That is the question.
For 15 years I have been planning to build a house on our nice 5-acres in Corvallis Oregon. I have countless designs and plans pretty much done, and that time to build is rapidly approaching.
However, with all these foreclosed homes on the market and much reduced prices for those simply trying to sell, does it make any sense to build? In the Willamette Valley in 2009, houses in the $1 million asking price range have been selling at 45% below the asking price.
I know that we will not find exactly what we would have built, and I am sure we will not find the quality that we planned either. I am sure asking you here at Breaktime, who are by nature construction people, will slant the direction of the answer, but do you honestly think that someone can build a house in today’s economy for less, or even equal, money to what you can buy one?
Replies
IMO-cheaper to buy existing
but is that what you really want?
money-logic says buy existing
but the question you're asking:
is this the right time to build my dream or do I buy someone else's dream for less money and fix it up...
money or dream
answer that and then...
silver
I agree.
Money or dream, money or dream. Tough question and at my age, quite close to retirement, money has to be a factor, but then again, the dream is there...
money or dream
I don't know you but at 57 my advanced wisdom says:go for the dream and believe in the dream...I can only speak for myself.We bought a very small house and 160 acres in 1982 and figured we would live in the house for a few years and then build a new one.2 additions and 3 kids later:1999-2000 we built a new home- wasn't easy-was it the right time??but it was the right dream...and we're happy today and will be celebrating our 30th wedding anniversary on August 30th.know thyself-as Socrates put it. Tomorrow is promised no one as my old guru puts it.silv;er
I have a friend in Seaside that paid 475000 grand for a nice home with 5 acres and no neighbors.
He bought it 2 years ago at the top of the market.
We talked about this yesterday and determined it was his dream and would do it again cause its what he wanted!!!
>> I have a friend in Seaside that paid 475000 grand << You most hang with the Trump crowd.... 475,000,000 for a house? WOW!!! Did it come with a 250' yacht? Island? Harem?
Sorry... couldn't resist :-)
It doesn't necessarily have to be an either or situation. Run some numbers on existing houses that you are looking at. See how much you are saving and how much you would have left to renovate and make them your dream home. Quite often, unless you are remarkably eccentric, people's dream home ends up looking a lot like their neighbors.
"Quite often, unless you are remarkably eccentric, people's dream home ends up looking a lot like their neighbors."
My immediate thought also.
Funny story. A number of years ago the firm i was at had a local contest of sorts to provide free design services for a client who wanted something unique. In exchange for portfolio material and possible documentation for an article a la FHB, Metropolis, Home, etc.. We eventually settled on a couple who were retiring to the North Carolina mountains near Asheville. Mountain view site, great people, good program.
First design, the wife hated. Same with the 2nd, 3rd and so on (later versions were very Susanka-ish). She ended up cutting photos from generic house magazines and saying she wanted something like those.
We eventually parted ways (amicably), and they moved to NC and built their house. Never saw the final result. But it was an interesting lesson.
Ah, the joys of design clients. A large part of the reason that I became so picky about who I design for is that I got sick of spending months trying to incorporate people's "wishes" into their dream home only to have them sell up and move within three years, as demographics say they inevitably will, leaving their dreams for someone else.
"Dream" anything usually leads to disappointment. Dream Girl, Dream Job. Dream vacation - It's not a very adult way to go through life.
planning to build a house
You actually building it yourself with your own hands or just having somebody else build it?
If with your own hands, go for it. If I were decrepit enought that I could not build myself, then I'd buy depressed area existing house.
We just went through that. It was a little different for us than some as I build homes for a living, plus we wanted to downsize. Still I couldn't make the numbers work. No matter what we were going to take a hit on the house we were selling. On the purchase side I could get a good discount on a building lot but what is 10% of a building lot, compared to 10% off the new house. Sure we coulda saved a little by partial DIY building, (I don't count my labor as free) but it woulda been 6 to 8 months of blood, sweat, and tears for what - savings in the single digit %. Already followed that dream anyway. This time, we bought an existing home.
Here, in the building business we don't discount presale houses. Buyer pays list price. OK - we might let the price down a little in these economic times, little being the operative word.... One common misconception is that builders make a lot, as in significant percentage. If we clear 15% we feel like we are doing really good. So, if we let our margin down, say 10%, than that is 10% of 15% or 1.5% to the home buyer...
OTOH, the only way to get exactly what you want (and can afford) is to build. Right now people are hungry and are willing to work for a little less. Maybe very little. Schedules go quicker too, which saves a little on construction loan interest and it's a little less frustrating. While researching I did find building lots to be cheaper and more readily available than 2 years ago but that doesn't help you. Lumber (raw material - not finishing products) fluxiates crazy but in general is down low right now so that would save you a little. Framing lumber might reprisent 15% of the cost of a house. If you really want to do this thing, you are still likely gonna get it a little cheaper now than you ever will. If you wait a year or 2 all those 'little's will likely be gone as it seems like we are on the rebound.
