your house-floor.
We begin with one aspect that we consider to be one of the most important. Today most people work in cities and therefore want to live in them. We like to have everything we need nearby: shops, restaurants, cinemas, etc.
While it is true that in any large town or city we can find many buying options, it is also true that since we live in large towns, we prefer to do so in the central areas. Obviously, this great demand means that prices, as you get closer to the centre, will rise disproportionately. In the same way, at the same time that prices rise, the size and quality tend to fall, as they are usually older apartments.
On the other hand, when looking for a plot of land in the outskirts, or in smaller towns, the options are not so many. Not only there are fewer plots of land for sale, but you also have to bear in mind that in many of them you will not be able to build anything. This makes looking for and buying land to build a house an often slow and complex task. But not everything is a problem, in favor we will say that the prices are much more affordable, and what we lose in the proximity of the center we gain in space and quality of life (it depends, of course, on the personal and work situation of each person).
Involvement and participation
Another important (very important, I would say) and personal factor is the level of involvement. There is a big difference between the time you will have to spend on buying a house (even on renovating it) and the time you will have to spend on building your house. And when I talk about time, I mean time, desire and effort.
The whole process of building your home often requires active involvement on your part, finding and buying the land, choosing your professional team (architect, surveyor, etc.), in design meetings, in decision making, in comparing mortgages…
Some of these tasks will also have to be carried out if you decide to buy a house (new or second hand), but without a doubt, the effort involved will be much less than that required to build a house.
It is true that having a good team of professionals on your side will simplify the whole process, but remember to take into account your availability during the next few months when making a decision.
Time and Deadlines
In this respect, one cannot be clearer, as the data are totally objective. Without a doubt, buying a home is a much faster process than building one. We are talking about the fact that you could easily move into your new home in just a few weeks from the start of the purchase process, whereas building a «normal» home can take, depending on many factors, between 10 and 18 months (not counting the purchase of the land).
Although what we were saying about the purchase of homes is true, it is very rare that the home purchased is 100% ready, finished and / or appropriate to the tastes and needs of the buyer.
If you buy a second-hand flat, it is very possible (and almost always necessary) that it needs at least a face wash or the replacement of some element (paint, floors, tiling, etc.) However, most of the time the work goes more, changing carpentry, reforming the kitchen, bathrooms … or even having to make a comprehensive reform.
It is important to point out here that the reforms of houses, in which a technical project is not needed, are normally valued by the constructor, who presents the client with two key data: the price and the term. The problem is that builders usually carry out several works in parallel, and no one can guarantee that the deadlines will be met.
What we want to make clear at this point, is that we must be careful when assessing the fact of buying and reforming a home, because sometimes the deadlines can be extended months until the time you can go to live. In any case, we recommend always contacting a professional for advice.
By design we do not only mean the aesthetic aspect of the home, but everything that defines it: distribution, structure, installations, energy efficiency, equipment, finishes, etc.
When there are not many demands on all these aspects, it will be very easy to adapt a purchased home to your tastes/needs. You probably won’t have to make many reforms, just the necessary ones, and this factor will not be too influential when it comes to buying.
However, when the design is something important, when you buy a house already built, the fact of getting the desired house is very much conditioned, since each person/family is a world, and what works for some people, may not work for others.
Imagine: you have seen a flat at a very good price and that «it is not bad», but before deciding to buy you stop to analyze it carefully. The orientation is north, so you will not have good lighting. The distribution is strange, with meters and meters of corridor, and you will have to add much money to reform it to your taste. On the other hand, you don’t know exactly how the facades are built, nor how cold it will be in winter (and how much you will spend on heating). The windows are rather small, as in most of the flats, and to modify or extend them you will need a technical project (plus expenses). You will be able to move the kitchen and the bathrooms, but always close to where they are, since the downpipes and the rest of the installations will not be able to touch them.
And then you understand why it is cheaper than the others, and why it has been on sale for a long time without a buyer. But it’s not all bad news, since with a proper integral reform you will be able to adapt it more or less to your needs. Of course, by sacrificing several of your initial ideas.
What I want to get at here is that in this aspect, new construction wins by a landslide, since you have total freedom in the design.
In short, starting from scratch you can, together with your architect, create an efficient home that meets all your tastes and needs, optimizing the distribution, facilities and structure to obtain a functional result adapted to you.
