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The drivers for the *profitability* of new home building are related to local cost runups.
There is some connection to construction costs over time though. As an area becomes more profitable to sell in, more builders move in, fewer tradesmen become available, and their prices go up accordingly.
Nowhere near the rate that homes have shot up here though. What I've seen is fewer guys returning phone calls or wanting to take on remodelling work as opposed to easier new construction work.
Of course it doesnt hurt that my new brother in law is a new home construction general contractor...
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