Building house on a lot- many questions (purchasing, contractors)

[Lost_In_Translation]

Originally Posted by diggity101

The difference is that in '025 the land value justifies new construction, as is evidenced by all the "mcmansions" popping up (really hate that term btw).

Dropping $300K+ in an area that clearly doesn't support that price is a very different scenario.

If the OP plans on living out his/her remaining years in the home, that would be one thing. If they ever plan on selling though...

Yes, but what justifies the mcmansions? Why pay 800k for a 400k dollar house on a 400k dollar lot vs. paying 600k for a 200k dollar house on a 400k dollar lot? Is it solely because there are "X" number of 800k dollar houses? I understand the general statement that you don't want to overprice your neighborhood, but is there certain rules of thumb (like until lot values exceed house values by "X" multiples, new builds are always going to be losing propositions (after initial buildout)?

[cheryjohns]

Originally Posted by Lost_In_Translation

Yes, but what justifies the mcmansions? Why pay 800k for a 400k dollar house on a 400k dollar lot vs. paying 600k for a 200k dollar house on a 400k dollar lot? Is it solely because there are "X" number of 800k dollar houses? I understand the general statement that you don't want to overprice your neighborhood, but is there certain rules of thumb (like until lot values exceed house values by "X" multiples, new builds are always going to be losing propositions (after initial buildout)?

Look at West U for the true example in how it is done.

[Lost_In_Translation]

Originally Posted by cheryjohns

Look at West U for the true example in how it is done.

I don't understand. What do you mean or is this giving away a trade secret?

[cheryjohns]

Originally Posted by Lost_In_Translation

I don't understand. What do you mean or is this giving away a trade secret?

LOL - no. When I first saw the McMansions going into that wonderful little bungalow-filled community - I was horrified. At the time, you could buy a 1100 SF home, built in the 40's, for $125K - $140K (late 80's - early 90's). The new ones were going for about $350K (as far as I can remember now). Go on HAR and look to see what they are worth now (and what the small, older ones are worth) - about 3X the amount in both cases - and in a relatively short period of time.

[Lost_In_Translation]

Originally Posted by cheryjohns

LOL - no. When I first saw the McMansions going into that wonderful little bungalow-filled community - I was horrified. At the time, you could buy a 1100 SF home, built in the 40's, for $125K - $140K (late 80's - early 90's). The new ones were going for about $350K (as far as I can remember now). Go on HAR and look to see what they are worth now (and what the small, older ones are worth) - about 3X the amount in both cases - and in a relatively short period of time.

ok, i thought you were being mysterious about something there. So really, unless you can count on rapid price increases in an area, building new accelerates your initial depreciation curve in an established area.

[cheryjohns]

Originally Posted by lost_in_translation

ok, i thought you were being mysterious about something there. So really, unless you can count on rapid price increases in an area, building new accelerates your initial depreciation curve in an established area.

yes!!!! Each area of town has to be evaluated, to determine whether there will be depreciation or appreciation. From the OP's earlier posts, she lives in Clear Lake - it will take forever.

[RCH99]

Originally Posted by cheryjohns

yes!!!! Each area of town has to be evaluated, to determine whether there will be depreciation or appreciation. From the OP's earlier posts, she lives in Clear Lake - it will take forever.

What about the 529 corridor, west of highway 6 by the Walmart?

[astrohip]

Originally Posted by MNCold

1. Can we build a quality 1 story home, 4br, 2 bath, ~2200 sqt for $80/squarefoot? I'd like red brick on all sides, granite counter top, maple cabinets, carpets in bedrooms and play area, tile in bathrooms, wood in living room. Is $80/sqt too low? Houses in this neigborhood is average ~215K and the lot is $40K. I don't want to be the most expensive house in the hood, average is good for me.

We seem to have strayed from your questions (what else is new in this forum)... I'll work on #1 for ya':

No. You can get a production builder home for $80 (or less!) a sqft, but not a custom home. With a production builder, the cost of supervising and whatnot is spread over all the homes being built in that subd. With a custom home, you are paying for a builder's time, to supv YOUR house. He's going to have to visit your house daily, along with the other houses he's building.

Plus, the trades charge more. Granite for a cookie-cutter countertop may be $25/ft. To do it for a custom house, substantially more. Same with every trade & supplier.

I think $120 would be an absolute min, based on your specs (maple cabs, brick, wood floors, etc). And probably more.

[diggity101]

Yes, but what justifies the mcmansions? Why pay 800k for a 400k dollar house on a 400k dollar lot vs. paying 600k for a 200k dollar house on a 400k dollar lot?

Because no one in their right mind is going to spend $600K on what would amount to a 1,500 sqft house. It just doesn't make sense. The land price is more spread out across the total price as you build larger.

Let's assume you can build for $130/sqft ($133 actually, since it makes the numbers more round). In the first scenario, you're looking at a home that would need to sell for $400/sqft (just to "break even") whereas in the second scenario, it would be $266/sqft. That doesn't even take into account that your cost to build per square foot drops as you go larger. The expensive things to build in a house are kitchens and bathrooms.

[Lost_In_Translation]

Originally Posted by diggity101

Because no one in their right mind is going to spend $600K on what would amount to a 1,500 sqft house.

Here in Houston probably not...