Lower Operating Costs Mean New-Home Buyers Can Afford More House

A newly published study from NAHB’s Economics and Housing Policy Group looks at how operating costs vary depending on the age of the home, using data that has recently become available from the American Housing Survey (funded by the U.S. Department of Housing and Urban Development and conducted by the U.S. Census Bureau).

Basic findings include operating costs (fuels, other utilities, maintenance, property taxes and insurance) that average $6,900 a year, $3.77 per square foot, and 4.24 percent of the home’s value.   However, some of these numbers vary significantly depending on how old the home is.  For example, operating costs as a fraction of value decline regularly as the structure becomes newer, from nearly 5 percent of the home’s value for structures built before 1960 to just under 3 percent for homes built after 2008.

Operating Costs1

The implication of the difference in operating costs is that buyers can purchase a higher-priced home  and achieve the same annual operating costs if the home is newer.  The article provides an example that takes mortgage payments and income tax savings for a typical buyer of a $200,000 new home into account.  The example shows that, if annual costs during the first year of ownership are the constraint, this buyer can afford to pay $37,655—or 23 percent—more for a new house than for one built before 1960.

New Home Premium

The difference is a little more than enough to cover the price of an extra full bathroom.  For more information, including an explanation of the details underlying the calculations, see the complete study, available online.

Advertisements

6 Responses to Lower Operating Costs Mean New-Home Buyers Can Afford More House

  1. […] Article – National Assoc. of Home Builders Economics and Housing Policy Group […]

  2. […] a new NAHB analysis shows how home operating costs varies with home age. The findings indicate that operating costs as a fraction of home value decline as the structure […]

  3. […] from NAHB on the benefits of buying a new home includes the piece on lower operating costs for new homes and the various consumer flyers and guides in the New Homes Month Toolkit, which will be updated […]

  4. […] from NAHB on the benefits of buying a new home includes the piece on lower operating costs for new homes and the various consumer flyers and guides in the New Homes Month Toolkit, which will be updated […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: