You’ve paid an ungodly amount for your house. You’ve also paid more than you can believe in closing costs. But if you are like the typical homebuyer, your spending isn’t over.
Based on its analysis of Census Bureau pre-pandemic data, the National Association of Home Builders said a buyer of an existing single-family house generally lays out $13,718 for new appliances, furnishings and remodeling during the first year of ownership. But surprisingly, someone who purchases a newly built place spends even more: $18,155, on average.
Buyers of new homes spend the most on property alterations and repairs. Most of that money – $9,288 – is used for outdoor features such as patios, pools, walkways, fences and landscaping. The rest is split almost evenly between appliances and furnishings.
In the appliances category, these buyers spend the most on televisions, followed by washers and dryers, lawn equipment, refrigerators and freezers. As for furnishings, they spend most on sofas and mattress sets.
Most of the typical existing-home buyer’s outlay – $7,391 – also goes to property alterations and repairs. This group tends to spend more on remodeling, painting, wallpapering, flooring, roofing, windows and HVAC work.
For what it’s worth, homeowners who stay put also spend big – $8,908 a year – again, mostly for property alterations and repairs.
Megabuilders to Blame for Site Shortages
With their ability to raise money, large, publicly owned homebuilders are all but taking over the markets they serve by snapping up huge numbers of building sites .
The lack of finished lots ready for crews is one reason builders have been unable to keep pace with demand for new houses. But the big national companies have more than enough sites on their books to keep going for years.
Housing economist Tom Lawler said the three largest builders have boosted their lot holdings during the pandemic. As of the end of March, D.R. Horton has 574,000 lots under its control, up from 329,300 in March 2020.
Two years ago, Lennar either owned or had options on 307,806 sites. Now, it controls 481,102. And the Pulte Group has upped its lots over the same period from 159,841 to 234,542.
Rick Palacios, research director at John Burns Real Estate Consulting, reports that public builders have collectively increased their lot holdings by roughly 33 percent of late.
Many of their sites are still under contract but not yet owned, meaning that as the market slows, builders could back out of their deals. That would put lots back on the market for others. Only time will tell, but the giants of the building business are so well-heeled that they could simply hang on.
Hire an Inspector Anyway
In an effort to beat back competitors during the pandemic, many buyers waived independent home inspections. If you’re one of them, that doesn’t mean you can’t still have the place gone over with a fine-toothed comb.
Consider hiring an inspector after you close, but before you move in – or even after you take occupancy. That way, at least you’ll be alerted to any major defects that you didn’t spot earlier, or that the seller didn’t disclose. In the latter instance, if the damage is significant and the law where you live requires that sellers must reveal known defects, you could have a legal case against the seller.
Beyond that, an inspection is a good way to get to know the condition of the house in general. You’ll learn whether the water heater is on its last legs, how long you can expect the roof to last and perhaps even the useful life of the appliances. Also, the exam could reveal potential safety issues such as faulty wiring, a blocked fireplace or other issues that you’ll need to address sooner than later.
More Signs of Underbuilding
America’s housing stock is aging gradually, if not gracefully. In 2005, the median age of our houses was 31 years, according to Census Bureau data. In 2019, the median had jumped to 39 years.
The main reason is that construction has continued to lag demand since the recession of 2008. There’s been a shortfall of some 1 million to 1.5 million houses needed to keep the market running.
While the demographics point to continued strong demand for newly built residences, the aging trend likely means a strong remodeling market because older houses usually need updating. As their houses age, owners need to replace appliances, maybe add a new room or change out their roofs, among all manner of other improvements.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at firstname.lastname@example.org.