Just reading about Ian Schwandt’s project in WI and its $125/foot all-in (minus the cost of land) cost.
I’m in the mountains in Colorado and would love to build on a 5.5 acre lot in Chaffee County that we own. I’ve GC’d two of our other homes here and up until 2020, we could build a modest 2000-sq-ft home for around twice what Mr. Schwandt’s per foot price is.
Since the summer of 2020, though, the price and time involved in building here have gone through the roof. Projects that would have taken about 6 months are now requiring a 2-year timeline. It sometimes takes months to get permits I am told. And…that $250/ft building cost is now right around $400/ft. , according to local builders I’ve spoken to. And… all of them I’ve chatted with are looking at mid 2023 for a start date.
I’ve had to postpone our build a couple of times now because of the runaway cost of building along with the time a small-home project requires to build. If I were to spend the $800k it would cost, I’d end up with a house whose market value is about $650k. Our balance sheet would not be happy.
I’d love to see an article that examines the incredible cost of building in some markets and a prediction of when things in this market might settle down (if ever).
Can anyone here offer advice as to how to get this build done in a stupid-expensive market?
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Any builder giving you a price for a start date over a year away is looking back at the last two years and saying that they have to pad their estimate by 30-40% to cover the worst case scenario. I haven't spoken to anyone that knows what cost forecasts should be, we are all just guessing. Inflation, rising labor costs, rampant material shortages, building has been challenging lately.
Bear in mind a 30% increase in build cost usually corresponds to a 30% increase in home values. There are estimates of home value increasing by 18-25% this year from market forecasters that I have seen. Personally I don't expect more than a 10% increase, but the last few years have taught me not to trust my expectations.
The fed has announced 3 interest rate hikes this year. I expect this to have a chilling effect on the housing market and the construction industry. But again, I don't trust my own expectations anymore. My gut says wait it out, but... I wish I hadn't taken my own advice on a couple of projects.
Thanks for weighing in.
The $400/ft is today's cost and as you said, there is no telling what it will be in 2 years.
I agree that cost to build typically tracks parallel to cost to buy, but the market seems different these days. Cost to build (in the neighborhood where I will be building) is outpacing cost to buy. Like I said...A home that cost 800k to build may only bring 650 on the market once it is built and lived in.
Builders in that neighborhood are being cautious, no doubt, and padding their quotes.
I really hope to see building cost inflation cool off by tightened credit, but the lumber futures market seems convinced that prices will continue skyward.
Interested in hearing how this works out for you. If I had GC'd my project out (as opposed to self performing every part that I was able( as you are my cost would have been in the $375/sqft range. Local builders including the one I work for are seeing costs in the $400 range as you mentioned
Thanks for the update and details of your experience.
As far as knowing what the ultimate solution may be... it's looking more and more like it will take a while for the market (and cost of building) to stabilize, reach equilibrium and perhaps even cool off.
I'm thinking that may well be a couple of years from now. In the mean time, our beautiful property will make a nice wildlife refuge I suppose.
Thanks again.
Just buy an Airstream and park it on the land.
A $150,000 trailer seems like a bargain these days.
I’m kind of joking but at least you could enjoy the property.