I built a new house in upstate New York (described below) for $250,000. My brother and his wife built a house in Virginia for $750,000. His was about the same size, but it had a brick exterior, was on a tiny lot, and had only a one car garage. I’ve seen new homes my size around the country selling for $500,000 or so with nothing special (vinyl siding, vinyl windows, bottom-end appliances, painted cheesy trim, no special anything, with mediocre workmanship). I know being in a one-lumber-yard farming town that buiding materials can’t be cheaper here than in populated areas, and I don’t think other carpenters are getting paid six times the wages they are here. So, my question is, who’s getting the extra half million dollars these other people are paying for a lesser house than I got for $250,000? Where does all that money go?
My house is on 1.1 acres, 2300 square feet, plus 600 square foot attached woodworking shop, with an insulated and sheetrocked unfinished basement. 3 bedrooms, 2½ baths, 2 car garage, Hardie Shingle siding, timber frame front porch with natural sandstone columns and copper roof, screened faux stone back porch, forced air gas heat, radiant floor heat in the shop, backup heat gas-burning stove, small kitchen with solid surfacing and marble counters, cherry cabinets (but homemade), ceramic tile in several areas, paved driveway, ICF foundation, R-21 in walls and R-38 in attic. I did all wiring, tile, kitchen cabinet building; contractors did all the rest.
Replies
"I did all wiring, tile, kitchen cabinet building" Well you might have $50,000 there. That brings yours upto $300,000.
And how much did you pay for the land, building permit fees, impact fees, etc, etc, etc. I suspect that is the biggest difference. In some parts of the country those expenses are so hight that people are buying $250,000 houses just to pull down and put up a $1,000,000 home.
Then you add in the different labor rates. And don't forget that those affect not just the wage rages of the workman, but also insurance and taxes. But they also affect the suppliers so their prices are also increased.
And there are also basic difference in state taxes and insurance costs.
Then the people with the $750,000 house might have picked out handmade tiles. Not any better than what you have, but much, much more expensive. Easy to ratch the cost up with fixtures and appliances with not that much difference in "performance".
I can't imagaine many states, except California, having many fees higher then New York. Comp and insurances surely exceed those of Va.
One thing that effects prices around here is the amount of other work going on and how available crews are. As demand goes up, prices go up. Ultimately the builder ends up with more money in their pocket. Conversely, as demand goes down, if they want to keep working that must compete with lower, rather then higher prices. Sometimes it's a buyers market, sometimes the market belongs to the seller.
Don
It's funny looking at real estate around the country on the internet. I see houses for sale at prices I can't figure on both sides, high and low.
Seems like some of them the materials costs would equal the price of the home, so is there a big "Home Building" hobby? Doing it just for the fun of it all?
I'm in Southern Cal, where a million dollar tear down is not uncommon. Recently saw in the local paper that John Wayne's old house is gonna be demoed to be replaced with bigger and better. It's a nice house, about 4500 sq' on the water in Newport Beach. Tear it down, build bigger. Go figger, Joe H
PS, I know for sure it ain't me gets all the money.
Everything he said. I think impact fees could be significant, but don't know if you have them there. In some places in CA, they add over $100K to the cost of a house. Absurd, but some locales pass them. We're fighting it here tooth and nail.
Well, the land cost $30,000, which is high for the area since a typical lot is $12,500. But the lot was the last available one in an established area and had municipal water, electricity, gas, telephone, and cable already at the lot. A septic system was there, too, because there had been a mobile home on the site at one time.
Fees came to $500 (building permit), which did not include the electrical inspector. He was another $150.
a lot like yours, where i live, would cost $250,000.... same lot i would have paid $25,000 for in '84.....Mike Smith Rhode Island : Design / Build / Repair / Restore
You don't feel guilty about stealing that land, do you?
;)
.
Excellence is its own reward!
"The first rule is to keep an untroubled spirit.
The second is to look things in the face and know them for what they are."
--Marcus Aurelius
Landscaping, water and sewer hookups, Viking ranges, Subzeros, cost of living differentials...whatever, you've got the deal...don't look a gift horse in the mouth;-)
Congratulations, BB It's okay, I can fix it!
Around here the extra cost is eaten up in overhead. Small subs with reasonable prices don't put up with the big builder bullying for long. So the big builders are left with the big:
Excavating contractors
Foundation contractors
Framing contractors
Plumbing contractors and on and on and on.....
These companies have lots of people running around a rented office spending countless hours a day trying to find out why they need $20.00 more material on a job.
It's mind numbing but most of the price of a house is not spent on someone actually building it.
arround here there's a building boom. Bricklayers are getting $1.80 per brick and the owner still has to buy the bicks! Your brother has external brick walls, so I can easily see where the extra costs went.
Thank you all for your comments. Here's what I learned.
Land can be a biggie, with the same lot costing between $10K and $250K+ depending on location. This confirms what I suspected about land. I'm suprised about the differences in labor, carpenters from $11/hr to $35/hr. Impact fees don't exist around here -- $100K tax for no reason would make me choke. It did not occur to me that bigger contractors would use bigger subs, and that would be quite a bit more expensive. It seems that material cost is not much of a factor -- I know I got better materials than those "standard" $500K homes.
My contractor was a pleasure to work with. All his workers were legal and on the books. He paid his subs and suppliers on time. He was fully insured and his agent provided written certification. These are among the things I checked before hiring him. There was one change order on the whole job and it was my fault for omitting a window location dimension on a drawing.
