New Construction Costs - CRAZY!

[Dawg52]

Custom home builds have always been more expensive than buying new construction or existing homes.

But now? Covid has created demand: People are realizing their home needs to be their everything. People are upgrading, adding on, moving to bigger ones.

Add to that the supply chain issues, delays with sub-contractor and permits, all builds will take longer which means more overhead - and the cost of raw materials is going up.

Best bet is to find a resale that meets the neighborhood and footprint requirements, the bones, the things that can't change. Then budget upgrades and changes.

I went to Lowes yesterday looking for a refrigerator . I bet they were out of more than half of the display models on the floor. I found the model I wanted but demand must be high for home products as delivery is almost 2 weeks out. No doubt Covid has had an impact.

 

[RoyDornoch]

That psf cost seems high to me. We are under construction on a custom home in a gated golf course community in Kentucky for about $170 psf on 4,100 sf of enclosed space (5 bedrooms, 4.5 baths) and 1,200 of covered porches.

 

[sengsational]

Y'all need to come down to Unionville, NC! My FIL's place is on the market and we'll be lucky to get $138/ft2. That's my guess because that's what a neighbors house just went for. FIL's kids (owners) fell for the old real estate agent tactic of suggesting a higher price than was possible in order to secure the listing. But I digress. There is some new construction they're competing with, and I'm not sure how that works. Is there a premium for new construction?

 

[Sunset]

New housing usually has a premium, as it' "new" and not second hand...
When we were looking for a house, people suggested buy new, as nobody wants an old house.

 

[ExFlyBoy5]

We *were* going to custom build when we relocated to flyover country, but before the first blueprint was even printed, we had run up on our budget. We knew it would be expensive to build, but some of the numbers were just out to lunch. In the end, we wound up buying a house that seemed to meet our needs (100%) and most of our wants (70%) but after a couple of years, what we thought were wants would have been unnecessary expenses for not great reasons and ultimately, I think we are happier where we are instead of where we were going to build.

Not only that, but I have met a whole lotta people who have custom built but were never truly happy since "perfection" doesn't exist in a residential build. Not to say that OP wouldn't be happy...but I think a large % of folks like the idea of custom building but are disappointed with the end result. Especially if it involves a big bill at the end!

 

[Ronstar]

We will most likely be moving in the next 5 years. I'll be trying to keep costs down by finding a place under 2,000 sf.

We have looked at a few places Arizona. We made an offer on an existing house at $345/ sf. We also met with a builder who had several different plans and base prices. The builder's agent told us to budget in 30% of the base price for options. I thought that 30% for add ons sounded ridiculous. A corner multi sliding patio door costs $69k.

 

[24601NoMore]

Thanks, everyone. Appreciate all the perspective and first hand experiences of what you are all seeing..

The motivating factor for us is privacy. We don't have any, having built very early in this phase of our current sub without houses (at the time) on either lot next to us. BIG MISTAKE. Both lots got bought up by builders for their personal homes. One of them built a 5,500+ (!!) sq ft house that takes up literally every square inch of buildable space on his lot. (We're a couple thousand sq ft smaller..) And here's the best part - it extends pretty much into my backyard since the street curves. So, I look out my great room window - and look at the side of his house. Great...we put in some huge trees to try to hide everything. Mistake #2 - some of them are Bradford Pears, and now that they're 20+ years old, they're super susceptible to wind and rain, and we already lost part of one. The others are a kind of evergreen that are known (not that we knew it at the time) to not be "permanent" trees and that we can now see through as they are disease prone, deer prone and are turning into more a big structure of sticks than a full, healthy evergreen. But the pears are 30+ feet tall, the evergreens 40+ feet tall and there's no replacing them for the screening we DO have left at any price. You just can't BUY trees that big - I've checked..best I can get [and even this is 'hard'] are ~20 foot evergreens, which won't hide his house. So, if we were to "fix" (replace) them with new - I'd be looking at Mr 5,500+ sq ft all day long for the next 10 years. Not an option..

The new property is 3.5 wooded acres, at the end of a court. We'd finally have privacy. But - we made a "why vs. why not" (go ahead with it) list and came up with *27* "why nots". (No nearby hospitals..limited recreation..increased taxes..site condo with extremely restrictive master deed and bylaws..water quality [iron & arsenic]..high HOA / Condo fees..the list goes on..and on).

