Should You Buy a New or Resale Home in El Paso Texas? | 2022

Should You Buy a New or Resale Home in El Paso Texas? | 2022

Hi, my name is John Peña and in this video we're going to talk about buying a new home versus a resale home. Hi, thank you so much for checking out the YouTube channel. My name is John Peña. I am the founder of Peña El Paso Realty Group. If you have any real estate needs, buying, selling a home, investing, please consider reaching out to us. And in this episode, we're going to talk about basically

should you buy a new home or should you buy a resale home? A resale just means a used home, a home that somebody else has lived in. And so when you buy a home, of course, there's the money part of it. It's the numbers. How much does the home cost?

How much is my mortgage payment going to be per month? Should I just rent? Absolutely, there's numbers that you should consider financially. However, when you buy a home, there's also the intangibles, the things that

make living in a home desirable. Being in a school district, so you're knowing that your kids are going to go to the same school year after year. Being able to make

renovations, being able to tear down a wall and, you know, open up a floor, do whatever it is you need to do. Or it could be simple things about let your kids paint the walls the color that they want to paint the walls or put up a pattern or whatever, right? So those are the intangibles about owning a home. And that's really like where the heart is, right?

That's where the heart of the home is. That's where your family is going to grow up and have memories. And so, you know, choosing a new home, a resale home, there's some things that you should consider. And so spoiler alert, if you're really attached to new homes right now, 2022, with what's happening in the economy,

basically, there are going to be less of them available. They're going to cost more and they're going to take longer to build. So I'll get to that in the end if you're interested in that. But first,

let's basically jump into the pros and cons. New home versus resale. All right. So it's funny because they're just one in another. The pro of the new is the con of the resale and vice versa. So first off, pro of a new home. All right, everything is new. You're the very first owner. This is awesome.

I don't get too excited about new construction and new builds until I go into like an epic like icon home or something or crown heritage home and I'm like, man, like this is super nice. Like, okay, this is pretty cool. That's you can't argue with that. And I suspect that's why most people want a new home because you go in that model home or you see the pictures and everything's new. It's like, you know,

it's a storybook. So that is a con of the resale home, especially if you've looked at some used homes, you know, from the 19 whatever and they were crazy, right? Because on a resale home, everything is old, right? You're like, you're not the first owner.

You're like the second, third, fourth, fifth, you know, owner. And so sometimes that's not great because maybe the people didn't take care of the home very, very well, right? Sometimes it can be cool because maybe the owners did take care of the home and did some like really cool things back in the day and now like your garage is like decked out as like an epic like wood shop or something. So, you know,

it can have its good things too. But con about new homes. Okay. New homes builders are trying to essentially maximize their dollar. How do they do that? They fit as many new homes into the smallest amount of space to maximize their dollar, right? What this means is that the yard of your new home is going to be small,

especially the backyard and your neighbors are going to be right on top of you. Horizon City, right? Sound familiar? There's a lot of the Far East that feels like this, right? So the other thing is that typically a builder isn't going to finish the backyard. So your backyard is just going to be a dirt pit. And so that's either an added expense or something you just have to live with over time. Now,

that's a pro for a resale home because on a resale home, it wasn't like that 50, even 20, 30 years ago. There's the lots are bigger. The homes are more spread out. There are larger yards, especially backyards, and it's not a dirt pit, but the home's been around for 40 years. So it's got probably mature landscaping, could have grass, could have trees that have actually had years and years to grow, that provides shade.

So that's one of the awesome things about a resale home. More space, neighbors kind of further away. All right, pro for a new home. Now, hard to argue with this. Modern design, open concept, high ceilings. Again, it kind of goes with that number one, because the epic thing about a new home is that

it's been built with the modern 2022 family in mind, right? That's why we have open concept, because you didn't want to have somebody cooking in the kitchen and then everybody else in the living room like having fun, and then whoever's cooking in the kitchen is like, ah, like walled and, you know, open concept.