Be aware that banks are funny about loaning money for construction projects right now. They are still getting over the shock of not making money hand over fist every time...
gerrha,
Well, do you want a house that is YOURS and all custom or do you want to settle for something close?
If you are building for the idea of resale and making money, forget about that right now as its not a good idea. If you are building because you want a place that is YOURS and can determine how it is built and what goes in it, than go for it!
If you just want a place to live, you can likely find a house to buy ready to go.
Mike
Thanks for all the replies. It more or less does come down to money versus the dream.
The house we were planning was to be our final house, not for resale, and very customized including an elevator for someone in a wheelchair.
But, as I am finding out, and as many of you agree with, the numbers are not in our favor for building right now. I was planning to do as much of the work as I could, but the one unknown I am up against is what actually would be the cost to build. I do not have any real cost to build our planned house in my hand, while if we buy, the cost is at least a known quantity.
I still do not know what to do, but I am leaning toward buying I guess..
I would suggest getting your dream priced out before you cancel it. Theres no reason that you can't get a handle on the price to build it. Then, armed with facts, go compare to existing homes. Then, make a decision.
gerrha,
I didn't have a solid number when I built my dream house 9 years ago. We end up running $20k over budget which I didn't think was all that bad. I did 95% of it myself so that helped save some money.
Price it out but don't give up on it too quick! I hate to see anyone give up on their dream home if it could be a reality.
How would one go about getting a reasonable price estimate for a house in which one plans to do part of the work? This has been a problem for me that I do not know how to overcome. And, since I live in Saudi Arabia, my ability to work/communicate with local Oregon builders is not so good.
Another option:
Buy near where you plan to build, live there while you build with max DIY effort.
If you do not count your own labor (you said you would be 'retired', consider the labor as 'exercise') or the 'toys' you get to buy, I do know that most places here in Seattle area the permit costs and 'impact' fees are GREATER than what I would need to pay for 100% of the materials to 100% DIY build. No idea of the fees, etc in OR.
Once you are back and living in the Oregon area of your 5 acres, then you can do the exact price comparisons. In 2 years the market may rebound and you can sell the 'return house' with no federal capital gains taxes, no idea what OR tax would be.
Well, you being remote does make it difficult. But...
I guess you would have to have some folks bid the various aspects (framing, roof, etc) than you would know what the specific costs would be. Or you could have someone do some take offs and generate a material list for you.
Either way, you could offer to pay someone to do those aspects and be up front and tell them you want to build it yourself yet want them to generate some numbers for you.
I have done this several times for ownerbuilders. They usually pay me to generate the lists and costs and then they can decide where to go from there.
You essentially just need a solid set of plans and a list of guys in the area to work with. I would be glad to help but not sure of my cost accuracy for your region being I live in Florida.
how about a shellbuilder?View Image bakersfieldremodel.com
Thats a good idea Huck!
.....how about a shellbuilder? ....Excsllent suggestion!!!!!!!!!!!!!!!!!!
Edited 8/28/2009 7:39 pm ET by shellbuilder
You could probably do it for $600,000 to $750,000. You have a lot of upgrades in your wish list. Nothing wrong with your plan though it might be cheaper to retrofit an existing house.
Thanks everybody for the good information.
A lot for me to think about here in Saudi Arabia and our work week has just started.
Thanks again, I will get back...
Gerrha
gerrha
One thing you are missing on the Build/buy decision is that you are not comparing the "same" house. The one that you described is pretty custom. In almost 20 yrs of construction in the Willamette Valley I haven't seen a dozen ICF homes. I haven't seen 3 GSHP. And I have worked on probably 15k homes here. Not that they aren't out there. But, they aren't common.
If you need some help finding a builder I could give you some direction. Lot's of guys laid off now. (including Dovetail!!!). DT has experience in ICF too.
In some strange universe Corvallis, Or has not been hit as hard by the housing melt down. Only down something like 5-7%. IIRC. Not many mortgages going bad there. Go figure.
Good luck.
Oh, and Go Beavers!!
Dropped into the thread and sent him a post.
They can't get your Goat if you don't tell them where it is hidden.
DT
You are just the kind of builder that would do a great job for him.
But that don't pay the bills this year. LOL
He's comparing 56 Chevy's and Toyota Prius. Two different animals. Both built to the standards at the time. But, it's hard to quantify the diff.
Me, I'd build what I want.
The cost of building your home is something you can figure out.
do you honestly think that someone can build a house in today's economy for less, or even equal, money to what you can buy one?
To me that's a silly question, any realtor could answer it for you.
No.