The "why" list has a grand total of 7 things on it (vs 27 why not). But the privacy issue is worth roughly 50 why nots. So there's that.

It's tough being in ER and having no W-2 paychecks to fund all this. Had I been smarter (or able to not have to bail from the J*B due to unmanageable stress that was likely to kill me had I stayed), I would have built the retirement house BEFORE pulling the ER trigger.

Live and learn, but it's really surprising to see what new construction costs nowadays. We thought things were crazy when we built this house (albeit, in a tract sub) at ~$167/sq ft INCLUDING land 20 or so years ago..

 

[JoeWras]

Maybe I should put this on pet peeves, but you bring up a good point about landscaping. Builders do some bad things in the initial landscaping.

Our neighborhood is 40, and we're finally burning through most of the original landscaping. The Bradford pears are long gone, taken out by wind and ice 20 years ago. The leyland cypress are gone in the last 10 years or so, just as you describe. Disease ridden sticks.

Now the large trees are going, which is a shame. Trees planted too close to houses or driveways. Just stupid placement. We have tree companies in the neighborhood every day. This didn't have to happen if the right species were planted in the right places.

But, fast growing junk sells neighborhoods and is usually affordable. Always comes down to $$.

 

[HI Bill]

$600-$800/sf in Maui, according to my realtor friend there. Add to that, the cost of land, a pool, landscaping, design, grading, etc., and we'd be over $1.5M for a 1,800-sf house...so we decided to buy an exiting home with a pool, with a $392/sf price. Week 3 of escrow!

 

[24601NoMore]

Maybe I should put this on pet peeves, but you bring up a good point about landscaping. Builders do some bad things in the initial landscaping.

That they do, but I can't blame this on the builders as we had to figure out a way to try to screen Mr. 5,500 sq ft and the house on the other side - which, while not as far back as 5,500 is also in "back" of us due to street curves. So, WE decided what to plant - and just made bad/uniformed decisions.

Ultimately, regardless of who's fault (ours) it may be..we have no privacy. Getting some requires tearing down the Bradfords and Colorado Spruce (now I remember) that are 30 - 40 ft tall and replacing them with the biggest trees money can buy - and best I can find is MAYBE 20 ft. So, achieving even the level of privacy we have today will be...impossible..with the current lot.

All of a sudden, $250/sq ft to get out of this mess doesn't look so bad

 

[Fermion]

It sure does seem to be a head scratcher that the projected 2020 inflation rate is something like 0.61% when sheathing has gone from $12 to $18 and a 2x6 8 footer has gone from $4.50 to $7.

And these figures for price per square foot..yikes.

Inflation is really 0.61%?

 

[JoeWras]

It sure does seem to be a head scratcher that the projected 2020 inflation rate is something like 0.61% when sheathing has gone from $12 to $18 and a 2x6 8 footer has gone from $4.50 to $7.

And these figures for price per square foot..yikes.

Inflation is really 0.61%?

Not in the housing industry. Sales or construction.

 

[Sunset]

Funny thing with a custom house, once a person goes to sell it. It's not a custom house to the buyer, and of course could be outdated by the years of ownership.

 

[Retired Expat]

New custom will always be more, new often is more than even recent. Look at prefabs as they can be a good value

 

[Beachcomber]

I feel pretty lucky after reading this. We built a retirement home in Grande Dunes, (Myrtle Beach SC) next to a Del Webb clubhouse, plus full benefits to Ocean Club. (2 clubhouses) Moved in May 28th, 2020.

A high end home for only $187.50 per sq ft - 3200 sq ft conditioned at $600k in a resort like community. And a waterfront property lot (ICW) for $307k in a gated community!

Wow! I feel blessed. My wife got her dream house. Restaurants and entertainment are just minutes away.

 

[FIREd]

In my area, new condos sell for 600+ euros per sq. ft. while "used" condos in move-in condition sell for ~350 euros. I bought a fixer upper for 200 euros per sq. ft. last year and completely remodeled it to the tune of 150 euros per sq. ft. to get exactly what I wanted. It just didn't make any sense to buy new.