Now, whoever is kitchen has a line of sight through to the living room, right? And so it brings everybody together. That's awesome. Like there's, that's epic. Some of the new design features that these builders do are beautiful. Like I love going into a new build, high ceilings, the the wood beams, like, I mean, builders are doing super cool stuff.

That is a con for a resale home, okay? Maybe builders were doing cool stuff in the 1970s, but that's not cool now. Perfect example. Homes in like the late 90s, early 2000s here in El Paso, especially on the west side, they have this like built-in shelving, basically, where the living room is, and they built in a space for the TV.

But in 2000, they didn't know that we were gonna have like ginormous TVs, and now our TVs don't fit into those pre-made spaces in the living room. So that's a design element that's now outdated, and that's what makes used homes sometimes not that cool, right? Con of new home, the location. So

I'm mostly talking about Horizon City, the Far East, and east of the Far East, northeast, but as we all know, all the new construction is north, right? And on the west side, all the new construction is kind of far north and far west, right? So

what are the common words there? Far. New homes are typically further away, because that's where the space is, right? Since they're further away, they're further away from great views of the mountains. They're further away from downtown. I mean, a lot of cool stuff goes on downtown, and like you're out there, right?

They might be further away from stores. Horizon City, for instance, is frantically trying to build up the stores and the infrastructure, so that there's shopping close by, but, you know, for now, if they want to go to someplace nicer, say the fountains, well, they got it. They're further away, right? So the other thing about the new homes being out in these kind of far-reaching

suburbs is that a lot of times the infrastructure isn't in place. I'm talking about sewage, streets, electricity, gas lines, and so what happens is that the cost of developing that infrastructure gets passed on to you, the consumer, who buys a new home in these areas,

because these areas will have what are called MUDs or PIDs. MUD, M-U-D, Municipal Utility District, or sometimes they're called Public Improvement Districts. So these exist out in Horizon City in the Far East, and you're essentially, it's just an extra tax that you're going to pay, because, you know, Horizon City isn't just going to shell out the millions of dollars to, like, create streets and all this stuff,

just because you're moving there. You're going to pay for that. So that's a pro, though, of the resale home, because the resale home is closer to town. They're older homes, so they were built first. They're closer to downtown. They're closer to,

like, great parks, things like that, that have been established. They're closer to the mountains, hiking trails. It's just, in my humble opinion, the location that older homes, whether it's on the west side or the east side, the locations are just better, because you're closer to everything. They're established, oftentimes, quiet neighborhoods. Again, the trees have been around for a long time, so the parks have been around for a long time,

so the trees are grown, and it's nice, you know. Better commutes, also. So, a lot of people are concerned about commuting. I know a lot of military have to be 30 minutes from the base or want to be, and now, as we start to push out these suburbs, like, you couldn't really do, like, a far, kind of, west side new build and make it 30 minutes.

Like, you have to either go through 10 downtown, where there's a lot of, it could be traffic, or you have to go through the mountain. So, the location of the new build is a little bit different. The location of resale homes, in my opinion, definitely better. Alright, a couple more here.

New home. Okay, here's a pro. The maintenance should be minimal. So, simply the maintenance of the home, the exterior or the stucco ought to be good. The roof, you know, you're not going to have to be like, on an old home, you're like, ah, how old's the roof? Or be like, ah, you're going to have to replace that in five years.

On a new home, no, you don't have to worry about that. The roof is brand new. Everything's brand new. The appliances are brand new. Your hot water heater's brand new.

So, I mean, that's a huge pro for a new home. That is, of course, then a con for a used home because, again, roof, ah, when was the last time the roof was replaced? The hot water heater might be, like, 12 years old and, like, tomorrow, all of a sudden, there's no hot water in the showers. So, you know, that's a con of the resale home.

Increased upkeep, maintenance, repair costs. And this is the last one for the pros and cons. All right, this is a good one. This could get the comments riled up.

