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Nowhere did I say, nor do I expect, the builder to take a loss.
And by builder, I mean a private contractor, not one of the mass-production outfits.
Similar to your situation (where you already own the house), I own the lot... and want a small home built. I'm willing to pay X amount of dollars to do so. A fair price, without any "market adjustment". You've got the connections to get what you want, and that's great.
This thread is loaded with you saying you are offering a fair price. Clearly it is not a fair price or you would have found a builder.
The whole concept of "starter home" went out 20 years ago. The reason is real estate values are not increasing as quickly as they did in decades past. You can't buy a house today, make a huge profit in 5 years, and upgrade to a more expensive house. The house you buy today will likely not be worth much more in 5 years than what you bought it for today (and hopefully the value does not go down). Taking my house as an example, in the past 12 years my home has only appreciated about 40-50K in value. I purchased it at 350K which is right in line with "starter home" prices. That 40-50K appreciation over the past decade really doesn't put me in any better position to "upgrade" today as it would have if I had bought a more expensive home to begin with.
“And, the regulatory costs and professional fees are nowhere near $100,000.“
JG, $100,000 on a $400,000 house is a fair estimate. Homebuilder association analysis estimates regulatory costs equate to 24% of a new homes price, or $85,000 on an average new home price of $349,000.
The whole concept of "starter home" went out 20 years ago. The reason is real estate values are not increasing as quickly as they did in decades past. You can't buy a house today, make a huge profit in 5 years, and upgrade to a more expensive house. The house you buy today will likely not be worth much more in 5 years than what you bought it for today (and hopefully the value does not go down). Taking my house as an example, in the past 12 years my home has only appreciated about 40-50K in value. I purchased it at 350K which is right in line with "starter home" prices. That 40-50K appreciation over the past decade really doesn't put me in any better position to "upgrade" today as it would have if I had bought a more expensive home to begin with.
Starter homes are non-existent these days. One shouldn't buy their first home as an investment but rather as their actual home to live in and raise their kids. If their means of living are as cheap as possible then buy a cape cod in a small lot in a very cheap area. Vice versa if they can afford a million dollar home elsewhere then good for them. It's all about your way of living and buying into what you can afford....
Condos are really the only “starter homes” around anymore. Most people get married/have kids later in life and the real estate market as a whole is more expensive then 25+ years ago.
Plus in NJ many middle class people live in relatively small homes. It’s not like in Ohio where the average guy might be able to buy a small cape at 25 and then upgrade to a McMansion at 40.
Condos are really the only “starter homes” around anymore. Most people get married/have kids later in life and the real estate market as a whole is more expensive then 25+ years ago.
Even condos are very expensive. In my area of Essex County most condos are just as expensive, if not more expensive, than an average SFH. If you go to a town like Parsippany, 150K gets you a 1BR/1BA in a garden style apartment...probably not what most people have in mind for a starter home.
Condos are really the only “starter homes” around anymore. Most people get married/have kids later in life and the real estate market as a whole is more expensive then 25+ years ago.
Plus in NJ many middle class people live in relatively small homes. It’s not like in Ohio where the average guy might be able to buy a small cape at 25 and then upgrade to a McMansion at 40.
The majority of condos in NJ are more expensive than most homes. When you add the mortgage plus the HOA fees it tends to be more than a small house paying separate for utilities. Unless you move to the NJ suburbs of Philly but doesn't make sense if you work in NYC....
This is so true, my wife and I were struggling to find anything "average" colonial SINGLE FAMILY house aka 3 bed 2.5 bath. It was either a cheap condo/townhouse with high monthly HOA fees (like 350$/mo+) or really expensive old 1950s-1970s SFH which needed major renovations with a split or bi level plan (which we didn't want)
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