McKee Financial

McKee's Weekly Newsletter 10-19-2020

I think it is easy to romanticize how amazing building your own home is going to be.  There are a lot of pros and cons to building your dream home and I am sure there are some things on both ends of the argument missing below.  Hopefully, this article can be used as a starting point for things to think about when considering buy/build your next, or maybe even your first home. 


Should I Buy or Build a House? The Pros and Cons


Who doesn’t love getting something brand-new—especially if it’s custom-made just for you? The problem is, custom-made things tend to come with higher price tags and longer delivery times—which are important factors in deciding whether you should buy or build a house.

A house is way too big of a financial responsibility to make a wrong choice here. To help you land the best decision for you and your budget, we broke down the pros and cons of building a house.

Let’s check them out!


Is It Cheaper to Buy or Build a House?


Last year, the average cost to build a house was over $485,000.1 Meanwhile, the average cost to buy an existing home was nearly $309,000.2 That means, choosing to buy a pre-existing house instead of building a new one could save you almost $177,000!

And if you took the middle road and bought a new, semi-custom tract house, it’ll still cost you about $50,000 more than a previously owned home.3


Pros of Building a House


Okay, now that we covered pricing, let’s look at the specific benefits of building a house:

  • Customization. If you build a house from the ground up, you’ll get to personalize the details to suit your lifestyle and tastes—from the layout, cabinets and flooring to the sinks, lighting, paint colors and doorknobs! Even tract homes built within subdivisions allow for some customization in color choices, flooring options and certain finishes.

  • Low to no competition. In August 2020, existing homes were on the market for an average of 22 days!4 With homes flying off the market so quickly, competition to find the best existing home at the lowest price can be tough. But if you already own the land you want to build your home on, you obviously have zero competition!

  • Lower maintenance. Since new homes are built to meet current building codes and have up-to-date technology, you probably won’t have to worry about big repairs or heavy maintenance issues for the first few years—meaning no leaky roofs or failing HVAC systems! Plus, many homebuilders offer a limited warranty if something should break.

  • Lower energy costs. New homes often feature the latest energy-efficient systems and materials, which usually leads to lower energy bills—woo-hoo!

  • Newness. You get to start fresh as the first owner of your home and enjoy brand-spanking-new systems, finishes and fixtures.

Cons of Building a House

Okay, we already know one disadvantage of building a house is that it’s more expensive—which isn’t so bad if you’re able to budget for it. But now let’s consider all the other cons of building a house just to cover our bases:

  • Longer wait time. It takes an average of seven months to construct a new house—not counting the planning and approval stages.5 This means you’ll likely have a gap in living arrangements between the time you sell your old place and build your new one. So you’ll need to be prepared to cover the cost of renting until you can move into your newly built house.

  • Harder to negotiate price. Most buyers go into a home purchase hoping to lower the price. While that’s super common in the resale market, new homes are a little different. Usually there isn’t a lot of leeway on closing costs or purchase price with a builder—unless your real estate agent brings a creative mind to the negotiation table. Still, you’d probably get more bang for your buck with an existing home.

  • Noise and mud. If you build a house where other new homes are being built, you might have to deal with construction noise, traffic and glops of mud along your commute. Sure, things will eventually calm down as other homes get completed, but it’s something to think about if your tolerance for noise level and messiness is on the low end.  

  • Stress. When you build a house, you’ll have to purchase land, decide on a home design, pick out flooring, fixtures, cabinets, countertops, interior trim, exterior trim, and on and on it goes. You’ll have to do all of this and stay within your budget. Managing all the details that go along with building a home takes time and effort. Don’t underestimate the depth of stamina you’ll need to make sure it’s all done the right way.

  • Hidden costs. Those dollar signs you see on the sticker—for things like countertops, fixtures and appliances—are just the tip of the price-berg. Upgrades can quickly drive up the price of your new home and may or may not be rolled into your contract price. Play it safe by budgeting for only those you can cover with cash. And don’t forget about post-move costs like landscaping and blinds—they’ll sneak up on you too.


Tips on Paying for a New Home Build or Existing Home


Whether you build or buy, make sure you stick to a house you can actually afford. Never get a house with a monthly payment that’s more than 25% of your take-home pay—otherwise, you’d be house poor! 

