Big ticket purchases can either increase or decrease in value over time. Take, for instance, buying a new car – one of the worst investment opportunities. A buyer may purchase a new car for $35,000 and drive it right off the lot, feeling pretty good about their investment, lured into a trance, perhaps by that new-car smell. After all, he received a 3-year, 36,000-mile warranty and a 7-year, 100,000-mile engine guarantee. To the buyer, this equates to no repair bills for at least the next three years, compared to possible headaches and necessary repairs if he had purchased a used model. But what about the resale value? Some cars may depreciate as much as 35% the minute they are driven off the lot.
Buying a new home versus a “trade-in” provides buyers with an excellent investment opportunity. Unlike new cars, new homes appreciate over time. Buying a new home makes good business sense. Buyers have the ability to work with builders during the construction phase to include upgrades and landscaping that will increase the value of the home over the long-term. In the future, homeowners may be able to sell their investments for more than $50,000 over its original value. Appreciation will vary, depending on how long the buyer plans to live in the new home before selling. But for example, a home we built for a new homeowner 10 years ago just went on the market and sold for twice its value from a decade ago. When it comes real estate investment, it’s clear that buying a new home makes smart business sense.