Whether you're buying your first home or buying again for the first time in 20+ years, choosing the type of home, searching for the perfect location, and imagining your future life are all exciting, but overwhelming decisions that will determine your dream home. As you begin a home search, one of the first questions that will come up will be "how much does it cost?" While easy to determine costs for most purchasing decisions, this answer is a bit more complicated when it comes to buying a home.
The home buying price and process will vary depending on a variety of factors from new construction to the location to the state of the market and it can be difficult to sort through the details. We’re here to help you understand the differences, why they exist, and what you may expect when buying a home. To keep this relevant, we'll be looking at these decisions through the lens of new home costs in Rockville, MD.
Average Cost of Homes in Rockville
The first step is to research the average cost of homes in the location you're hoping to move to. Homes in Rockville, MD may cost anywhere from about $350,000 to up to $1,500,000, but the median home price listing in Rockville, MD is $650,000. It's important to note this includes all different housing types available, from lowest to highest prices across all of Rockville, but it does offer a reference point.
In addition, home costs will fluctuate based on availability, the market, what type of home you’re buying, and a variety of other factors like square footage, proximity to retail and transportation, and upgrades and features. Older resales and condos will typically be lower priced than new home construction with larger square footage and modern features. Most important, is to know what you want and how much you can dedicate to your new home purchase.
Here are the top factors that affect the price of a home and what to look out for during your search:
Location: Proximity & Popularity
You’ve heard it before, but we have to say it again: location, location, location. Where you live will play a huge role in determining the price of homes in the area. If the home is in a desirable location, such as close to a lively downtown area or a neighborhood within a great school district, the home can significantly cost more than homes that may be further out from a city or in a less trendy neighborhood. Here are location-driven pieces that are known to influence cost:
- Schools – Whether you have school-age children or not, the local school district where your dream home is located will influence the price of all homes in the area. According to realtor.com, “Homes in the best school districts, on average, sell for higher prices than similar homes in less-popular school districts.”
- Transportation & Convenience – Living close to public transit has become more and more desirable over the years. Close proximity that includes a reasonable walk or access to a metro or bus system can make a morning or evening commute much easier. Those who live close to public transportation can avoid traffic, save money on gas, parking and car payments, reduce your carbon footprint, and get more exercise by walking to and from home or the office. The benefits of living near public transit options are many and it adds value to the homes in the area, which means it also may increase the cost.
“Access to transit is known to add value to homes. A recent Redfin study found that, on average, home prices grew by 0.6% ($2,040) if they experienced a single-point rise in their Transit Score” (Construction Dive).
- Dining, Retail, Parks, & Entertainment – Most people would love to wake up, walk out their front door, and grab a cup of coffee or go for a morning run through their favorite local trail without having to get in their car. Living within close proximity to dining, retail, parks, and other entertainment destinations is increasingly in high demand, and the price of nearby homes will reflect that.
- Popularity – If an area is seeing an increase in development, whether that’s office complexes, hospitals, new retail, parks, or a future form of public transportation (such as the Metrorail's Purple Line), the price of homes will reflect that. Popular areas and neighborhoods tend to hold value and continued demand for housing in those areas will contribute to increasing the price.
Timing & the Real Estate Market
If you’ve been searching for a home, you’ve probably heard the terms ‘buyer’s market’ and ‘seller’s market.’ What these concepts really boil down to is supply and demand. When there are more homes for sale than there are buyers, it’s a buyer’s market. When there are fewer homes for sale and more buyers looking, it’s a seller’s market. When the market shifts towards a seller’s market, it will cause the prices of real estate in the area to increase.
Here are a few factors that affect the market, and in turn, the cost of a home:
- Strength of the overall economy & economic factors
- Interest rates
- Mortgage interest tax credit
- Activity: Local builder activity, zoning restrictions, and local regulations
Home Owner Association (HOA) Costs
What’s an HOA?
“An HOA is a legal entity that manages a shared housing complex, whether it’s a condo building, a row of townhouses or a suburban housing development with shared space. Almost all townhomes fall under the jurisdiction of an HOA and every condo is part of an HOA” (Redfin).
