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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (977)	10/30/2001 6:59:14 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

The best person to ask whether or not it makes sense to build your own or buy existing property in your area believe it or not isn't a contractor (twice as long and twice as expensive even if you account for that) but your insurance agent. They keep extensive info on building rates per square foot. Every single property I've ever bought had a replacement cost on the policy that was a lot higher than the amount of the sale price and land doesn't burn down. Obviously this isn't true in every area and in some instances there is a huge discrepancy. The question is why do people pay that much for these houses? Because they can afford to (affordability index is quite low right now believe it or not) and the cost of a like property in the area is comparable without going through the headache of dealing with a contractor. You have the added cost of living somewhere while you build. I know what a nightmare contractors are to deal with, I married one. <g> We had planned to build our own house and work as our own general. We bought our present house for the property and location with the idea we could tear it down if the house wasn't suitable but the house was more than suitable, it was built with better materials than the expensive boxes up the street. It just had nightmare suburban taste in flooring and window treatments. If you minus what we would have paid for a developed lot in our area we paid less than $40 psf for the house six years ago. The money we saved enabled us to do a lot of improvements, landscaping, add an outbuilding and a pool. Needless to say it would sell for a lot more now, but who cares, I'm not selling. What is interesting is that it may seem like I did the right thing and bought something at a reasonable price, people I know who paid outrageous prices for their homes in areas where home values were inflated, around the same time, did far better than I did in terms of building up equity. Houses are expensive in a region because demand is high, the area is desirable and there are people who can afford those prices. Houses in these kinds of locations tend to appreciate faster and the compounding from a bigger base builds up equity faster. I'm all for living within my means but if you move into an affordable location that lags the expensive neighborhood you want to live in with the idea you will save for the expensive area....forget it, you can get further away every year.