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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: John Vosilla who wrote (54582)5/22/2006 1:44:30 PM
From: TradeliteRead Replies (2) of 306849
 
<<New 3500 sf home in Indianapolis by Centex for only $159k. How can they make a profit? I thought construction costs have gone through the roof the last couple of years. Jeez $45 psf for the living area and you get everything else for free. Yes it is a two story production boxy home but still seems way to low. Something does not make sense to me<g>>>

John, it's all about land costs, not cost of construction of a particular house. We have always had major builders in the Wash DC area who can build the very same model of house on cheaper land in outlying areas at far less than they build the the very same house on expensive land located close-in to major employment areas and commuter routes. The major builders (the guys you folks on this thread love to short) get land at a certain price in areas way outside of "town" and build houses there for the same price they build a house "in town"--only difference is price of land and cutting back on certain fine finishing details that higher-income people expect in a close-in home--such as maybe hardwood floors in kitchen, extensive molding, jacuzzi tubs in master bath.

They use the same floorplans in either case. Sames them big money. It all boils down to location, location, location.
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