 

[Tiger8693]

We are in the process of building. Purchased lot, plans drawn up to our specs, elevation survey and septic permits completed.... then the August 84 lumber price sheet came out. Average 58% increase to all materials. OSB sheets went from $7/sheet to $21/sheet. The builder said the largest 1 month increase in material in his 15 years in business. Supply v. Demand issues due to you know what. We are holding off a couple of months to wait out this supply issue.

 

[zippy2020]

Don't know if this will make the OP feel better, but the WSJ just ran an article about the newest interior design trends, and quoted an SF architect:

"...construction costs in 2020, to date, are $700 to $900 a square foot, compared with $600 to $800 in 2018 for high-end homes, says Mr. Duff."

 

[calmloki]

Reminded somehow of our oriental carpet mentor who told us about customers who would come in to his shop full of antique Baluch and Kazak rugs and look around for awhile before asking if he didn't have any carpets that weren't used. I like old houses and old wood and things that have lasted for decades. Feel like most new things are so well engineered that they will last juuuust 10 years or until the newest fad sweeps the nation.

 

[2177V]

Custom home builds have always been more expensive than buying new construction or existing homes.

But now? Covid has created demand: People are realizing their home needs to be their everything. People are upgrading, adding on, moving to bigger ones.

Add to that the supply chain issues, delays with sub-contractor and permits, all builds will take longer which means more overhead - and the cost of raw materials is going up.

Best bet is to find a resale that meets the neighborhood and footprint requirements, the bones, the things that can't change. Then budget upgrades and changes.

I agree with this opinion as a former county employee who was involved in issuing building permits.

A custom house will cost a whole lot of money versus buying an existing house and then adding the upgrades and changes.

Generally a custom built house is for super rich people who have money to burn. They are super nice but you pay a whole lot of money simply because there are very few portion of the custom built house where you can save money. Converting an existing house is so much cheaper especially if you buy an existing house that was custom built to begin with.

I told customers the typical features of a custom built home that you do not see in a tract home: (1) A master bedroom suites with two separate toilet rooms so the wife does not get upset when the husband forget to lower the seat. (2) Naturally the guy bathroom has wiring for the guy to watch TV while sitting on the toilet throne. (3) The garage should also be supersized for additional space for a man cave. Some guys like to spend a lot of time in the garage. In addition, the head space in the garage is high enough to install a hydraulic car lift. (4) The kitchen should have a walk in pantry plus a walk in refrigerator.....or at least space to fit two refrigerators since a single refrigerator home is substandard. (5) Room to build a separate in-law unit for a live in maid. (6) swimming pool should be indoors or partially protected from leaves or debris.

I learned a lot on how the rich people live. However, all of this cost money. The best you can do on a limited budget is to get some of these features.

 

[troutnut1]

Maybe you should wait and try real estate market timing

Seems to me just a few months ago some of our forum’s real estate experts decided our homes values would all soon be collapsing as us boomers got old, and the next generation wouldn’t want them.

 

[indiajust]

I lean toward asset protection as an explanation. My grandfathers house was between $2k-4k in 1928. My dads house was 20k-40k in 1973. My house ran between $200k-400k in 2015. They were different styles, but all in the 1600 - 1800 sf range. The dollar dropped in value. The house did not go up. I suspect house prices are soaring for the same reason as stock prices. It's time to pay the bill for the last 50 years, so the dollar is shifting down.

I have no idea what to do with 1800 sf when I had a family, much less 2700. I suppose i would rent out the extra rooms.

 

[sanfanciscotreat]

Here in WNC materials costs have gone up about 50%. Had a builder sign a contract to build a house in our neighborhood, then material went up and he had not done a cost plus contract. Now he cannot afford to meet the contract price.

 

[morriss003]

In the affordable areas of Maui it is $200 to $250 a square foot. In the unaffordable areas it is $600 to $1500.

 

[HI Bill]

In the affordable areas of Maui it is $200 to $250 a square foot. In the unaffordable areas it is $600 to $1500.

Where are the affordable areas? Wailuku? Hana? Hard to fathom $1,500, even in Wailea!