The best answer to that question, of course, is, it depends!!!
Since I just received a similar question from one of my clients, I figured that I should put together some real-time numbers before answering.
Her question was, “How much more does a newer resale home cost than an older home?”
So, I looked up sales in the past 6 months for 3 bedroom, 2 bath homes that were built between 1987 and 1999 in the Laguna Creek neighborhood of Elk Grove, California. A simple market analysis of these homes showed that the average home was about 1,448 square feet in size and that the average sales price was about $159,000. Therefore, the average price per square foot was about $110.
Then, I looked up the sales in the past 6 months in the East Franklin neighborhood of Elk Grove, California. Only looking at 3 bedroom, 2 bath homes that were built between 2000 and 2007. The average home in this neighborhood was about 1,692 square feet in size and the average sales price was $197,000. That amounts to an average cost per square foot of $116.
So, on the surface, the older home was about $6 per square foot cheaper, but was also much smaller.
Does that mean that I could tell her that the older home was a better buy? Again, it depends.
Most of the homes built before 1991 in our communities had cedar shingle roofs. Most of them are in need of replacement. So, if you bought an older home with a shingle roof, you would need to consider the cost of a new roof when you compare these older homes with the newer homes that have tile roofs. Generally, you are not going to replace a shingle roof with a tile roof because the older home was not engineered to handle the weight of a tile roof. The alternative would be a standard composition shingle roof. How much does it cost to replace the old shingles with a composition shingle roof?
I went online to the Service Magic site that provides the homeowner with estimators for such tasks. http://www.improvenet.com/HomeOwner/ProjectTools/index.html Based on the the roofing estimator, depending upon the type of roof you were replacing and the quality of the roofing materials you were using, the cost could be somewhere between $5,000 and $10,000 to replace the roof.
Unfortunately, the older roof is not the only consideration. What about paint and carpeting? You may have that expense for the newer home, as well as the older home, but since the newer home is generally larger, the cost for paint and carpet will be higher in the newer home.
Also, the kitchen and bathroom may need updating in the older home. And, last, but not least, you may need to consider replacing windows in the older home. That can add another $15,000 or more to the cost of upgrading the older home.
It seems like it is pretty easy to bring the cost of the older home up to the cost of the newer home if you do the roof, windows, kitchen and bathroom. You still have an old heating and air conditioning system to deal with too.
Although the older home was an average of $42,000 cheaper than the cost of the newer home, was it the better investment or not?
If it’s a home that I am buying as a rental, then maybe I will lean towards the older home because I probably won’t do anything other than the roof and paint and carpet. If I am going to live in it, then I will want to do it all and my overall cost will probably be about the same.
In the end, I guess it is all a matter of personal choice. Some people really like the look and feel of the older, more mature neighborhood. Some want the newer neighborhood.
With the above info, you should be in a position to make the best choice for you. And, when you are ready to move forward, give us a call at www.ElkGroveRealEstate.com, and we will be happy to answer your questions and help you experience the joy of home ownership.
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As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office. I hope it has been of value to you. Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow homeowners!
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