Overall it appears I got a good deal.
Just going to agree with everyone else here, there are many variables which cause different housing prices. For starters you did a lot of the work yourself which saves money, then you have to take into consideration land value, an acre of land in Boston cost far more then an acre in Kansas just for example. I know someone who just put up a 5300 sq ft home in Houston off a golf course for about 1.2 million. The craftsmanship at best is fair and that's being generous. MDF painted trim, hollow core doors "crap" like that Top end appliances and granite counter tops. If that makes sense. There was a "view premium" on the lot of over 125,000, the same house in St Louis where I used to live would have had better trim work, doors windows etc and would have cost at least 300,000 less. The money mostly goes into land value, taxes and other various "fees"
Wayne
ITS quite simple in your typograhical type! lol....I'm BUILDER. My wife is a real estate broker over 20 years. LOCATION LOCATION LOCATION! Ever hear that before?
Where upstate? I've looked upstate NY for years for projects I'd one day love to pull off. I lived up in woodstock, NY.......pretty damn expensive but worth it. I have serious ideas I WILL pull off there when my current project is finished,,,,,Any takers?
Have a gas
Namaste
Andy
It's not who's right, it's who's left ~ http://CLIFFORDRENOVATIONS.COM
Ill hit the ole no no . Labor problems. Right now in Missouri there is no licensed builders . In Arkansas , there is minimal building restrictions in the country. The city Im in took a little raise and they were fored via election ! A lot of carps are making 35 per hour and up on this forum. They make 15 here .
Different types of constuction plays a big role also in region . Many people up north have basements. Its really uncommon here . Prices on material is not the same , as we have already compared notes. They get what the market will bear and no more. People that own the right property at the right time make money. Builders that can build mutiple units a year make money because of weighing volume to get pricing. Those kinds keep subs busy full time and they want a very cheap price for it. A builder just built 35 houses at once here and bought direct from the factories and mills. Several truck loads of just studs . Full truck load of drywall mud , with numerous loads of drywall.Seemed every delivery was an 18 wheeler . Carpenters were paid 11.00 per hour on that job , top pay. That flew because they could hire at that price. I think most every one on this forum builds for more money than here.
I bought a 4000 sgft with shop , in a nice neiborhood for 90,000. I matched bids on the one next door for 90,000 this past summer and a lady bought it for 90,000.[ 4000ft also] We are getting a lot of the factories because of pricing . We dont think we will be affected in the comming recession.
Anyway , its a different world .
Tim Mooney
what is the estimate of general contractor profit?
15%
more?
less?
on say a 200,000 house not including the lot?
what is profit ? is it before all salaries are paid. does it include company overhead ?
what kind of home... tract, custom , starter ?
what area of the country... ?
there is no answer to your question... nor do all GC's make a profit, either gross or netMike Smith Rhode Island : Design / Build / Repair / Restore
lets say a 300-400k home in say atlanta, subdivision, built as a spec home, not custom but with nice features, what is profit after the company OH is subtracted?
say 20% ??
Impossible to answer your question, as Mike said. Too many variables.
Builder A uses underpaid, off the books(no taxes) illegal aliens for his crew, uses every shortcut in the book, uses cheap finishes and fixtures and doesn't have to worry about any warranty service or callbacks. (Cause he won't be in business next year) He might even get away with not completing the punch list if he gets lucky enough to find one the abundant customers that just have to move in NOW. Perhaps his cost is 150K-200k.
Builder B is above board and legal, but doesn't do a good job of running a building site. Poor scheduling, can't seem to keep a clean and orderly site. Slow in paying vendors and subs. They all know it and charge accordingly. His own employees have gaps in their schedule. Building takes 50% longer than it should. Perhaps his cost is 300-400K.
Most are in the middle of these 2 fictional extremes (I hope) But there is no way to tell from here, or to apply the same percentage to all buildings. Even the same house in the same subdivision can have different costs due to unknowns and variables like weather.
I'm building over in Berkshire Wayne, East of Ithaca a bit. I think all me fees came to about $1000 total...permit, septic inspection, electrical, etc. Talking to a friend out in Bouler, he said it would cost him $30K just for environmental impact studies, water impact studies, etc.
So we have it kinda nice here in some regards...until you talk about taxess. LOL
I have 2800 sq ft, 4 bedrooms, 2.5 baths, very open space, 25' cathedral ceilings, T&G interior, big white pine log columns and wall ties, log siding, large poured patio, corian countertops, stainless applicances (not Viking and such, but about $5K for all), oversized windows, radiant heat, LOPI woodstove, 1000' off the road (about $5K for electric install...me doing the work)...a nice place...for about $150k. I've done just about everything in construction...maybe $10K out to labor...so that's primarily materials cost. Sitting on 44 acres...I paid 18K for.
My parents just built a 1900 sq ft ranch for about $190k with fair workmanship, nothing special or fancy, 3 bedrooms, 2.25 baths (I can't even fit in the one "bathroom" LOL) outside the Utica area.
Who gets most of the money?
The Lumber Yard borrows to buy the material, the Builder borrows to build the house, the Homeowner borrows to buy the finished product. Unless you know of a new trend where people are paying cash for houses, the Bank gets most of the money plus interest, plus interest, plus interest, plus interest...
If you hate Unions, the Unions get most of the money. If you hate Government... if you hate your first Wife...
Gordsco