US homebuyers can save a staggering $200,000 by building a new home instead of buying a used one — but on 1 condition. Is it still worth it?

Here’s why the Golden State’s notoriously unaffordable housing market is so favorable for investors and homebuyers looking to build.

California’s unique dynamics

Typically, the rising costs of labor and construction materials means newly built homes are more expensive than existing ones, according to the National Association of Home Builders. Given their modern design and finishes, buyers are also willing to pay a premium for this new inventory.

That’s why new homes can cost as much as 125.9% more than existing homes in states like Connecticut, according to LendingTree’s report. Only six states buck this trend, but the gap is miniscule in many of them. In Utah, for instance, a newly built unit costs just $1,659 less than an existing one.

However, California’s gap in home prices is exceptional. This is because much of the state’s new inventory is constructed away from the coast in areas with less competition and cheaper land prices, according to SFGATE. By comparison, existing homes tend to be concentrated in the state’s famous urban centers such as San Francisco and Los Angeles.

“When people are as tightly packed in as they are in San Francisco and parts of LA, those existing homes get to be so expensive, and there’s just not really that much room to build new,” LendingTree’s chief consumer finance analyst Matt Schulz told SFGATE.

This dynamic means a typical Californian new build is roughly $193,682 cheaper than an existing unit. That’s a difference of 24.7%.

For potential homebuyers who don’t mind living outside of the main hubs in California, buying a newly built unit could be a good idea. But even if you don’t live in California, the advantages of new builds could make them worth the premium.