The American housing market is more competitive than ever before, with insufficient inventory and insatiable demand from homebuyers. This has driven the home values higher than they've been before and many buyers are forced to increase their budget or move to a location with lower median price.
In 2020, the movers flocked to states with larger homes in their states, according to a Zillow analysis in June 2021. Notably, many metro areas in Zillow's analysis have an average age of older. For instance, in Cleveland, the median year in which houses were built is 1955; in Pittsburgh, it's 1920. According to the latest Census Bureau American Community Survey recorded mid 1980 home construction in the Nationally average area.
Buyers who are in the process of buying an older home should proceed with caution, though. Buy a modern house that was built in the 1950s doesn't just mean that you have to sacrifice old conveniences like an extra bathroom ; older houses may also need expensive repairs or renovation projects to keep them up-to date with the latest safety standards.
Be honest when buying an older home, said Nick Gromicko, founder of the International Association of Certified Home Inspectors. It’s not much different from buying a younger car in that you should invest more for both repairs and maintenance.
We spoke with Gromicko to see what buyers should look for when buying an older house. Here are five important things that buyers should keep in mind, beyond apparent structural damage and the foundation of the home. When you're ready to buy, be sure to visit an online mortgage broker like Credible to compare the interest rate so you can get the best deal on your home loan.
Newer homes are subject to stricter building codes to ensure there are no harmful substances, such as lead paint, used in the construction process.
Homes built before 1978 may contain lead-inhaled paint, which can cause lead poisoning if the paint deteriorates and is exposed to dust. According to Gromicko, some homes built in the late 1940s even have lead pipes, which can contaminate your drinking water.
Another added cost that Gromicko says comes with buying an older home is thermal loss. Outdated insulation can make it harder for your home to keep in heated or cooled air, causing your HVAC systems to work overtime and your bills to skyrocket. Homeowners should keep an eye out for the following when travelling to older homes:
Some modern homes have already been retrofitted with more old windows and doors and insulation. This, in turn, can increase the value of your home and make it move-in ready, which will also increase demand. You could find yourself in a premandat war during the home buying process, so it’s best to come equipped with a bidding letter. You can get approved on the Credible loan marketplace to get a mortgage.
Problems with electrical electronics can cause dangerous living conditions and require expensive repairs that can cost hundreds of dollars.
The American homes built before the 1970s may not be equipped with ground fault circuit breakers that keep your electrical system from overheating and catching on fire, says Gromicko. Those built before 1962 were not equipped with grounded, three-prong electrical outlets — this can result in electrocution or a power surge that damage electronics such as TVs and laptops.
Before homes were connected to public water systems, it was common to have wells and septic tanks on-site. These can pose expensive issues if left unfilled, and removing a well or septic tank requires significant excavation works.
The same is true of the oil tanks, which were commonly used before central HVAC systems were adopted. HomeAdvisor estimates it costs between $532 and $1,804 to remove an oil or water tank.
New construction homes are typically built with state-of-the-art mechanical equipment like copper wiring, which has proved to be stable and durable compared to aluminum wiring. Houses built between 1965 and 1973 may contain outdated aluminum wiring.
From about 1880 to 1940, it is used to inspect the cable and tube wiring, which poses a fire hazard. According to the Angi Home Project Website, it cost $8,000 to $15,000 to rewire a 1,500 to 3,000 square-foot home. While it may not be necessary, depending on the state in which you live, leaving it can result in higher insurance premiums in addition to the underlying safety concern.
When you remodel something in an older home, don't be surprised at finding other systems and components that need to be upgraded as you open up walls and ceilings which have been covered for decades, says Gromicko.
When you are ready to make an offer, move quickly in this competitive housing market.
Let's say that you've shopped for a home that has all the boxes checked and doesn't have any of the red flags listed above. Many homes are sold within a week in the real estate market, so it's important to have quick, reliable offer ASAP so your offer is seen quickly.
It is essential to get preapproved for a mortgage before we start touring homes. Shop on Credible for a mortgage today so that you're ready to submit an offer when the time is right in your case.
How do you ask a finance-related question? Credible Money Expert can email moneyexpert credible.com, and your question may be answered in our Money Expert column by Credible