New home construction costs - OMG!

[24601NoMore]

Hey gang..

Anyone price out new home construction lately?

We've been looking for about 10 years for a quiet place to live in retirement with lots of space, and just found a pretty good vacant 6 acre parcel to build on, in the "country" but not too far out and away from everything we need.

We were SUPER excited after so much searching to finally find something we thought was perfect - until we priced new construction.

O. M. G!!!

New construction when we bought current house (which we built, but in a sub using a builder doing lots of other houses in the sub) was ~$100 / sq ft - 15 years ago.

It's now conservatively $200 / sq ft.

So, to build my 2,500 or so sq ft retirement house (ranch), the house alone will run me $500K.

Add in property ($150K) and we're at $650K.

Add landscape, well, driveway, septic and propane - $700K easy.

Another $50K easy for interior finish.

We're at $750K - and that's probably UNDER estimated for a 2,500 sq ft house! What the...?!!!

We're in SE MI.

What are you all seeing? This is insane. IF we could find what we want (super big if - have been looking for 10+ years and haven't found it yet), we could buy a used house for 75% of that cost..really nice homes in the $5-600K range.

Would love to hear opinions as to what on earth is going on to drive costs through the roof like that..hot stock market? Low interest rates? Builder greed? All of the above?

Figure I can get $600K for current house. But I'm thinking new house will easily be $8-900K - for a 2,500 sq ft ranch. REALLY?! That means I'll need to dig into the piggy bank for another $2-300K I didn't plan on spending, which could push RE out another couple years..we'd have something awesome when we're done, but I just can't see spending $8-900K for a 2,500 sq ft ranch - no matter HOW nice it is.

 

[Blue Collar Guy]

200 a sq foot sounds high. thats for a higher end house. Not gold leaf ceiling but higher end.

 

[aja8888]

200 a sq foot sounds high.

Construction costs are dependent on where you want to build. In some parts of Texas, you can build a 2,500 sq. ft. house for around $120 per sq. ft. including the building lot.

In Sunnyvale, Ca, it's probably $400 per sq. ft.

In Detroit, Mi, maybe $50.00 per sq/ ft.

 

[Blue Collar Guy]

In Detroit, Mi, maybe $50.00 per sq/ ft.

hahahah, To add insult to injury, when I was having this joint built, I was quoted A, it turned into A plus 50 %.

 

[24601NoMore]

Thanks..I should have added that we do want "nice" finishes, elevation, lots of brick, nice windows (probably Anderson) etc. We have that today and would like to keep it in the new / retirement house.

I know I can build lower-end (less brick, builder finishes, more plain elevation, more wood or siding) but this is the last house I plan to build (ie: the one we plan to never leave until there are no more days left..) So, I have basically one chance to do it and I'm not ever going to do it again..

We're even starting to think about things like geo-thermal (since propane is so high) so just see the dollar signs spinning before our eyes like a slot machine..I can easily envision a million dollar, 2,500 sq ft ranch and actually know someone who built an (albeit slightly larger) ranch across from a previous property we were looking at that sold for $1.4M..he went a little crazy with landscaping, had a concrete deck and a finished basement, but..still...

 

[W2R]

New construction homes cost a lot. I wonder if they depreciate in price the first year or two? Seems like they might, since some people insist on brand new.

I don't like them, myself. I was appalled at how much I still had to do, the one time my ex and I bought a new construction home. No curtains, no mailbox, no house number, not even a hook to hang up my doggone bathrobe, and so on. There is so much work to just make a brand new house barely livable, probably hundreds of tasks like the ones I mentioned. It's utterly exhausting and pointless, IMO, and takes months before the house is reasonable. Although I know some people really love brand new houses and I don't mean to insult their judgment, they are just not my particular cup of tea.

 

[aja8888]

Thanks..I should have added that we do want "nice" finishes, elevation, lots of brick, nice windows (probably Anderson) etc. We have that today and would like to keep it in the new / retirement house.