If you have the money to build, build for the way you live. Just like remodeling. Its not always a dollar and cents proposition. Its having the house set up for the way you live.
Yes, the key as you mention is having enough money. If one has enough money almost anything is possible.
The house we were planning would be roughly 5000 square feet, ICF, super-insulated windows, GSHP, solar panels, attached greenhouse, etc, etc, etc, which I think is what we (in the USA) should be doing in general (except for the size maybe), to minimize global warming, and most of all reliance on foreign oil, which I might add, has paid my wages quite well for over 20 years now.
However, I am not with infinite money, so as I am reading the consensus here (which I pretty much new anyway), building new in this economy is not cost-effective. That leads us back to money versus the dream.
In my case, I may be willing to put the dream on hold and buy in this market.
has paid my wages quite well for over 20 years now........... However, I am not with infinite money
Having known a few folks who worked for Aramco for close to 20 years, and the inferred the size of their 'nest egg', ...
..... by comparison, many on BT would pretty much think you DO have a near 'infinite' amount of money <G>
Good luck.
which I think is what we (in the USA) should be doing in general (except for the size maybe)
That's a pretty big aside to consign to brackets. There is a lively debate about the merits of many green features but it's pretty clear that the size of a house has enormous impact on it's environmental footprint, and reducing the size of your dream home may significantly tilt the economics in favor of building.
I wanted something so far from normal that it would never be available any place else.
It was also massively outside my price bracket.
I built it myself, as in I milled the timbers, I swept the floor, I designed and built with very little outside help..
I did this all part time while holding down a full time job..
I also bought wood for a tiny fraction of what it costs at a lumberyard..
I searched salavage yards and garage sales etc.. I hauled home the timbers and the wood and everything else in my pickup..
I only had two real outside contractors. (I spent about $5000 with them)
But it's taken me 10 years and my wife is used to living in a house under contruction etc..
That's the only way you can come in below what you can buy in todays realestate climate..
I am a Realtor in MO so I don't exactly know the OR market but...
Nationally it is cheaper to buy than build right now. I would really consider buying right now and selling in a few years and spending that time building your dream home.
One issue you may run into is getting a construction loan from a bank without hefty collateral and you might have problems with appraisal. I had a client purchase a building lot several years ago in a growing area, I heard recently that he went to build this spring and could not get a loan. The home was to be sort of a 'not-so-big house' in design and construction. He was going to GC the build himself and needed right around $400k, the bank came back and said the finished home would only be worth $325k and they would not finance that unless he was going to put a lot of his cash into the project.
I would however try to get some soft $ numbers on the project. Pay someone to make a materials list for you and some drawing, then bid out the project in parts. That way you at least have some idea of cost.
-Day
Day,
Thats a GREAT point about the loan as we had trouble securing one back in 2000 when the market was good! Alot of lenders are scared of owner builders. And I am a contractor!!!
What they may have to do is contract with a builder to do some of it (like the shell as Huck suggested) and then finish on their own.
But yeah, another good point to think about!
Mike
Bobby, Know anybody who can help this person?? Dovetail????
This particular owner/builder is a project manager for a company that does apartment buildings, so frankly he was more than qualified to GC his own home but the problem was the appraisal. If you are familiar with the current goings on in the real estate world you would know that low appraisals and appraisers whom have to value things they are not familiar with is a HUGE problem right now. The home that the OP described wanting to build would be a PITA to appraise to where he needs it.
-Day
I didn't mean the guy you used as an example in your reply, I mean the OP getting a contractor. Maybe I'm confused?
But yeah, getting an appraisal on an unbuilt structure is difficult especially if its a custom home.
Edited 8/28/2009 10:13 pm ET by Oak River Mike
Getting an appraisal on an existing structure is hard enough right now. Just got mine back and it's about 20k too low to refi and 200k below the last appraisal. Of course this appraisor was 10% off (low) on the sq footage. She also valued my workshop (a 28 x 44 gshp heated and cool structure with a full basement) at 4k. Don't even begin to think she even knows what a GSHP is. The whole house is heated and cooled with it but it doesn't get any mention.Have you ever tried to fight a low appraisal. Good luck with that. She even admits there are errors but will not change them and says the are within an acceptable margin of error. Bank won't even consider another appraisal. The whole business is a scam.
Get a second opinion.
You pay for a blind appraisal and present it to the bank, if it is different enough the bank MAY order another appraisal. OR Gather and present evidence as to why you think the appraiser was incorrect. I am talking a typed report with clear, bulleted points that are then explained.
Option 2 takes lots of time but works better. Option 1 may or may not work out in your favor and could always be dismissed by the bank as biased because you wrote the guy a check.
