Cost to Buy v.s. Cost to Own
You know for a long time I have said that you can buy more house on the open market then you can build new for the same money. Sorry, that has not changed yet.
This is another way of saying. old house are cheaper. But they may not cost you less to own. Cost of ownership is a function of what you pay for it, plus what you spend to keep it up and live in it less the money you sell it for. Let’s say you buy a house for $200,000 live in it for 10 years put about $40,000 ($4000/year) into improvements and maintenance and then sell it 10 years later and it sells for $240,000. Add in annual taxes, heat light and power and interest expense on your mortgage and you might have lived there for a cost of $100,000 which sounds like a lot but really is pretty cheap. Do the same math with a $1500/mnth apartment and you could be out more then double that. If you are really smart and buy a house right, do lots of maintenance work yourself over the years and the market grows you could live for free if you sell your house for enough over what you bought it for.
Now if you bought a new house for lets say $260,000, clearly a lot more money then the cost of buying the older house. But for the first 10 years your cost of Maintenance and improvements should be next to nothing so lets say $10,000. Theoretically a newer house should be more energy efficient so the cost of heat, light and power should be lower. Now when you go to sell it, it is likely a relatively new home compared to the old home. With that it likely more modern with a layout (floor plan) that is closer to what people are looking for today so it’s market value is considerably higher. If this is true and again assuming you made good choices you could sell this house with the same 20% value increase for $312,000 with lower operating cost and living expense and might well find yourself getting paid back with a net positive 10 years later.
So while the up front Cost to Buy was higher the Cost to OWN is much lower.
All of this comes from my own experience. My wife and I bought our second house a number of years ago and it was at the time the most popular house design on the market. The classic center hall colonial on a great lot in a great neighborhood. However, 10 year later we listened to a realtor tell us how no one wants a L/R and a Family room as well as a D/R with an eat in kitchen anymore. Additionally the rooms were small and cut up and now everyone wants a big open great space with less rooms. Our closets while they were the huge double door closets with lots of space, they were not walk in. Because of these things and despite all the time and money we had spent keeping the house like new and modern it was still a floor plan that was very hard to sell, worse yet, it did not carry high market value.
We bought this house used at a time when it was the end of that designs run. The needs of people are every changing and with it what holds value changes too.