I know I can build lower-end (less brick, builder finishes, more plain elevation, more wood or siding) but this is the last house I plan to build (ie: the one we plan to never leave until there are no more days left..) So, I have basically one chance to do it and I'm not ever going to do it again..

We're even starting to think about things like geo-thermal (since propane is so high) so just see the dollar signs spinning before our eyes like a slot machine..

I had a co-worker that did just what you are planning. He built a high end house for lots of dollars, but the area was priced about 1/2 what he paid to build. When he went to sell, it and move on, which people do (or need to), he could not get anywhere near what he had into it. Maybe that's not your concern?

 

[Blue Collar Guy]

Figure I can get $600K for current house. But I'm thinking new house will easily be $8-900K - for a 2,500 sq ft ranch. REALLY?! That means I'll need to dig into the piggy bank for another $2-300K I didn't plan on spending, which could push RE out another couple years..

I went thru a home build. A- never again, 2) the cost was 50 % more than we started, E) It took them 4.5 months longer than they said. Full disclosure we upgraded things and paid the difference, we added 2 fireplaces to the original scheme and we added a 4th bathroom. That being said it didnt sound like up grades at the time. The builder would say say that tile you picked out is way above the allowance. Or the trex deck steps will be very steep if we go out 20 feet , we need to go out another 4 feet to make them sweep down gently. And these guys never talked in the hundred range . their vocabulary only contained the word X thousands more.

Oh the point of this post, you need to have a piggy bank for the overages. Its like playing poker with scared money, you just have to have spare dough.

 

[ivinsfan]

You're talking about a custom build on rural property..probably the most expensive thing you can do..you're not going to get septic, well, landscaping and driveway for 50...try doubling that number.

 

[wmc1000]

DD and her hubby built a 1900 sq. ft house with unfinished basement on 40 acres in southern indiana last year for $110/sq. ft. turnkey excluding land cost. Would be hard pressed to see how one could add another $90 per sq. ft.

The base cost for the house before their upgrades was $71 sq/ft.

 

[travelover]

I'd look at existing houses. I just moved out of SE Michigan and did not even keep up with inflation over the 27 years I owned the house, despite upgrades.

 

[Ronstar]

$200 per sq ft doesn't surprise now after I just stared 2 remodel projects and see what material costs are these day.

 

[Blue Collar Guy]

I'd look at existing houses. I just moved out of SE Michigan and did not even keep up with inflation over the 27 years I owned the house, despite upgrades.

We ran the risk of having the nicest house in the neighborhood, always not a good return for your money. That worry faded after 3 years, because the last 2 years some well healed people have been bulldozing homes all around me and building the most fabulous abodes, all easily worth double, triple (?)of my place.

 

[RunningBum]

I did custom build when I built my house because most of the houses around were built as second/vacation homes--no garages, and very little storage and closet space. There was only one existing place I considered, and I would've wanted to add on a garage plus expand the kitchen and probably add a second main level bedroom since I don't think my young child would've been comfortable alone in the basement. Not the most economical move but I got what I wanted, though I overdid it since times were good.

 

[FIREd]

We live in a below average cost of living area and $200 per sq ft. does not seem far off for new construction. It is much higher than what the existing stock usually goes for ($70-100 per sq ft.). I cannot imagine how this is a good deal given the below average performance of the local RE market.

We own a house which did not quite meet our needs anymore and we faced the choice of remodeling vs. building new. Many on this forum warned me about the escalating cost of new construction and we ended up remodeling the old house instead (at a cost of only $14 per sq ft.). I am glad that I listened.

 

[athena53]

My niece and her husband are building near Lexington, SC and they dug the foundation and have let it sit there for months without framing it. They're trying to get out of the contract. Just after I heard that, I saw an article on msn.com about how the crackdown on illegal immigration has created serious shortages of skilled construction labor- especially framers. Hmmm.. Their builder is a well-recognized national firm and I'd hate to think that they were lax about checking up on the immigration status of their workers and are in a bind now that the cheap, illegal labor is disappearing.