That 25% limit includes principal, interest, property taxes, homeowner’s insurance and, if your down payment is lower than 20%, private mortgage insurance (PMI). Plus, don’t forget to consider homeowner’s association (HOA) fees when preparing your budget—in case your new home is part of an HOA.

Use our mortgage calculator to enter your down payment amount and try out different home prices within your budget. If you want a mortgage you can pay off fast, talk to Churchill Mortgage about getting a 15-year fixed-rate conventional loan. Any other type of mortgage will drown you in interest and fees and keep you in debt for decades.

If you’re a first-time home buyer, it’s probably better to go the cheaper route and buy an existing house to get in some homeownership reps and build equity (your home’s value minus how much you owe on it) before you take on the challenge of building a new house.

But if you’re confident you can build a house while staying within that 25% limit and still handle all the other homeownership costs like maintenance and utilities, then building a house could be a fun adventure for you.

Whether you buy or build, owning a house you can afford is an incredible way to build wealth!

Buy or Build With Confidence by Working With an Agent


The best way to choose whether you should buy or build a house is to talk it over with an experienced real estate agent. Your agent will know where to find the best deals in long-standing neighborhoods or in up-and-coming communities. And they’ll help you decide if building a house or buying an existing home will suit your needs best.




Interesting Economic Facts


BELOW ONE - The last time the yield on the 10-year Treasury note was above 1% was on 3/19/20 or 7 months ago today. The 10-year note yield closed at 0.74% last Friday 10/16/20 (source: Treasury Department).

FUTURE TAXPAYERS - The nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 58.3 births in 2019, a record low rate for birth data that has been tracked nationally since 1909 or for the last 111 years (source: National Center for Health Statistics).

PRINT AND PURCHASE - The Fed’s balance sheet reached $6.5 trillion as of 10/14/20, up from $3.9 trillion as of 3/11/20, largely the result of purchases of Treasuries and corporate bonds (source: Federal Reserve).

MORE THAN TWICE AS LARGE - The US government had a record $3.13 trillion deficit during fiscal year 2020, i.e., the 12 months ending 9/30/20, smashing the previous record deficit of $1.41 trillion set 11 years ago during fiscal year 2009. The deficit was the difference between $3.42 trillion of tax receipts and $6.55 trillion of outlays (source: Treasury Department).

HALF-AND-HALF - The United States government has maintained financial records since 1789, i.e., for the last 231 years. As of 9/30/10, the US had reached a national debt of $13.56 trillion. As of 10/15/20, the US had amassed a national debt of $27.14 trillion. Thus, the US government has accumulated more debt in the last 10 years ($13.58 trillion) than it had in its first 221 years ($13.56 trillion) (source: Treasury Department).

AT THE MARGIN - The top marginal tax rate used in the payment of federal income taxes in 2020 is 37%. The top marginal tax rate was 70% in 1979, 77% in 1969 and 91% in 1963 (source: Internal Revenue Service).

SOCIALLY DISTANCING - Americans sold 745,000 existing homes in April and May this year as the country reacted to a pandemic-driven shutdown. That’s off 25% from the 998,000 existing homes sold in April and May 2019 (source: National Association of Realtors).

LITTLE SHORT OF CASH - 17.1 million US households were behind on their monthly rental payment or their monthly mortgage payment as of 9/28/20. That’s 13.5% of the 126.8 million households in the country (source: Census Bureau).

IT’S ABOUT TIME - Americans have reduced their outstanding balances on their revolving debt, e.g., credit card debt and home equity loans, for 6 months in a row, i.e., March 2020 through and including August 2020 (source: Federal Reserve).

WE NEED ONE OF EACH - There are 213 vaccines and 319 treatments for the COVID-19 pandemic in the development stage as of Friday 10/16/20. None of the test vaccines or treatments has yet to receive FDA approval (source: Milken Institute).

WHO’S RIGHT? - As of Friday 10/16/20, 39.2 million people worldwide have been infected with the COVID-19 virus or ½ of 1% of the globe’s 7.7 billion population. However, the World Health Organization reported on 10/05/20 that its “best estimates” show that 1 in 10 people globally have been infected or 20 times the reported number (source: Johns Hopkins Coronavirus Resource Center, Dr. Michael Ryan, WHO).

