New Construction Homes Sell for 16% More Per Sq. Ft. than Resale Homes
Selling homes for more than twenty years now (licensed in 2003), one of the rules of thumb in the real estate market I tell my clients is that new construction homes sell for a lot more per square foot than resale homes. Appraisers would never compare new construction homes with resale homes when conducting a report, and Realtors worth their salt would never compare the two when preparing a home value estimate for a client. But in all my years I’ve yet to find a good place to get the hard data, the difference in price per sq. ft. between new and resale homes in our area. So I decided to start my own annual reports on this, so I can share the information with my clients with total confidence.
I love writing around the greater Portland real estate market and one of my favorite categories is, “What Causes a Home to Sell for More?” In that category I have a lot of fun researching the higher or lower home values when properties have ADUS, swimming pools, solar panels, septic or sewer, single levels or multiple, and more. We will now be adding the difference in home value between new and resale properties.
The Research Criteria
We are going to look at all of the detached homes that sold in Portland, Oregon in the last four months, from 11/10/22 to 3/10/23. The total count of homes sold in that time range is, 1,834. Of the 1,834 sold detached homes, 112 were new construction and 1,722 were resale homes. Data provided by RMLS.
Price Per Sq. Ft. of Sold Detached Homes in Portland
Let’s start with the big picture on Portland, Oregon price per sq. ft. For reference, below is a price per sq. ft. chart provided by Fidelity for Portland, Oregon that runs for the last five years, from March 2018 to today.
Now back to the last four months, researching all detached home sales in Portland, Oregon.
New Construction Homes Sold for 16% More Per Square Foot
The average price per sq. ft. of new construction homes in the last four months was $336. The average sold price was $749,945 and the average size of the new homes was 2400 sq. ft.
The average per per sq. ft. of resale homes in the last four months was $287. The average sold price was $528,500 and the average size of the resale homes was 2092 sq. ft.
Real Estate Advice for Homeowners on New Construction
There are two reasons not to compare your home value with that of new construction nearby. First, new construction always sells for more per sq. ft. Second, new construction often draws a completely different buyer pool. Just like there are folks out there who will only buy new cars, there are home buyers who will only consider new construction homes. The opposite is true as well, just as there are many people who realize the value of buying a used car, there are many home buyers that realize the value of purchases a cared-for resale home. Either way, don’t compare your home to new construction.
Real Estate Advice for Homebuyers on New Construction
Yes, you can spend that extra premium to buy new. You have the comfort of knowing no one else has lived there, and you are getting a significant warranty as part of the purchase (by law). If the home isn’t fully finished yet, you might even get to pick some of the finishes for yourself. However, do not forget that you’re paying a premium, and a lot of things that automatically come with resale homes (like window coverings, fences, established landscaping, and more) won’t be included in your new construction purchase.
Work with an Experienced Realtor
I’ve been selling homes in the greater Portland metro since 2003. I lead a small team of agents, and we’ve had the pleasure of helping over 2,000 clients complete their home sale or purchase locally. If you’re looking for a top 1% sellers agent, or top 1% buyers agent to assist your next real estate journey, we’d love to connect with you today. Call our main line at 503-714-1111 or chat with the bot on this site. We can’t wait to connect with you!March 17, 2023