I've never built new- always bought existing structures. Too many horror stories. The house I own now is an architect's original (I have the plans) built 20 years ago. Best of both worlds.

 

[24601NoMore]

Thanks for all the great responses..

This is a tough one..we've been looking for "the" house for 10+ years, and have not been able to find it. So, buying used is pretty much out of the equation unless a two-headed purple unicorn happens to stroll across our path one day

Since we plan to live in the house "forever" (barring any unforseen craziness like a motorcycle gang moving in next door or someone putting a rock mining quarry at the end of the street), we want the house to have certain things - no living room or dining room (waste of space), relatively nice finishes, really good windows (have Andersen today), nice elevation, quiet/peaceful lot with NO NEIGHBORS, etc.

Hard to find all that in a pre-built house unfortunately..

 

[HillCountry]

New construction when we bought current house (which we built, but in a sub using a builder doing lots of other houses in the sub) was ~$100 / sq ft - 15 years ago.

Not sure about your complaining. With 3% inflation, 100 then is 155 now. And tract home cannot be compared with custom build.

Even if you get 150 instead of 200, what is the difference? 125K.

So your problem is not construction cost.

 

[ivinsfan]

Thanks for all the great responses..

This is a tough one..we've been looking for "the" house for 10+ years, and have not been able to find it. So, buying used is pretty much out of the equation unless a two-headed purple unicorn happens to stroll across our path one day

Since we plan to live in the house "forever" (barring any unforseen craziness like a motorcycle gang moving in next door or someone putting a rock mining quarry at the end of the street), we want the house to have certain things - no living room or dining room (waste of space), relatively nice finishes, really good windows (have Andersen today), nice elevation, quiet/peaceful lot with NO NEIGHBORS, etc.

Hard to find all that in a pre-built house unfortunately..

Yes the builder has you between a rock and a hard place doesn't he?You don't have any wiggle room

 

[Accidental Retiree]

Uff da.

Hey gang..

Anyone price out new home construction lately?

We've been looking for about 10 years for a quiet place to live in retirement with lots of space, and just found a pretty good vacant 6 acre parcel to build on, in the "country" but not too far out and away from everything we need.

We were SUPER excited after so much searching to finally find something we thought was perfect - until we priced new construction.

O. M. G!!!

New construction when we bought current house (which we built, but in a sub using a builder doing lots of other houses in the sub) was ~$100 / sq ft - 15 years ago.

It's now conservatively $200 / sq ft.

So, to build my 2,500 or so sq ft retirement house (ranch), the house alone will run me $500K.

Add in property ($150K) and we're at $650K.

Add landscape, well, driveway, septic and propane - $700K easy.

Another $50K easy for interior finish.

We're at $750K - and that's probably UNDER estimated for a 2,500 sq ft house! What the...?!!!

We're in SE MI.

What are you all seeing? This is insane. IF we could find what we want (super big if - have been looking for 10+ years and haven't found it yet), we could buy a used house for 75% of that cost..really nice homes in the $5-600K range.

Would love to hear opinions as to what on earth is going on to drive costs through the roof like that..hot stock market? Low interest rates? Builder greed? All of the above?

Figure I can get $600K for current house. But I'm thinking new house will easily be $8-900K - for a 2,500 sq ft ranch. REALLY?! That means I'll need to dig into the piggy bank for another $2-300K I didn't plan on spending, which could push RE out another couple years..we'd have something awesome when we're done, but I just can't see spending $8-900K for a 2,500 sq ft ranch - no matter HOW nice it is.

 

[FlaGator]

$200/ft is the going rate in my neighborhood, a mile from the beach on a 10,000 ft lot.

Get a lot for that, compared to a production house-well insulated, good finish work, storm-rated windows, functional design.

