home building vs buying (Centreville, Fairfax: for sale, 2013, lease)

[sequon]

We are still new to the NOVA area. We are currently renting and looking for a home to buy and move in permanently. We have some time because the lease ends at the end of July 2013.

But we just wonder whether buying a land lot and building a home can be an option in this area. I hear people say that building a new one isn't necessarily cheaper than buying an existing one. But that is a general statement and I wonder how that applies to this area. According to simple math, home prices here are about 3-4 times more expensive than other areas such as Texas (even in urban areas there), but I would say that the cost of home construction would be similar across the nation (maybe regional variations can exist but it won't be as big as 3-4 times). Then, don't we have a higher chance of saving money by building rather than buying because we live in such an expensive area?

I guess I can see the catch a little bit. First, probably the land here is already pretty expensive and, second there aren't empty lots to build unless it's further away from DC. Is that "the other part of math" not mentioned above?

But, also I think some people in this area still find a lot and build a home there, right? I would like to hear some argument for building. Or any other insights or first-hand experience would be appreciated.

(I should mention---I commute to DC, so it can't be too far. It doesn't have to be NOVA, but it should be anywhere commutable to DC and with decent schools)

[boyd888]

There is plenty of land; it's just out west past Centreville. If you plan on commuting to DC everyday I hope you have a massive budget to afford land somewhere closer than Prince William County.

Even then there is very little empty land close to/inside the beltway and even on the tear down properties you'll be bidding against companies that plan on building million dollar mcmansions that could care less if they have to pay another 50K to get the land.

[jillybean720]

We just bought a home earlier this year. I would have LOVED to have had a new home built. Who wouldn't want to be able to pick out everything just the way they like it? But the reality is that the price of a decent lot in this area is pretty insane. We saw many very old fixer-upper type homes that were listed for sale with the intent of tearing down and building a new home on the lot. When we went to look at those houses, there were actually brochures from builders in the kitchen. The price of a purchasing a home just to tear down (tear-down obviously not already included in the price) in Fairfax county starts at close to $300k. And that's by no means a huge lot of land - we're talking in terms of square feet, not acres, as most lots are less than 1/4 acre. Add to that purchase price the price of the new construction PLUS the price of taring down the current structure. For us, it was absolutely cost prohibitive. We bought a habitable (flipped) SFH in Sterling in a nice neighborhood with over 1800 square feet for about $310k. Not a CHANCE we'd have been able to build a new 1800-1900 sq ft home around here for that price. Maybe if we went way further out into western Loudoun, but even then, it'd probably be a stretch, and I sure wouldn't want to be commuting to DC from there.

[PolandSprings]

We looked into buying a tear down in Vienna and building a new home. We worked with a realtor/builder and did bid on some lots, but were always outbid by a builder paying cash. Site work was estimated to be $60k-$80k, some floor plans we looked at were in the $225k - $250k range, but they were not by any means my first choice. Now add in the upgrades I would want and we were at close to $300k. Now add in a tear down, and were were looking at spending $700k minimum. Doable for us, but winning the lot was the tricky part and we eventually gave up. You should also plan on at about a year for the whole build process. During this time you are paying rent and the payment on your construction loan.

[scottfs]

Originally Posted by sequon

I guess I can see the catch a little bit. First, probably the land here is already pretty expensive and, second there aren't empty lots to build unless it's further away from DC. Is that "the other part of math" not mentioned above?

In short, you got 'the catch' right. You probably just didn't want to admit it. The prices really have to do with the land. I think people buy lots and build vs buying an existing home for the same reasons they do it vs. buying from a builder in a new subdivision, which is, they want something specific. They want to customize the design and plans to their wishes. I doubt many are doing it for substantial cost savings as compared to the other home-acquisition methods I mentioned. As always, I could be wrong but that's how I see it.