Recent research by two Las Vegas companies indicates there is only a modest price difference when comparing new home sales with resales.
Both companies eliminated the inclusion of sales’ prices of distressed resale homes, such as foreclosures and short sales, because they are homes sold under extenuating and exceptional circumstances that often reflect highly undervalued prices not typical of home sales that occur under standard conditions – much as new car sales are not comparable to used car sales.
An analysis and report by the Las Vegas office of First American Title Co. indicate that, on average, the price of a new home is only $4,400 more than a comparable resale home. The company looked at sales
of new homes built in 2013/2014 and resale homes built in 2009/2012.
First American Title examined pricing in eight categories of new and resale homes, ranging from the smallest-size category of “1,500-2,000 square feet, 1 story with 3 bedrooms” to the largest-size category
of “3,000-4,000 square feet, 2 story with 4 bedrooms.”
In three of the eight categories, the average closing price of new homes was less than the average closing price of comparable resale homes. For example, the average closing price of homes in the category of “2,500-3,000 square feet, 2 story with 3 bedrooms” was $10 less per square foot for a new home compared with a resale home.
In another analysis and report, the SalesTraq division of Applied Analysis concluded “the gap is less dramatic” between median resale and median new home prices. The difference between the two figures “is not necessarily an apples-to-apples comparison.”
For example, the average age of a resale home closed in 2014 was 22 years, suggesting that half the homes were constructed prior to 1992, SalesTraq noted. “There are a significant number of differences between a 22-year-old home and a new construction unit, including technology, current building codes, required maintenance and refurbishments, size and other factors.”
A new home, built to the International Energy Conservation Code, is 30 percent more energy efficient than homes built in the early 2000s, according to the U.S. Dept. of Energy. New homes built to the Energy Star program requirements are even more energy efficient.
Also, the average size of a resale closing in 2014 was 1,834 square feet compared with the new-home average size of 2,369. That 535-square-foot difference could account for $50,000 or more of the pricing gap, SalesTraq concluded. The association calculates that the 535-square-foot difference accounts for $61,527 of the pricing gap.