All right, so a con of a new home is the quality, okay? What do I mean by that? The quality of materials that are being used to purchase or to construct homes now is different than what it was 20 years ago, 30 years ago, 50 years ago. Now, in some regards, it's better because there are, for instance, insulation.

Like, the insulation now is way more maximized and efficient and smaller than it was 30 years ago. Like, there are certain materials that new homes are going to come with that's going to be higher quality because we've simply made these, like, technological advances and the materials are better. Yes. The biggest one that comes to mind, people talk about this all the time, but in order to do, I'm not a builder, all right?

Don't get crazy on me on my vocabulary. In order to do a stick and frame build, basically where you put down a concrete foundation, you use lumber, 2x4s, 2x6s, to basically frame up the walls. You have, you know, everything's lumber, right? So, once you have that frame up, you have to put something around the frame of the home.

Now, back in the day, they would put up plywood, okay? Now, some builders are not using plywood because plywood is really expensive, right? We're going to get to this now when we talk about the numbers of should you do new or old. But, so, in order to compensate for the fact that plywood is more expensive or not readily available, some builders are using what would be called a glorified cardboard, okay?

Now, this has a lot of people upset because basically then they're like, they're building cardboard houses in El Paso. Well, I mean, that's a bit of an exaggeration. And now, sure, if we lived someplace where we maybe had blizzards or really intense tornadoes, earthquakes, well, yeah, well, then maybe I want a sturdier home. But, I mean, we're in the desert.

Aside from some wind every once in a while and a lot of sun, what's going to blow this house down, this cardboard house? But, again, to the point, also, builders might be skimping on materials because they're trying to build a house for X number of dollars and sell it to you for X number of dollars. And as their costs go up, well, they got to sometimes make sacrifices. And if they can't afford wood or they can't find plywood and they have to use some other type of material, well, I mean, that's what they're going to do.

I mean, it's a business, right? And now, again, it's not glorified cardboard. I'm sure I have to believe it's, you know, up to code, right? That's why we have codes for making structures, especially structures that human beings live in.

These homes have to be up to code, right? So, like I said, now, that's quality. Now, let's talk about craftsmanship. All right, I'm going to put up some pictures of some clients that recently purchased a new home.

Maybe their quality of work is sketchy. This home I'm sitting in was built in 1984. I suspect back in 1984, you know, things were different. Potentially, the quality of craftsmanship or labor was at least good enough to build this home to the point that I think this home is solid.

It's great. Like, I haven't seen any defects in this home. Now, labor is the world is a much different place in 2022. And labor is really challenging. And this is going to bring us into the whole talk about should you do this financially?

Right now, it's very challenging to find labor. So builders are struggling to find labor. This happened because of COVID, right? The state of the market is such that right now, builders are in a very challenging position, OK?

First off, new homes cost more than resale homes, as much as 30 percent more. So this is likely to increase because we all know that we're experiencing inflation right now, right? Inflation makes things cost more money. So for a builder, this is like one punch in the face, let's say, OK?

Because now their costs are going to increase. Now, those costs are going to be transferred to you. So now instead of a new home being maybe 30 percent more than a resale home, it might be 35, 40 and who knows how much more. So the second thing that kind of I think should inform your decision whether to go for a new build or a resale home is, OK, because of rising interest rates,

the demand for new homes is down significantly. Man, builders had wait lists of buyers trying to get homes in El Paso. El Paso is a very popular place. If you don't follow us on Instagram or TikTok, you should check it out because we do a lot of short form content about what's happening in the market.

And basically we were at three percent interest rates for a long time, thanks to COVID. All right. And all these stimulus packages that we're coming through for COVID. Three percent. I bought my home May 2020. My interest rate is two point seven five percent.

Like that's pretty good. They jumped. We went right over four. And basically now interest rates are in the five percent, let's say five, five and a half percent. Now, what that did to buyer demand is it took it from crazy, crazy, crazy hundreds of people on my wait list to, whoa, way, way, way less people on the wait list.

