28 Nov Buying a New Home Vs Building One on Balboa Island
I’m often asked by clients about the pros and cons of building a new home vs buying a spec home (new construction). It comes down to 3 main things: time, money and involvement. The numbers used below are about average for other areas in Newport Harbor as well. ~ Steve Roose with Luxury Real Estate
Buy a New Home on Balboa Island
This process is quite simple and straightforward. Find one you like and make an offer! Open escrow, complete your due diligence, arrange financing (if any), close and move-in immediately. Currently, new construction is selling for $3,800,000 and up for a standard lot size on Balboa Island. On a 30′ lot, you get about a 2,500 sq foot home. These homes tend to be 3-4 bedrooms with a roof-top deck and 2 car garage.
Pros of Buying a New Home on Balboa Island
- Move-In Immediately
- Finance with Ease
- Plans & Permits already Completed
Cons of Buying a New Home on Balboa Island
- More Expensive than Building – Approx $500,000 or more.
- Higher Property Taxes – Property taxes based on the sales price (Higher than buying a lot and building costs combined)
- Low Inventory – Few homes to choose from. In this market there are usually 0-2 new homes available at any given time.
- Possibly Lower Quality – Due to Investor’s Profit Margin
Available New Homes on Balboa Island
Recently Sold New Homes on Balboa Island
Build a Home on Balboa Island
For the right person, this can be a fun project to save a lot of money and get exactly the home you want. Although it takes just over a year to build, we are typically in an appreciating market. The OC Register forecasts 5% appreciation next year. With the costs of land and construction being much lower than what new homes are selling for, you will walk into over half a million in equity on day 1. Many clients are unsure of the permit process, which builders do a quality job at reasonable prices, and so on. I recommend professionals that have been in the business a long time, they are efficient and have a history of quality and happy clients. The right builder/designer, just like any other professional, will save you time, money and headaches. Currently, lot value is just under 2 million on Balboa Island. You can expect to get a 30′ lot for about 1.8 million today. Due to all the new construction on the island, we are seeing less multi-family properties (duplexes) as they are being torn down and replaced with new homes. Over time, this will lower density. Most of my clients are able to build a new home for just over 1 million, depending on finishings. If you built for 1.2m you have a final product at only $3,000,000. That is $500,000 less than buying new and you are getting the home you want… down to every detail!
One of my clients will have her Lido Isle home completed in January. She paid 1.6m for the lot and is building for 1.1m, bringing her total to $2,700,000. I’d currently value her home at 3.6-3.7 million. That’s $1,000,000 in equity! If you don’t have another home to live in during construction, you could lease a property for a year and still come out ahead.
Pros of Building a Home on Balboa Island
- $500,000 or more in Equity
- Lower Property Taxes
- Choose # of Bedrooms and Design Perfect Floorplan
- Get the Quality and Finishings you Desire
- Easily Add an Elevator
Cons of Building a Home on Balboa Island
- Over 1 Year To Build
- Lots of Decisions
- Slightly Complicated Financing with Potential Rate Change Over the Year
Properties Available Near Lot Value on Balboa Island
- I have an off-market option on Diamond at $2,000,000. (Now Sold)
Recent Home Sales Near Lot Value
Balboa Island Real Estate
- View All Homes For Sale
- View All Homes For Rent
- Get Real Estate Alerts – New Listing and Sale Notifications
- Check Your Home Value
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