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I saw a framing contractor walk off in the middle of a job in St. James a few weeks ago and proceed to another plantation because another builder offered him a substantial pay increase.
I guess there just must be some other convoluted, complicated reason, logical reasoning to be mulled over... but there isn't.... the answer applies to all aspects of the question....
but... well just see my original post, it was also correct.
What? This has nothing to do with accepting your answer...your answer simply doesn't address the question. If the question was "2 years ago I was quoted $150/sf to build my house, and now it $175/sf, why is that", then your answer would make sense. But thats not the question. Your answer doesn't address the OP's actual question. I don't think you're actually reading the post, you're responding to the (misleading) title.
Its as if this were the conversation:
Me: Why is the sky blue?
You: I could tell you, but you wouldn't accept the answer.
Me: If you know the answer, tell me.
You: Ok, its because dogs can't fly.
Me. That makes no sense.
You: I told you you wouldn't accept it.
Your answer doesn't address the question, so actually, you don't know the answer.
I'm not an expert but here are a few reasons I can think of.
1. Spec homes are built by builders in between regular jobs. They use their crew that they are paying anyway to do a lot of the work.
2. Spec homes were made with materials at yesterday's prices. If your area has seen growth in the last year to year and a half prices for labor and materials have gone up.
3. Often builders buy an iffy lot( not bad just ones that the average buyer wouldn't pick first) to build spec and put average materials in them.
I'm sure the circumstances of every spec build could be different, especially if the builder was building to showcase their work but this is just what I've seen.
There could be a variety of reasons. The lot could be the reason cost/sq ft changes. A house on the ICW probably requires pilings. A house 10 miles away may not. There are added costs depending on the development. St James has several enforced rules and inspections that can add 10-15k to construction.
Thanks to everyone for their opinion. In this market, it certainly is less costly to buy, than build, which strikes me odd, in comparison where I currently live in Northern Virginia. So the plan is to buy something new already built, and keep my building lot in the ICW community to use the amenities. Then, perhaps sell later on when/if the market achieves better health.
To come up with the real reasoning, one would have to know exactly what materials and construction techniques/practices are being used/applied in the houses in question.
OP, your build on the ICW, has the builder priced in materials to combat wind and water? What is the sheathing material, is he using copper for flashing, vinyl or other siding? Custom cabinets? What materials are spec'd for the floors in the house, how many bathrooms? Pilings? Elevator? Insulation (batts, closed cell foam, cellulose)? How much square footage on external decks and are they one story or more above grade?
We are waiting to start construction now, signed contracts about 2 months ago. We went through the same process trying to figure out why homes we saw for sale that looked comparable to what we were talking about building ended up costing so much less (on paper) than our build. We were able, over time, to walk through homes our builder had under construction as well as others we saw as "comparable" that were either also under construction or completed and for sale. In the end, the quality differences, for the most part, explained the price differential.
Looking at price/sq ft is just a terrible way of trying to determine things. There are far to many variables to consider to use sq. ft alone. I suggest you have a builder from each "price per square foot" estimate your build then look at the specs and materials side-by-side, go with what makes you most comfortable.
The supply and demand thing is absolutely real as well, no doubt about it and coastal NC construction is on fire up and down the coast.
My wife and I recently purchased a lot on Bald Head Island and we've experienced the same situation as the OP. I approached a builder who had a spec home on the market for $300 / square foot. He said the cost would be "about the same" to build a similar house on our lot. That seemed odd considering we'd have a considerable amount invested in the lot and architectural fees. In addition, the burden of obtaining a construction loan would be on us. I asked him why and he provided an answer that made sense to me.
If a contractor builds a custom home for a client, they have to manage that client. The builder is being pushed on schedule, someone is following up after them every step of the way, there are arguments over what is in the contract, quality standards, and there are often changes in the scope. The list goes on.
If they build a spec home, it's built on their schedule and to their standards. Take it or leave it. Sure, there is risk for them to carry a construction loan and to sit on inventory. However, the current real estate market is red hot so they are not sitting on inventory long.
Give it time. The real estate market is cyclical and it will cool down again. The builders I talk to are expecting things to slow down in another year or two. Who know if that will happen or not. If it does, you'll find plenty of contractors available to build your home at a reasonable price.
Our plan is to work with an architect to complete the design and obtain permits in 3 years. Once approved plans are in hand, we'll request pricing from 3-4 builders. In the end, we may pay more than a spec house or it may be about the same.
Stonecreeks answer is the most logical and realistic in todays Brunswick county Real Estate market. Hottest market on the East Coast and tremendous shortage of craftsmen. All about supply and demand and builders can get as much as people are willing to pay. Sorry about your predicament.
Again, thanks to everyone for their opinion, all seems plausible. We placed a contract on a house this past week, and are waiting to see if the owner will accept our offer. It's a great coastal region (SC/NC state line to North Topsail). The house we contracted is in a great community, and is very similar to what we would have constructed.
Nevertheless, we never got into the specifics of any special building techniques with the builders, when we discussed pricing. It was simply, an apples to apples comparison at a location not too far apart. Whether the builder factored in any special building techniques, I do not know but it was not mentioned.
I will keep an eye on the market. Perhaps it may cool down, but from what I've read, the market continues to be in a state of upswing, recovering from the last collapse. I know we paid considerably less for the building lot we purchased in the ICW community, than the original purchaser paid 12 years ago. A lot of speculators are still waiting to make a profit, many housing lots are only worth a fraction of what people paid during the last housing boom, and some are unloading building lots at a 50% or more loss.
What? This has nothing to do with accepting your answer...your answer simply doesn't address the question. If the question was "2 years ago I was quoted $150/sf to build my house, and now it $175/sf, why is that", then your answer would make sense. But thats not the question. Your answer doesn't address the OP's actual question. I don't think you're actually reading the post, you're responding to the (misleading) title.
Its as if this were the conversation:
Me: Why is the sky blue?
You: I could tell you, but you wouldn't accept the answer.
Me: If you know the answer, tell me.
You: Ok, its because dogs can't fly.
Me. That makes no sense.
You: I told you you wouldn't accept it.
Your answer doesn't address the question, so actually, you don't know the answer.
As a person that has worked in electrical contracting for 8 years, the answer is simply two-part.
1.) Market.
2.) Volume.
The other poster already answered the market question. The market is booming. That is why prices in general are high.
The second part of the answer is client volume. I did business heavily with various DOT's. The contracts would typically be 7 figure contracts. I would have private customers that would ask me to do 4 and 5 figure jobs for them. I would always quote them higher. Why?
Because if you want me to pull men off my high volume work, you need to pay me at a higher margin to do so.
A builder isn't going to leave a location where he is doing lots of volume within a small footprint to build one guy's house that's out of the way unless he's getting higher margin to do so. 10% margin off of 5 homes is a better deal than 15% margin off of one home. You better double, no, triple the margin to make it worth my time pulling my limited supply of manpower off my most loyal customers.
The logistics of managing men is a nightmare alone. Working in a big subdivision, one supervisor can monitor many crews working on many plots all at once. If you pull a crew and stick them 10 miles away, that supervisor just got a huge efficiency drain.
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