Easy to spend more based on your tastes

 

[MooreBonds]

Construction costs are dependent on where you want to build. In some parts of Texas, you can build a 2,500 sq. ft. house for around $120 per sq. ft. including the building lot.

In Sunnyvale, Ca, it's probably $400 per sq. ft.

In Detroit, Mi, maybe $50.00 per sq/ ft.

It also completely depends upon the various details of both the local area (and building codes) as well as basics like "Is it a slab on grade (common in Texas) vs having a basement (having a basement is a substantial expense). 2 story/1 1/2 stories will be a bit cheaper than a ranch (a LOT cheaper if you have a basement, since you have half the footprint for the same square footage).

In many parts of the St. Louis suburbs, existing housing stock for 40 year old modest ranches go for $200+/sq ft (decent areas but not the cream de la creme) So it's not unexpected for retail pricing on new construction to go for $200/sq ft in your area. Also, you have to remember that not only does a builder have to have their overhead and profit added in (do you think a builder will take on a $500,000 project and only make $5,000 in profit with the risk, financing, and time commitment?), but if you are talking an entire subdivision vs a single home out in nowheresville, it will also add on an additional sum on top of it given no economy of scale.

And there are various building code changes over the past 10 years that all add up to another decent chunk of cost increase, whether it's general building codes, electrical, fire protection, etc.

 

[Bamaman]

I'm so sorry that you're finding new construction so expensive in your area. With such low interest rates has brought a high demand for new houses and thus builders are charging premium prices on new homes.

A new house was built in our neighborhood about.what you're talking about. It is 2650 square feet large 3 bedroom house with a full daylight finished basement and a huge screen porch on the back. The house alone cost them $300k.

We.bought a foreclosure home 18 months ago in a very substantial neighborhood with homes going up to 10,500 square feet. We have 5 bedrooms and 5 full baths, 2 double car garages and a 35 ft. deck. My media room is a ridiculous 26' by 47'. Our landscaping is absolutely incredible and the 120 ft. by 210 ft.lot is fully irrigated and sodded. We paid.just under.$300k.

There are cost based home markets and there are demand based home prices. It seems that homes are more expensive the farther you go north. Have you looked into buying an existing home or even better a foreclosure?

 

[FI_RElater]

Keep looking, you'll eventually find it

Thanks for all the great responses..

This is a tough one..we've been looking for "the" house for 10+ years, and have not been able to find it. So, buying used is pretty much out of the equation unless a two-headed purple unicorn happens to stroll across our path one day

Hard to find all that in a pre-built house unfortunately..

Well we did find a single-headed orange unicorn, but it only had three legs, but it took a few years to find-- at a distance of a couple of thousand miles. Most times, by the time we could book a flight, the good ones were gone.
We found a house that met virtually all our requirements:
View) over 160 degrees of cascade mountain view
Single level) only one step up from the garage, first level of deck is at level, then a few steps to smaller deck with hot tub
Space) over three acres-- sited like over five with no obstructions to the view; house is just over 2300 sq ft
Quiet) it's in semi-rural area but only a few miles to decent town
Recreation) has its own golf course, close (~half mile) to world-class trout fishing, a few miles to international known rock climbing--- you get the idea

Downside) the unicorn doesn't have good restaurants close by and have to drive to the city (~20 miles) for good restaurants {closer ones just aren't as good}, hence the three-legged nature of the property

Price) at the time, under 300k-- but easily would be well into the lower 400's as sites like ours aren't easily found and less appealing, smaller with less acreage, ones are **selling** for 350-400k

So-- keep looking and good luck

 

[travelover]

...........That worry faded after 3 years, because the last 2 years some well healed people have been bulldozing homes all around me and building the most fabulous abodes, all easily worth double, triple (?)of my place.

The same thing happened in my neighborhood but with the effect that my house was too small and old to appeal to the new class of people building McMansions on tear down lots and worth too much to just tear down for the lot.