Since you automatically become a member of an HOA when you buy, it’s important to know what your HOA will cover in addition to how much it will cost per month. According to a study by George Mason University, HOAs increase property values. It’s important to understand what you’re getting, but also what you want when making a decision.
How does an HOA affect cost?
An HOA collects monthly dues from its members to fund its activities from landscaping to trash pickup and everything in between. They vary from community to community, but these monthly costs will factor into your debt-to-income ratio, which “compares the minimum monthly payment on all your housing costs and debt to your monthly gross income. A steep condo or HOA fee could be the tipping point that makes a loan approval a little challenging,” (Washington Post).
New Home vs. Resale
When you think of your dream home, what do you see? A modern townhome with an open floorplan, luxury upgrades, and modern appliances? A traditional home with a spacious yard and extra bedrooms for a growing a family? Each type of home has its pros and cons, one of which is cost. While a newer home will typically have more cost upfront, an older home or resale may have higher costs in the long run.
Here are a few of the factors that affect cost for new and older homes:
- New construction best-building practices, materials, and safety features
- Typically offers sophisticated design and open floorplans
- Upgrade options for luxury materials and top-grade appliances
- Better energy efficiency and modern appliances
- Fewer maintenance costs with new construction warranties
- Often more expensive than resales
Older Home or Resale:
- Established, known neighborhood dynamic and property values
- Design is often more traditional with formal room layout
- Often requires remodeling or updating to bring up to code or buyer preference
- Higher maintenance costs to replace roofing, systems and repairs
- Utility costs are typically higher in older homes
- Typically less expensive to purchase
Home Features & Materials
Whether you choose an existing home or a newly built home, the materials and features will contribute significantly to cost. In an existing home, the features and materials are what you see, while in a new home you may get to select the options and features you want.
In a new home, you’ll have the choice of features and upgrades you want to include. Upgrades and features typically range from cabinetry, countertops, flooring, lighting, and plumbing options, but they may include more structural features such as an in-home elevator, loft, or rear deck. Depending on what you select, these can significantly impact costs. Of course, with new home upgrades, both the cost of materials and cost of labor are factored into the price.
In an older home, you typically won't get to make any or as many upgrades or decisions upfront. This may keep initial costs to purchase low so you can afford to remodel if you choose. However, additional costs often come into play as needs change, general wear and tear occur, and trends or your tastes evolve. A general rule of thumb is to plan on spending 1-3% of the purchase price each year for upkeep and updates.
Type of Home
Taking each of the factors above into account, another major factor in cost will be the type of home you choose to buy. The resale of a single-family home might be less expensive than a new townhome or condominium community, but might require more maintenance over time. A new townhome community might be closer to a city center, but won't offer the outdoor space of a backyard for your family to utilize. A condominium community might have more luxury amenities available, while a townhome community may not.
When choosing between a single-family home, townhome, or condominium, consider what's most important to you, and where you're willing to invest more of your budget.
Cost of EYA Townhomes in Rockville, MD:
Once you factor in the average cost of homes in Rockville, MD, decide if you want to go with new construction or resale, and consider where and how you want to live, you're ready to look at the options.
If you’re looking for a new townhome with upgraded features, close proximity to parks, dining, retail, and entertainment, in addition to access to public transit, an EYA neighborhood might be for you.
Below, are the current prices for EYA townhomes in Rockville, MD:
Tower Oaks: New townhomes from the low $800s
- Townhomes: Starting from the $800s
- Elevator Townhomes: Starting from the $900s
Cost is more than just a price tag. Once you consider all the factors, both economic and personal, and determine what’s most valuable to you, it becomes easier to focus on where your needs and wants will lead you.
If you’re interested in living in Rockville, EYA’s newest community, Tower Oaks, features three distinct floorplans, a variety of upgrades, features, and options, with a lifestyle destination at the center of the community. Click here to learn more about this vibrant new neighborhood.