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

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

A newly published study from NAHB Economics may help builders make the case to prospective buyers about why newly built homes are a better deal than older, existing ones. Using data from the 2011 American Housing Survey, the study first looked at how operating costs vary depending on the age of the home. It found that the average annual operating cost of a home is just over $6,900, with narrowly defined maintenance costs averaging $547 annually and fuels and property taxes – the largest operating cost components – averaging just under $2,500 each.

However, the newer the home, the lower its per-square-foot operating costs. For example, homes built before 1960 have a $4.26 per-square-foot annual operating cost, versus just $2.92 per square foot for homes built after 2008. Moreover, operating costs as a fraction of the home’s value also decline regularly as the structure becomes newer, going from nearly 5% of the home’s value for structures built prior to 1960 to just under 3% for homes built after 2008. The study then provides an example showing that, if first-year cost is the constraint, a buyer can afford to pay a 23% premium for a new house (compared to one built prior to 1960), simply because it’s new. And based on results of  NAHB’s House Price Estimator, that’s enough to put an additional full bathroom in a new home, with a couple thousand dollars left over.

NAHB Member Creates Charity to Help New Jersey Rebuilding Efforts

In the wake of the terrible damage wrought by Hurricane Sandy, the New Jersey Builders Association recently reached out to let us know about a newly formed 501(c)(3) charity called ReBUILD NJ NOW. Created by New Jersey member Matt Wendorff, the charity's designated purpose is to "raise capital for the procurement of building materials to help rebuild the infrastructure and private residences of those affected by natural disasters in N.J., according to its website.

The site further explains that "ReBUILD will team up with local and national manufacturers and suppliers to help deliver rebuilding assistance to the people of the great state of New Jersey."  Readers of this report may recall that in the storm's immediate aftermath, we reminded you about the Home Building Industry Disaster Relief Fund (HBIDRF) charitable organization established for the purpose of helping rebuild communities affected by natural disasters -- and many of you responded saying you'd like to help in one way or another.

So in recognition of our members’ desire for information on ways to participate in disaster relief efforts, we wanted to let you know about this latest option. For more information on ReBUILD NJ NOW, email contactus@re-build-nj.org. For more information on the HBIDRF, contact Jessica Lynch (800-368-5242 x8401) or Melissa Voorhees (x8251).


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This plan has  been modified and is available in several variations, or modify it to suit your individual desires.

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  • Joanne Loftus
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