Purchasing a Home - New or Used

For most people their home is the most expensive purchase they will make and the statistics show 85% of the time the purchase is for a used house. Which is better? To purchase a new house…..or a used house

First we need to analyze the reason someone purchases used products. In almost all cases it is price induced. A two year old car has depreciated and is less than a newer model. A 10 year old computer or cell phone is outdated and can be purchased for very little. The reason is simple. With the rapid advancements in technology and material development, the new models are more efficient than their older counterparts. This is the same in building construction.

Newer homes utilize PEX instead of copper water lines. They operate with LED and CFL lighting instead of the expensive Incandescent bulbs. The new homes have lined crawlspaces instead of ones with vents. The HVAC units have higher EER and AFUE ratings resulting in greater energy efficiency. The better homes have ICF exterior walls instead of wood framing.

So one would assume the reason so many used homes are purchased is the significant price savings. Hmmm…..did someone just state “What price savings”?

Maybe the question should be “Why are new houses priced around the same as used houses”? One would expect to realize a significant savings when purchasing used with the additional maintenance and operating expenses.

Let’s also look at the issue of equity!

When a used home is financed an appraisal is done to insure the house is worth the purchase price. This appraisal will reflect the purchase price resulting in the seller realizing all equity gains. The only equity the purchaser will have is what they have placed as their down payment.

When a new home is financed an appraisal is done based on the land, the house plans and the specific construction materials being utilized. Overwhelmingly, the majority of the time this is higher than the actual costs to the purchaser for the land and construction of their new residence. This results in the purchaser realizing the additional equity in addition to their down payment.

In conclusion I ponder would I spend the same amount of money to purchase:
- A 486 computer compared to the latest version?
- A rotary telephone or a touch tone?
- An original cell phone with a case verse the latest IPhone?
- DOS operating language or Windows or VISTA?
- A 14.4 modem or broadband?
- An older home or a new energy efficient green home?

Do termites enjoy ICF construction?

As the weather warms towards the end of spring we realize Termite’s are alive and breeding well in Tennessee. I do not know why Termite’s enjoy the taste of wood in homes. I would tend to believe there is enough wood in the ground to satisfy the hungriest of the bunch!

When building a house utilizing ICFs (Insulated Concrete Forms), one would think their home is safe from the intrusion of Termites. This is just a myth and is far from the truth. If you talk with a pest control sales rep they will concur. If you talk with an ICF sales rep they will tell you not to worry about it. Both just want the sales and do not really care to know the truth. An ICF without termite pesticide placed in the form is a condominium paradise. The constant temperature of the concrete and the fantastic tunneling ability of the polystyrene create a perfect habitat and breeding ground for Termites.

Several years ago we built ICF homes without Termite protection. We have found it did not stop the termites. We have pictures where the Polystyrene looks like the old ant farms when the Polystyrene has been peeled back. The termites set up different areas for their living quarters, cafeteria, breeding ground and even a cemetery. The more elite termites tend to tunnel to the highest level. We also have taken pictures where the termites have tunneled up through the polystyrene and started to eat the wood in the window seals.

We will only build ICFs now days with Termite protection in the polystyrene. Perform Guard is the only code-approved method for using foam plastic insulation below grade in the heavily infested areas. It is mixed in when the polystyrene is in the liquid state. It is then steamed, the polystyrene beads pop out and Perform Guard is permanently embedded in the ICF. As of this date we have never had a termite issue in any ICF we have built utilizing Perform Guard!

Green can save Green

Green seemed to be the prevalent theme in the year of 2008! Every seminar, trade show and advertisments for new and old products were claiming to be Green. In reality I am not sure the majority of Consumers care about Green except for the Green they can keep in their wallets. The good news is some Green can save lots of Green!

In one study I reviewed, 49% of the participants said "a company's environmental record impacted their purchasing desicions", however, only 21% claimed they had purchased a specific product over another because of it, and yet, more surprising, only 7% could name the specific product they purchased.

We have always been a nation listening to the WII FM station! (What's In It For Me!). We heartlessly make choices based on today and not tomorrow. This is especially true when it comes to our usage of energy. In the last five years we have increased our energy usage by 10% while silently watching the cost double during the same span. Expanding the energy problem is the world growth, which continues to double every 80 years, and other nations' subsequent desire to enjoy energy also. In 2007, the United States continued to do their part in increasing the world growth by setting a record year for births!

What does this mean and How does it Affect the Consumer?

The economic theory of supply and demand will greatly influence the energy market. There will be more demand for energy with less being available per capita and household. We will see substantial yearly increases in energy costs. Furthermore, we will see the government tapping into hidden taxes on utilites which will increase the costs. Consumers will be obligated to decrease their energy usage, if only for cost reasons.

Over the last few years we have experienced a tremendous increase in "Green" purchases that actually save "Green" when it comes to energy usage. Energy efficient commercial buildings, energy efficient residential homes and energy efficient automobiles have substantially increased. Future resale values will be directly linked to the energy efficiency of the houses, buildings and cars.

"Green" was the theme of 2008. "Energy Efficiency" will be the theme of 2009.

Builders or Homeowners - the Blame Game

As I consult with Builders, Developers and Homeowners, it amazes me how many are uninformed in regards to the latest trends and changes in Building Materials utilized in construction. Everyone seems to be more attentive to the cosmetics of a home than with the actual building structure. The glitz is a one time purchase and can be changed anytime, however, the structure creates an ongoing cost. When a person purchases a home their decision process seems to follow an order like this:

1.) I like the look of this house from the outside.
2.) I like the look and feel of this house on the inside.
3.) I think I will purchase this house.

A house is usually the highest amount a consumer will spend on a purchase, yet they don't question the after purchase costs. Even with a car they will follow a different evaluation method:

1.) I like the look of this car from the outside.
2.) I like the look and feel of this car on the inside.
3.) What is the miles per gallon?
4.) What is the warranty?
5.) What will be the resell value down the road?
6.) What will the new models look like?
7.) I think I will purchase this car.

I talked with a General Contractor this week that stated "I have been building for the last 30 years and don't see a need to change the way I build". Wait a minute....I don't think He was listening to what He said. Is He still installing rotary dial telephones in His homes? Is His computer from the 80's? Do people still enjoy avacado living room carpet? Does He still drive a Pacer or Gremlin? The world is changing extremely fast and the building technology seems to be shifting even quicker. Affordable Zero-Energy Homes are happening now and will only become more prevalent with the fast-paced rise in utility costs. Builders and Developers have an obligation to their clients to stay abreast of the changes. I believe we will be seeing a large amount of lawsuits, filed by Homeowners against their Builders, for building a custom home that is not affordable. 

If a Home is not energy efficient, then it is not affordable. If the Home is not sustainable and has high maintenance problems, then it is not affordable. If the Home creates an evironment where the family has health issues and medical bills, then it is not affordable.

Who is ultimately liable? The Builder or the Homeowner? Unfortunately, until the Homeowner becomes educated with their choices most Builder's will continue to claim ignorance!