The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Don Earl who wrote (59102)	8/4/2006 2:42:23 PM
From: Elroy Jetson	Read Replies (1) of 306849

The $100 per square foot construction cost is a widely believed myth -- except in California where people believe in the $300 per square foot construction cost. To be fair if you set out to build a custom home yourself, you'll probably be taken advantage of and your costs will be very high. Any large home builder whose costs were as high as $100 per square foot would have been out of business a long time ago. Many complain that large builders don't pass on their economies of scale to home buyers and this can be true. If you include the home builders 40% profit margin on a home in California, then indeed "building costs" are quite high. But if you check out places like Texas with a 9% or lower profit margin, then "building costs" are low. But real building costs, before profit margins are added are well below $100 per square foot in both places. Keep in mind that the home builder's lot costs in the Dallas or Houston area run around $25k for the typical $300k home - about 8%. In California or Seattle area, the lost cost is more likely to be many fold higher - but that's not really construction costs is it? .

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