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

To: JBTFD who wrote (14545)	10/27/2003 1:43:37 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

That is a factor for small builders, but not the only reason. Having worked for a large builder, I saw that it was due to perceived value among buyers. The typical person does not realize how little homes cost to build, relative to the cost of the finished lot. Doubling the construction cost may increase the sales price by 20%, yet in the mind of the buyer it doubles the perceived value. Frankly I think this is what drives the construction lending requirements for small builders. The bank is trying to direct the builder toward a profitable outcome based on current market conditions.