Way less people trying to buy homes because not that they don't still want to buy a home, but because they can't buy a home because the interest rate made it so that their purchase power, maybe they could afford a two hundred and fifty thousand dollar new home. But now with a three percent interest rate, but now with a five percent interest rate, well, guess what? Now they can't afford that home, you know, so they're going to have to terminate that contract or the builder is going to say when the home's finally finished, they're going to say, OK, you know, pay us. And they're going to have the buyers going to have to be like, I can't.

And then they're going to terminate the contract and sell that home for more money to somebody who does have the money. So buyer demand has taken up another punch to to the builders. Right. So now if you're a builder, put yourself into the builder's shoes. Now, everything costs more.

Right. And now there are a lot less people who actually want your product. What are you going to do? You're probably going to build less homes. That's the smart business move.

Right. If it's just going to cost you more to build homes and there's less people that want them, you know, basically every home you build is competition for the last home you built. Right. So builders aren't going to save the day. I wish they would, because there is a housing shortage in this country. Eventually, the federal government might have to step in at some point.

They already were talking about putting money into affordable housing, but that's not what we're talking about here. That's something else. So the government may need to eventually step in and provide stimulus for home builders because there is a housing shortage in our country, which is exactly why I'm always talking about that. No, I do not think there's going to be a housing bubble. Nobody's going to sell their home right now if they don't have to.

And there aren't enough homes. There's always going to all these millennials are flooding into the market like the demand is going to stay strong. So anyway, back to the last thing of this. We talked about it a little bit.

New home or resale cost of material labor problems. Big problem. So it's tough. We a lot of labor. I just did a little thing with the El Paso Times or I stole it from the El Paso Times that there's plenty of jobs in El Paso.

Like there's a ton of jobs and a lot of like people in the construction field are trying to get out and get into like remote remote work jobs. Right. Because I mean, who wants to build who wants to install a roof on a house in El Paso like 100 degree weather? If you could like get another job. Right. So it's not like people are knocking down the builder's door.

There's plenty of jobs to be had and jobs that are like inside an AC or provide different opportunities. So I mean, the builders, the builders are in a in a really funny place. So for me, of course, I would prefer a resale home. Yeah. Sometimes I see a new home and I'm like, man, that thing is epic.

Like more space. Just everything is so much nicer. All the all the like the digital wiring and like the electric is all up to date. Tankless water heaters like.

But then I'm like, oh, but my neighbor is literally like right on top of me. That's weird. And I'm in this weird suburb, you know, that the parks like they just planted trees. So it's a very fertile or not fertile, but it feels very desolate to me.

So I think you get better locations with a resale home. I'm close to downtown. I've got a great view of the mountains every day when I come and go to work. Like I think you get better locations, too.

So but everybody has to make their own decisions. Like I said, I just thought it was something interesting to talk about. I am so sorry. I know that was a long one and I went on a lot of rants there. But I hope it's all still kind of valuable information if you're thinking about buying a home.

Because, again, there's, of course, the numbers about buying a home. And everybody wants to talk about that and interest rates and mortgages. Yeah, that's all super important. And it's always fluctuating.

And we all need to be informed and know about it. But when you put that aside and when people reach out to me to sell their home or to buy a home, it's also about a home, you know, where you live, the experience that you have in that home, coming and going to that home.

So there's more to it than just the numbers. So, of course, I hope you're thinking about that if you're in a position where you're wrestling with that decision. If you have anything that we can do for you, please reach out to us. We're always excited to see people in the comments.

I hope that you've noticed that we've started trying to be more engaged in the comments. My sincere apologies for not doing that before. Honestly, last year, things went from zero to 100 for me with real estate stuff. And so the comments were a challenge.

But now we do have more of an eye on that. So I thank you for those of you that are participating in that. I hope that you are all well. And until next time, we'll see you later.