Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You will are unlikely to find a competent builder that would agree to an "all in" price that was under $250/ sq ft in the towns you are considering.
If you are capable of taking on more of the liability yourself and acting as your own GC, taking out your own permits, arranging for the required inspections and allowing sub-contractors to show up when it is most convenient for them and similar hassles it is conceivable that you could come in pretty close to $225/sq ft when it is all totalled up, but you would probably need to have 100% of the cash on hand as there are no lenders that would agree to this.
There are some homes being build that are below 3000 sq ft but these tend to be on either on the less desirable lots that previously would not have appealed to tear-down buyers or the really small lots in the priciest part of towns. When you see the asking price for the lots in the most desirable area it becomes clear that the seller is in no hurry to strike a deal...
I myself do not have a particularly large home (it is under 3000 sq ft) but as we have remodeled over the years we have increasingly gone with more "upscale" materials because I know what buyers are looking for. While I understand the intention of a "forever" home the reality is that skimping in such a case is not just a "for the next owner" proposition but something that will not serve you well from an operational standpoint. As I said above the best builders typically line the best subcontractors and often pay them a little bit more for a more thoughtfully assembled home -- the better subcontractors use slightly more costly materials in places where nobody might even see them but really do add long term value. It starts right with the excavation -- better subcontractors lay down a bit more gravel and that makes it easier to deal with any water that later will be channeled to a sump pump. The concrete guys that use the newer exterior water proofing membranes that cost a little more don't do so to put more money in their pocket but to further ensure a dry basement that enhances their reputation. The framers that insist on using a little higher grade of construction like 2x6 and exterior grade plywood for sheathing instead of 2x4 & OSB similarly are not charging more just for the sake of price but because those materials will result in better insulated, more weather-tight exterior shell. Roofers that specify a more extensive layer of ice and water shield are doing so because over the long haul (which ought to be the goal of a "forever home buyer") that means less chance of leaks.
I can say the same thing about plumbers that specify higher cost pipe, valves and fixtures. Electricians that spec out a panel that is roomier and higher capacity, higher grades of wire, conduit, outlets and switches, not to mention can lights, exterior fixtures and safety devices. Heck even things like drywall compound and pre-formed corner bead that may seem trivial but ultimately is more resistant to cracking and popping all contribute to a home that will remain troublefree for a longer time.
Honestly I have seen LOTS of folks go with "low bidders" and then spend much more time and money trying to find SOMEBODY that will help them "make things right" and the harsh reality is that the worse the work upfront the fewer high quality contractors will be even willing to get involved as they know that once they get involved with a "low budget" situation the high costs of doing things correctly along with the penny pinching ways of the buyer that originally hired a less than competent builders is a recipe for conflict...
I would also caution that even for things that are somewhat easy to deal with down the road, like a cheap GE stove vs a high qualty unit from BlueStar or other quality firm the fact that you only went with a 30" unit will effect the whole kitchen layout. Similarly the value of a fully cased in SubZero fridge that really is built for the "forever" buyer is orders of magnitude beyond what one would find in a GE that might be going into a rental. Seemingly trivial expenditure like a top of the line InSinkerator disposer with an counter mounted air switch is going to be long lasting, more convenient and safer than some low end builder special on cheap toggle.
If you are really concerned about "fully meeting your tastes" vs "wasted space" you should understand the degree to which higher end homes built by an experience high quality builder are a better value proposition than some featureless box thrown up in some cornfield by a tract builder.
I can recommend a range of custom builders that I know have done great work, and strive to meet the needs of their clients while being as upfront about costs as possible. Some of them also do work to renovate / update / expand existing homes. As the prices of existing homes in desirable towns has increased the smarter builders understand they can help clients achieve a long term value with a well executed, thoughtfully designed plan. The cost/sq ft on pretty much ANY renovation will be higher than new construction as older homes typically need a wider range of "systems" upgraded but for the right home in a nice community this is still an excellent option even moreso for the "forever home" as opposed to a flipper will.