Was refused on option one flat out, and good luck getting appraisor to change their original appraisal. One of the biggest issues is that there are timelines involved, rate locks etc. Even if I could get it changed, I can no longer get the rate I had. Makes a big difference. There really is no appeals process. most appraisers are independent contractors and from what I can tell there is little that can be done through any licensing board.The other issue is that the methods you list will only work if the bank cares that there are errors. The answer I got, from every level I was able to talk to was essentially, tough spit.The other issue is that you are also dealing with the "underwriter" that you don't have any contact with.The whole system has been so tainted over the last several years that they just don't seem interested in fixing any of it.
Edited 8/28/2009 11:56 pm ET by TomW
Edited 8/28/2009 11:58 pm ET by TomW
Oh...opps. Yes I see what you meant. I wasn't jumping on you. IME most appraisers have no idea how to value a 'green' or alternative build home. They go off valuation books that are updated every week or so. There are several methods to appraise a property but most banks will only accept a comparative analysis and it is nearly impossible to do a real comparison on 'unique' homes. So it often comes down to location, sqft, # of beds and baths, # of garage spaces, basement y/n and a few other minor things. In most areas if you spend an extra $10k to build with SIPs over stick built the appraisal may come back +$1k for frame type.If the OP is paying cash than this is a moot point and screw the banks...-Day
Day,
No problem...I think we are on the same page...
I agree as many appraisers are not well versed in construction methods...just as much as many contractors don't know about appraising! A great company would be comprised of both and offer both services!
Mike
Loans...
From other folks who have the same work history as the OP, somehow I do not think the OP needs to even consider needing to get a loan. <G>
If you have time no time line on completion and are able to put in sweat equity into it I would build. If your subbing the whole thing out I would buy. I added onto my house last year with lumber as low as it is it only made sense to do it.
I'd enjoy looking at homes for sale of the general size and quality that I'd planned to build. Spend a few weekends, following my intuition and asking everyone I meet if they know of any special homes for sale in the area.
No doubt that looking a higher quality homes would be educational for me and fun too.
In this economy, who knows what I'd find? I might come across something even nicer that what I've been dreaming about, for a very reasonable price.
NO............you can't build it for what you could buy existing.
Probably not even close.
But this is YOUR house right?
The question to ask is: If I build it, will I have enough cash left over to live in my dream home comfortably in my retirement?
Maybe it's time to talk to a reputable local builder............give him as specific details as you can and see what he says.
I'm gonna add to what Robert just said by saying in a depressed market, builders are working for less than they were. Base your decision on real figures rather than speculation. Good luck.copper p0rn
I think you should look at existing houses before you make up your mind. Your dream home may already be build and for sale. Can't hurt to look.
Hell, I'm building and it doesn't make sense from any sort of financial perspective. I couldn't care less though. It's exactly what I want to do.
A couple of points. In some parts of the country the bottom has been reached and we're now passing beyond that point.. Last quarter the average home price appreciated 3% which is a major improvement from the previous declines..
The real bottom picking is over in some areas and those in high demand have already started a real climb up.. especially at the lower priced affordable homes.
The mid to upper market remains soft but I've seen a lot of movement here on my lake My neighbor recently sold his house and it had been on the market for over a year and a half.. Prices haven't completely returned but desperation has passed..
Second some material prices remain the same whilke others are to the point where they simply cannot afford to sell them for less because they cannot earn a profit at those numbers. If the seller or broker of materials has weathered the storm this long they are not about to lower prices dramatically rather they will produce less to meet a lower demand..
Live an hours drive north of your dream place.
Many years ago (1983) I asked a guy I was building a custom house for pretty much the same question you are asking.
A)I prefer my wet dreams to someone else's.
I know people in Corvallis, have built a little in the area myself. Also know an archy located their who employs an estimator in that local market.
Corvallis hasn't taken the hit the rest of the state here has and being mid valley draws good people from Eugene, Salem , McMinnville and points north (All areas that have taken the hit)plus Corvallis itself has a number of good builders on the leading edge of energy building.
My advice is get your plans together, specifications etc. and pay someone to price it out as if it were a contract job. Make clear the job at hand is for them is to provide a detailed cost estimate and is not for the build. That will give you a value/cost start point. Then you can work backwards to determine what you can save yourself.
Be happy to hook you up or work with you .. drop me an e-mail through here. Have done 1 ICF, lotsa solar in the old days (70-80's), and 1 GWHP.
Hi Dovetail,
An hour north of Corvallis is just about where I lived for many years - Woodburn, a town now gone bad.
You are correct, Corvallis has seemed to avoid the meltdown. A quick look at Realtytrac shows only a handful of distressed houses in Corvallis and something like 200 in Albany 10 miles away.
To tell you the truth, we are having some second thoughts on Corvallis. We are now looking in the West Linn area because we have a 6-year old and the school system there in West Linn is very good.
Anyway, when I have a bit more time I will try to digest what all of you have been writing.
Thanks, Gerrha