From my experience, that has always been the case.

Try selling a home in a large tract community that is still building/selling new models that are relatively similar to each other. You can usually buy a 2-5 year old home with more upgrades, for a lower cost, than what you will pay for a new built with standard finishes. The new homes still sell, so some are willing to pay a premium for a "virgin" home and/or having their preferred finishes.

Yep, it should always be the case. :-)

But too often not and then people are shocked when they go to sell their house a few years down the road and find out that it's worth a lot less than what they paid for it.

This is especially important now though because the new build premium has been extremely high in many areas for some reason.

On person speculated that buyers are more interested in a higher level of finish now rather than square feet, and what's on the existing market is higher square feet with lower level of finish.

Who buys a house expecting to make a quick profit other than flippers? The old rule of thumb is if you're not planning to stay in the house for at least 5 years, you're financially better off renting. Of course that's a rule of thumb and markets vary, but I do think it is sage advice.

What area is your group monitoring?

Can you publish/post data?

Yes, some supporting data would be helpful.

"Unlike cars, homes are an appreciating asset--not a depreciating asset. The average five-year increase in home values since 1975 is 26% according to Realtor.com"

Given your usually reasonable responses I'm surprised to see this from you. To be clear, LAND is an appreciating asset. BUILDINGS on that land are a depreciating asset.

In comparison to a car, a HOME (land + buildings) depreciates somewhat slower and has a bottom (which is the land value less costs of clearing zero-value improvements).

That 26% you quoted is the appreciation in land value, less the depreciation in building value. Interestingly, it's almost exactly the inflation rate for the past 5 years (25.2%) so about zero net return.

BUT, that 26% is an average for a group of existing homes sold on the open market and does not include the loss in value due to the new home premium. Which, by the way, a homeowner will in most cases never recover. That's money that's gone the minute they move in to their home.

For perspective, if you invest that same money in a simple indexed fund you would have seen a return of about 104%

There are certainly advantages to a new home, like getting to choose the architecture and finishes. And having a warranty on some things. Worth the loss on move in day?

A quick comparison (using averages and assuming both homes are well maintained).

If Anna buys an existing home for $1m today, it will be worth about $1.45m in 10 years. She will have likely just barely kept up with inflation.

If Josh buys a new home for $1m today, it will be worth about $0.92m in 10 years.

From an accounting standpoint you can indeed depreciate buildings and not land. I get that. However, that doesn't mean a homeowner (or a rental property owner) should expect to collect less than they paid for their home (including the land it sits on-- which isn't sold separately) provided they've held it for a couple of years and properly maintained it.

Realtor.com quotes a 26% average 5-year increase in selling price since 1975. The average inflation rate over the past 20 years is 2.4% Compounded over a 5-year period that amounts to 12.6% or about half of the increase in value in that same 5-year period. Land values in my area have been stable for the past 15 years. The price of homes (including the land they sit on) has appreciated a good bit.

The 1980 house one of my sisters bought for $180,000 in Aug 2014 sold now for $376,491. They added a pool early-on, and did some other refurbishment two years ago.

My experience thus far hasn’t matched this. Our first house we sold for triple the price we paid for it. Our current home, which we built, is assessed at several hundred thousand more than what it cost us to build, although we have no moving plans.

Here's a chart that shows why the new home premium has become so high over the past 9 months.

I don't believe the chart you shared reinforces your argument. In fact, it suggests the opposite. Your chart shows an over supply of homes for sale--which includes both new and resale. Economics tells us that prices tend to decrease when supply exceeds demand. Indeed, this is what we're seeing. According to data presented by the St. Louis Fed, the median selling price for new homes peaked in October 2022 at $460,300. In February 2025, the median selling price for new homes was $407,200. For reference purposes, the median selling price for resale homes in February 2025 was $396,800. https://fred.stlouisfed.org/series/MSPNHSUS

Does anyone build a new home because they think it's cheaper than buying one already for sale in the market? I doubt it - people build new because they want that specific location or they want a specific architecture/layout/features. In that sense, it IS like a car - people who buy new generally want a specific model/colour/features (or they want something that will require less maintenance and worry for several more years).

I agree that homes are not always an appreciating asset, and one shouldn't count on their home for their retirement.......Home inputs are huge (for maintenance and upkeep alone, let alone any improvements), and the market prices when they need to sell are affected by so many things out of a homeowner's control. If you're a disciplined investor, renting instead of owning a house can be a smarter financial investment.

I agree with TV on this: "If you're a disciplined investor, renting instead of owning a house can be a smarter financial investment." I'd really highlight the need to be a disciplined investor though, and to some degree timing can also matter - both because local real estate markets are occasionally fickle, as is the stock market. It's a complex interaction between the two.

Note she said, "can be" too though. Again, home ownership is not always the path to financial wealth that (some?) people just seem to assume it will be. Most people will agree that owning one's own home is very satisfying, and is preferable to renting because of many reasons that don't have much to do with finances.

But I see people buying homes, thinking there is "no way" they can lose money over time....and they're just wrong. Again, it all comes down to the force of markets at the time you decide to sell - and if you figure out how to predict that in advance, well...you don't need to worry about markets anymore. Ha.

Very easy example - I currently have a 2nd home in a market saturated with new housing developments. If you build a new home in one of those new developments and try to sell while the development is still selling/building new homes, you will take a beating.

There is sometimes a struggle between needing a place to live and needing a place to invest. I find that those that put the priority in "live" are happier than those that put their priority in "invest". Volumes could be written on the topic.

I don't consider my home part of my portfolio of investments, although it has value and will hopefully appreciate over time. What my clients love about their new custom homes is the freedom from the limited maintenance required for the first few years, the higher-efficiency appliances and systems, the comfort level, and the fact that every aspect of the home is designed to enhance their unique lifestyle.

Keep in mind we have clients paying over $100-150 per foot to update just purchased resales.

In addition to paying a premium for the construction of the house, in my area, the few remaining buildable lots have gone up 400% since we bought our lot in 2019. You can get an exiting house in some parts of the neighborhood for the same price as a vacant lot. The 20-35 year old existing house will most likely need a good sized remodel.

The majority of the existing houses sold in my area since 2021, have new owners with seemingly endless remodel budgets. I'm on our neighborhood architectural committee, so I get to see all the project details/budgets. Great for my property values since I bought the lot in 2019 and built in 2021.

Real estate can be quite a roller coaster ride!