Buying a home is a dream for many people, but sometimes it's not the home you should start with. For some, buying land and then putting up a custom home is a better option. Given how home prices are skyrocketing in different areas of the country, the cost of buying land and having a custom home built is often comparable to buying an already-built home. But cost alone shouldn't determine which option you go with. Your involvement with the home and the surroundings also needs to be taken into consideration.
Space for Your Needs
One consideration is whether the home provides the space you need. Already-built homes might need remodeling to add or change room sizes. Custom homes can be designed to your needs, or if you go with a kit-style custom-home builder (who has plans already drawn up), you can choose a floorplan that works for you. Custom-home builders often have many more floorplans available than what you'll find in a housing development. If you definitely want the home to be built to fit your needs, purchasing land and installing a custom home would be better for you.
Another factor is the space between you and your neighbors. In housing developments, you might not have a lot of yard space, and there might only be a few feet in between houses. If you want lots of space, a custom home on purchased land would be better.
But if you want your neighbors nearby and don't want to feel separated by so much space, an already-built home would be better. You can still find older homes where there was more space in between the buildings, but not so much that you have to drive to see your next-door neighbor.
Already-built homes will likely see more competition from buyers simply because the homes are already built. If you don't like competition, buying land may be easier for you. But if you can deal with competition if it means you can move into your home as soon as the deal is sealed, then go with an existing home.
Utilities and Water Supply
Pre-built homes in developments will likely be hooked up to a city's water supply, possibly the city's sewage treatment lines (though you can find homes with septic tanks in metro and suburban areas), and electric and gas lines. You'll get good water quality and more consistent utility service, so if these creature comforts are important to you, a pre-built home is perfect for you. If you buy land and have a custom home built, you'll also have to arrange for utility lines to be brought out to the area, if they aren't already, and you may have to rely on well water depending on how far away from town the land and home are.
Talk to your real estate agent to get a better idea of what the homes in your desired area are like. If you're truly interested in buying open land, your real estate agent should be able to help you (or able to refer you to another agent who can) see how that situation would differ from living in a housing development. For more information, check out websites like http://www.foxfirerealty.com.