My goal is not discourage you or "upsell" you in any way, just trying to help you understand what forces are driving the market. Subs that work in nice areas tend to demand a little better pay rate. Builders can work cheaper farther west and farther south -- they can get more subs from places like Northwest Indiana and downstate areas where it is cheaper for the tradespeople to live. Some of the guys that work for nicer builders in the Fox Valley town like Geneva or St. Charles might literally be coming from a farm and can work cheaper...
Understood. You make many valid points. I'm just trying to understand the cost of everything to see if it is even a realistic option at this point. As our family grows, we will certainly be outgrowing our existing home in Hinsdale. So we are faced with a dilemma. Renovate and expand our existing home or build a new home. My fear with renovating are the number of unknowns. When you are working with a home that is 50 years old who knows what you will find (we have already found a number of "strange" things since we have been there). I could definitely see many unexpected expenses arising from this type of situation. On top of that, you still have an old foundation, old brick exterior, etc. While homes were built well back then, these materials (concrete, brick, wood) have a definite shelf life before they begin to break down and ultimately fail. It just seems that you can control costs/budget much more easily with a new build. I'm certain there are still unexpected costs that arise in a new build but I imagine they are relatively small compared to a renovation and at the end of the day you know that everything is new and meets today's standards.
However, it appears from your post that any builder charging less than $200/sf is either not reputable or will likely cut corners? Would you mind providing the names of builders that you have worked with in the past? I guess I can try reaching out to them if they weren't the ones I already contacted. Then again, it may not be worth the bother if I am looking at an unrealistic scenario.
There are additional reasons, not really related to just the outlays for labor and materials for construction, that make it all but impossible to find builders willing to sell a new home for under $800K in a nicer town.
Land value is a huge part of the equation. It factors in to just what existing homes sell for, and what new homes will cost, but also what is sensibly for LENDERS to allow for a budget on new home construction.
I doubt you can find a nicely sized, quiet buildable lot withing a half mile of DG Main St (btw, homes near Fairview Ave Station are pretty much equally costly, and the increased lot size close to Belmont Ave Station makes the equation very similar...) for under about $250K. Using "standard" land to build values that means lenders would be aiming for a home that would appraise out at over $750K should the borrower default and the lender have to sell the asset. That means that lenders will want to see blueprints that compare favorably to the homes that have sold for $750K -- basically nobody "wins" if the proposal to build a "stripped down home"...
Wine cellars are might rare, it is fun thing to tuck in the basement of already large home.
Big kitchens with nice appliances are something else -- basically a necessity. I don't care if you exist exclusively on hamburger help or "trixies tofu terror" the assumption is anyone with a need for a family sized home in a nicer area is gonna be spending quite a lot of time in the kitchen!
lots in the mid to upper 200's can be found in Downers, Wheaton, Glen Ellyn, and Elmhurst. They might not be huge lots or the very best location but they are within walking distance of the train station and good school districts.
as for kitchens, I would be fine with a kitchen like that shown in photo of the listing below. nothing over the top but functional.
lots in the mid to upper 200's can be found in Downers, Wheaton, Glen Ellyn, and Elmhurst. They might not be huge lots or the very best location but they are within walking distance of the train station and good school districts.
as for kitchens, I would be fine with a kitchen like that shown in photo of the listing below. nothing over the top but functional.
..on that home is $899,000! It has not been built yet, the photos are technically from another that the builder has completed. Property history seems to suggest the lot was acquired for well above $300K... That is well above what you are considering. The home is 3000 sq ft...
Not meant to incite anything, just point out the facts.
I similarly don't doubt that Joe Kiem is selling home on lots he currently owns for $700K, the land cost remains a driver and very likely the average cost of those lots would be above $250K if he were to sell them and allow another builder to construct homes on them. He is hoping for "upgrades" to improve his profit margin. Nothing other than business like practice...
I've been told by a local realtor/developer that the sweet spot for the small 50' teardown lots that are typical in my neighborhood in Glen Ellyn is $350,000. When I see homes listed below or near that number, I fully expect the house to be torn down.
But the example I posted was $250,000, and that location is really quite good. Easily walkable to everything.
..on that home is $899,000! It has not been built yet, the photos are technically from another that the builder has completed. Property history seems to suggest the lot was acquired for well above $300K... That is well above what you are considering. The home is 3000 sq ft...
