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

To: Don Earl who wrote (59147)	8/4/2006 9:48:51 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

I've worked for, and with, a number of large home builders. How many have you worked for? I'm sorry to hear that your costs were so high when you built a home. This is one of the main attractions of homes built by large integrated home builders, much lower cost for the same product. I know what the costs for large builders are, and they are nothing similar to those you have experienced. Live and learn. It is inexperienced builders like yourself who create a price umbrella which supports wide profit margins for the major home builders. The dramatic three-fold increase in home prices over the past eight years is not at all driven by construction costs as you imagine. You won't be able to locate a single vendor or craftsman who is enjoying triple the prices they charged eight years ago. They would all laugh heartily when they hear your pricing fantasy. The "mysterious" rise is home prices flows back almost exclusively to increased land prices. During each housing cycle the price of land increases dramatically, in areas like California often by as much as 35% per year - much faster than the rise in home prices. Then when the housing cycle ends, land prices fall. At the end of the previous bubble, well positioned home builders and investors picked up land for often 95% less than the previous builder paid. That is the bubble, and that's how it pops. .