When looking to purchase a home, buyers will tend to focus on price. Whether its a $300,000 or $700,000 home, its easy to compare primarily on the selling price. In today’s building environment where energy efficiency is now part of the Alberta building code, there are added costs involved in construction that have made the increased the spread between the price of a new home versus a home built even 10 years ago.
If you were to compare a 2000 square foot, 2010 built home with 3 bedrooms and 2 bathrooms selling for $450,000 and compare it with a home with the same specifications built today and selling for $500,000 it seems that the older home is the better value. However, even if you don’t take into account that the newer home will have a higher resell value down the road, you should consider the long term costs of the energy efficient 2020 built home versus its older counterpart.
Price reflects a one time upfront amount that you pay for a home, while cost refers to the ongoing expense of owning that same home. Both are relevant when making a home purchasing decision and both should be considered before making a final decision.
Homes built today must meet energy efficiency requirements resulting in more comfortable homes with lower utility bills. For instance, new homes are required to have a minimum of dual glazed low e windows along with certain levels of airtightness. Beyond these minimum standards, at Brost we also include high level construction practices to improve external heat transfer and industry leading mechanicals in all of our homes.
In the example below, we have compared two similarly sized homes, one built prior to energy codes and the other built using today’s standards. The $50,000 premium on the new home may seem like large enough factor to choose the used home, however, if you look at the cost of this home based on energy bills, you will find it to actual be much more expensive over its life. It is not uncommon for a home built to today’s standards to operated at 40% higher efficiency than an older home. This difference is tangibly attributable to lower monthly utility bills. As can be seen in the chart, based on utility bills alone, the new home will have utility cost savings of more than $94,000 over the life of its 30 year mortgage. Not only that, it will have lower maintenance costs, be more comfortable, will be designed for the way we live our life today and ultimately have a higher resell value. With these factors combined, the decision on whether to choose a new versus used home becomes a lot more clear.
We invite you to click on this link to see the example and calculations – Price vs cost worksheet