The vices and defects
A home, whether second-hand or new, can have defects and flaws. If you can see them with the naked eye, at least you know what you’re buying. The problem comes when these are not easily appreciated: they are what we call «hidden defects». They usually appear over time, and are a direct symptom of the age of the building. They may have been caused by poor execution, project failures or lack of maintenance.
Many times they will be unimportant problems that are easy (and cheap) to solve, such as faults and leaks in the installations, small cracks, etc. However, on other occasions, serious problems can arise with high repair costs, which can affect the structure or the enclosures, and which you did not have when you bought the house.
We continue with one of the most neglected factors: energy efficiency and consumption of housing.
For relatively few years now, a minimum of energy efficiency has been demanded from homes. This means that, generally, houses built more than 5-10 years ago do not have designs or construction systems suitable to current requirements. What does this mean? Well, that in order to achieve a good interior thermal comfort, the energy expenditure is much higher than in houses built according to the current standards.
The situation in terms of energy efficiency, bioclimatic architecture and passive houses has evolved incredibly in recent years, and it is doing so ever more quickly. Not only in terms of technological innovation, but also with the constant revision of the premises of residential design.
To clarify what all this means when deciding whether to buy or build a house, one should ask how much does the house consume? How much energy (and therefore how much money) does it cost to heat and cool it? The problem is that the answer is not at all simple and depends on complicated calculations. On the other hand, energy efficiency certificates do not usually provide 100% real data either.
What we do know is that when we build a new home, following all the design premises of bioclimatic architecture, we can be sure of energy efficiency, and our pockets and the planet will be grateful. On the other hand, when we buy a house, we will be very conditioned by how it was built in the past.
Finally we come to the price, the question you’ll be asking yourself from the beginning. Which is cheaper, buying a house (and renovating it) or building your own house? Which is more profitable?
Well, the answer is not that simple, as it depends on many factors in each particular case. However, from the different studies and statistics that can be consulted (which always show average values), it can be deduced that the cost of building a house is around 15-30% less than the cost of buying a house.
To give an example, in 2020 the price of housing in Torrevieja is around 2100 euros/m2. That means that a second hand property of about 150 m2 could cost about 315,000 euros. Adding taxes (property transfers) and other fees, as well as commissions from the real estate agency, notary, property registry… we would be talking about about 380,000-385,000 euros.
Add to this the need to reform because it is not usual to have a used house in perfect condition even if it costs that much, we could talk about an additional investment of 50,000 euros for basic reforms (changing the windows, floors, reforming the kitchen and bathrooms and painting). In the end, the house would cost about 450,000€.
On the other hand, for the construction of a house of the same surface area in Torrevieja and nearby villages we have observed, from our role as architects, that the total cost of building a house, including taxes, architects’ and surveyors’ fees, licences and taxes usually ranges between 900-1000 euros per square metre. For the construction of a house of 150 m2 we could then say that about 135,000-150,000 euros are needed.
To this data you should add the purchase of the land, which as you imagine, will take an important part of the investment and can reach, even exceed, the purchase price of a used house.
As told before, the answer wasn’t easy. A priori, as we have shown you in the example, the purchase price of a house far exceeds the construction price. Why? We have to understand that when buying a house, there are intermediaries who are making money from the transaction.
CONCLUSIONS: BUY OR BUILD. THE MOST PROFITABLE IN 2020
Indeed, we cannot claim that one option is ALWAYS better than the other. As we have analyzed, there are many factors that will influence the decision. Depending on how you are and how you want to live, you can choose to buy or build a home.
Making a general summary of all the above, we will keep several main keys:
– The economic factor slightly favors the option of building your own house over buying, as there are fewer intermediaries. However, this can change drastically by adding the factor of buying the land, with which you can reach or even exceed the purchase price of a house already built. This being the case, we recommend not only thinking about the economic factor as the final reason for choosing, but rather thinking about the following three points.
– The location, which normally plays in favor of the purchase of a house, since the offer is much greater.
– The time. If you want or need a house quickly, then certainly buy it.
– The design and the degree of personalization that you want, which plays in favor of the construction of your house, being able to make it 100% adapted to your tastes and needs. Remember, we are not just talking about aesthetics, we mean EVERYTHING. Orientation, lighting, distribution, installations, air conditioning, etc.
With this we finish. We hope with this article we have helped you to clarify your doubts or, at least, have given you the bases to take into account to make this decision. Now it’s your turn to ask yourself what best suits your needs.
We remain at your disposal for any questions you may have and we will be glad to accompany you in the process of renovating or building your home.