December 9, 2024
It comes as no surprise to homeowners that there is a cost to homeownership beyond the down payment, monthly mortgage payments (with baked in property tax and homeowners’ insurance), and some landscaping upkeep. It’s maintenance.
And now we have to data points on that.
According to UBS housing analyst John Lovallo, the new-home premium has reached an all-time low of 3%, meaning it’s just 3% more to buy a brand-new, albeit production, or “cookie cutter” home, then to purchase a previously owned home.
Since 1968, by comparison, the new-home premium has averaged 16%.
Here in Sonoma County, of course, there’s a hitch. This isn’t Vegas, Phoenix or some other place where homebuilders can just buy land beyond traditional suburban boundaries and build housing tracts. We don’t have that kind of land – at least that isn’t covered in vineyards (for the most part) or just otherwise designated for agricultural use. We like that, btw, and it’s a big reason that many of us live here.
Yet. Once a property reaches 25 years of age, major components and systems are likely to need replacement, and these could be big-ticket items, including roofs, windows, plumbing fixtures, decking and rails, plus the usual appliances – which have much less than a 25-year life.
According to an analysis by the Federal Reserve Bank of Philadelphia, homeowners in properties built between 1970 and 1999 spend 26% more on annual maintenance than homes built after 2000. The costs to maintain pre-1970 homes are even higher. Moreover, older homes tend to be more expensive to keep warm in winter and cool in summer.
Normally, older homes that are not renovated lose value, or at least don’t appreciate as much, as is the case in Sonoma County. The current market, however, is a double-whammy for home buyers, as limited supply is increasing prices, even for older, marginally improved homes. While buying a home off a builder’s assembly line isn’t as exciting as buying your dream fixer-upper, at the moment the former looks to be smarter financially.
Serving Cloverdale, Graton, Healdsburg, Rohnert Park, Santa Rosa, Sebastopol, Tomales, Windsor and surrounding Sonoma County, CA areas.
The First step when selling your home is to set the right price for the current market conditions in your area.
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