Not meant to incite anything, just point out the facts.
I similarly don't doubt that Joe Kiem is selling home on lots he currently owns for $700K, the land cost remains a driver and very likely the average cost of those lots would be above $250K if he were to sell them and allow another builder to construct homes on them. He is hoping for "upgrades" to improve his profit margin. Nothing other than business like practice...
I was simply using that photo as an example of a kitchen that doesn't have built in SubZero appliances, huge custom cabinetry etc. and yet is a nice, functional space. Also, as I stated previously, I don't need 3,000 SF and there is a lot less than 2 blocks away currently selling for less than $250k. So there is a lot of fat that can be cut off that $899k list price (plus take off 5% realtor fees since the builder appears to be using a realtor) and yet still meet my needs...
The way that the "lender land price multiplier" work a lot that is even "just" $250K is still going to be expected to have home that finishes out at much closer to $750K, which coincides with a price rollback of only about $149K from the pictured home... The difference in profit assuming the same number of bedrooms / baths but smaller sq ft (closer to your desired 2600..) is going to be negligible...
Really, just trying to let you know the "hows and whys" of what the builder & lender do to keep things moving in their favor -- make no mistake I saw the WHOLE SYSTEM grind to a halt when the bubble collapsed as even folks with CASH to build on lots that they scooped up cheap could not really line up builders familiar with the system willing to potentially get themselves into a spiral of downward pricing...
I didn't mean to suggest that no builder would do other than install higher end appliances either, just saying that when you are at $800K++ the cost differential between GE and the higher end brands becomes trivial, especially for homes built for clients and not speculatively. The tiny bit more to fully case in a nicer fridge or go witha higher end range / hood / oven is easily justified by "forever" buyers.
You gotta realize that if you start trying to call the marketing costs that builders and real estate agents incur "fat" you are really confusing how you, as a potential buyer, would like the market to function, with long established reality based business practices of those that make their living building and selling new homes. The builders and real estate agents control the market to ensure their survival. Again, not meant to suggest that the profit is not ultimately coming out of the 'buyers end' but without profit builders and real estate brokers won't participate. And the gross profit they make on individual tear down sold to owner occupied buyers is rarely more than 15% or so -- to get to their net you have factor in that there is nobody kicking in anything to a 401k/ health plan / life insurance for them (which I suppose is true for all business owners), Illinois notoriously high Workman's Comp to worry about (even if none of their subs are other than independent they still might face a court challenge...), and the day-to-day costs / headaches that some towns place firmly on the builders that are ultimately increasing the taxable value of the place...
You can compare pricing on other lots. Two blocks away are the neighboring houses as nice? Is the walk to the train as easy, especially in the snow / cold? Can mom see the kids as they cross the street to school? What is the trek to Starbucks like? It sounds silly even to me but if you live in the western burbs now you know that is what drives prices...
Like I said, this is very well established market (in every sense of the word...) and the participants behave in way that may not seem all that rational if their only goal is "fully maximized short term income" but neither do they make it easy to do things in ways that leave too much "off the table"...
Last edited by chet everett; 01-16-2015 at 02:36 PM..
The "fat" I was referring to is both the realtor's commission built into the $889k listing price, higher land cost, and the extra ~500 SF that I wouldn't need. I assume that if I work with a builder direct he wouldn't have to charge an extra 5% to cover comission since they are not selling the home on the land I own.
Also, if you're interested, there are some really beautiful row homes being developed right in the heart of downtown Wheaton, and they start below your max budget:
And as Toria pointed out, there are two locations where Keim Corp is building new homes in Wheaton... and while they aren't in-town locations, they are very nice in their own right -- walking distance to tot lots, golf courses, schools, the Prairie Path, and some beautiful preserves:
Just over $800k for 3300 SF. Shouldn't I be able to build for $110k less if I reduce the home size by 800 SF? I understand that cost per SF decreases as the total area increases but even assuming $150/SF for the additional 800 SF amounts to $120k. They paid $245k for the land which isn't much less for tear downs currently listed in that area.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The listing price...