BAYOU MISERY - 4 of the 10 tropical storms or hurricanes that made landfall in the United States in 2020 – Cristobal, Laura, Marco, and Delta – made landfall in Louisiana. The 10 tropical storms or hurricanes to make US landfall broke the record of 9 set in 1916 or 104 years earlier (source: Insurance Information Institute).

HOOPS - The NBA’s 74th regular season began on 10/22/19. As a result of the pandemic, the NBA finals were not concluded until Sunday 10/11/20 or 355 days later. The Lakers beat the Heat in 6 games, the 4th NBA title for LeBron James. Bill Russell won 11 titles in a 13-year career with the Boston Celtics (source: NBA)


...and for the History Lovers... This Week in History


October 19, 1873

Yale, Princeton, Columbia and Rutgers universities draft the first code of football rules.


October 20, 1977

Charter plane crashes in Mississippi, killing three members of popular Southern rock band Lynyrd Skynyrd, along with their assistant road manager, the pilot and co-pilot.


October 21, 1961

Bob Dylan records his first album in a single day at a cost of $400.


October 22, 1938

Chester Carlson invents the photocopier. He tries to sell the machine to IBM, RCA, Kodak and others, but they see no use for a gadget that makes nothing but copies.


October 23, 1929

The first transcontinental air service begins from New York to Los Angeles.


October 24, 1916

Henry Ford awards equal pay to women.


October 25, 1954

President Eisenhower conducts the first televised Cabinet meeting.


Notable Dates in October

  • October 9 is Leif Eriksson DayWho was Leif Eriksson and why was he important?

  • October 12 is a busy day, with three holidays packed into it:

    • Canadian Thanksgiving. This holiday shares many similarities with its American equivalent. However, there are a number of things that set the Canadian Thanksgiving apart!

    • Columbus Day (U.S.), a federal holiday, is observed on the second Monday in October. It was on October 12, 1492, that Christopher Columbus landed on a small island in the Bahamas, convinced that he had reached Asia. Read more about Columbus Day.

    • Indigenous Peoples’ Day (U.S.)—a holiday that celebrates the history and cultures of indigenous peoples native to what is today the United States. Indigenous Peoples’ Day is celebrated in cities and states across the country, often as an alternative to Columbus Day. 

  • October 18 is St. Luke’s Little Summer. This is a date steeped in folklore. Traditionally, around Saint Luke’s feast day, there is a period brief period of calm, dry weather. Learn more.

  • October 24 is United Nations Day, which aims to bring awareness to the work of the United Nations across the world.

  • October 31 is Halloween (All Hallows’ Eve)! Do you know the true history of Halloween? It’s not as frightful as you might think… Learn about the origin of Halloween.


Oct. 4: International Ships-in-Bottles Day
Oct. 6: National Noodle Day
Oct. 16: National Fossil Day
Oct: 24–Nov. 11: World Origami Days
Oct. 25: Frankenstein Friday








This recipe won a blue ribbon at the Goshen (Connecticut) Fair—thus the name. The pumpkin pie is nice and firm, not too custardy. It’s a basic pie recipe, but the crust turns out very well. After all, appearance and taste count most at the fair!




1 cup sugar

1 tablespoon flour

1/2 teaspoon salt

1 teaspoon ground ginger

1 teaspoon cinnamon

1/2 teaspoon ground nutmeg

1/8 teaspoon black pepper

1/8 teaspoon ground cloves

3 large eggs

1-1/2 cups mashed pumpkin, or 1 can (not pre-mixed pie filling)

1 cup light cream or evaporated milk

9-inch pie shell, unbaked (recipe follows)




Mix sugar, flour, salt, ginger, cinnamon, nutmeg, black pepper, and cloves together. Beat in eggs. Stir in pumpkin and cream.

Pour mixture into pie shell. Bake in a 400°F oven for 50 minutes, or until knife is clean after inserting in center of pie. Cool completely before serving.




2 cups flour

1 teaspoon salt

2/3 cup shortening

2 tablespoons butter, melted

5 tablespoons cold water

1 tablespoon vinegar




Mix flour and salt. Cut in shortening and butter until mixture is like coarse crumbs. Add water and vinegar, mixing with fork. Form into ball and chill.

Roll out to form 2 crusts. Makes enough for a double-crust pie.



Preparation method:





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