Somehow that seems counter intuitive, (not doubting you one single bit) but, you are paying for someone else's equity in the house.
Just seems weird, I guess.
I've thought the same thing. But that's reality. Hopefully Aspen or someone else in the industry will weigh in.
Around here at least the scales are kinda like this...
Tract house - Custom built in that you get to choose a few things from a book. On say 1/4 acre in a cul-de-sac neighborhood. Set # of floor plans in a given development, maybe 4-5 of them, not counting mirrors. $100 a sf. Nicer than a starter home since it's new, but generally the mechanicals, roof, etc are junk. My sister owned one of these, replaced the HVAC in year 8, roof in year 9. Sold in year 12 for about $98/sf to be cheaper than the developer who was building new ones for the same basic price as when she bought in year 12. Tough to compete on resale when you can get new that cheap.
Old stock - Just what it sounds like. Older houses, some in neighborhoods, some not. If it's on acreage say 10 acre or so, you can basically take acreage *5000 + SF *100 and be pretty close. .Stuff is often priced higher than that if the house is really nice, or the land has a pond, polebarn, etc. If it's in a neighborhood you can genearlly take $40k for the lot, then $100/sf for the house.
Acreage decreases in value the bigger the parcel gets. I just paid around 5200/acre for our 76 acres. Literally a mile from me, 10 acres sold for 100k.
I think the reason it's counter intuitive is that the tract housing is driving stuff down in price. To lots of people a house is just a place to live a good roof, HVAC,or even a kitchen are plainly luxuries. In many cases the tract homes end up the same or cheaper than rent a similar sf. And they are designed and built to hit that price point. So good or bad, it gets to set the floor for the market, and everthing else races there.
There are outliers of course. SWMBO and looked at this place. We honestly liked it. It checked most all of the boxes our family needs. https://www.realtor....41_M35903-73515
It's priced at Land + 215/sf. Maybe a bit under 215 if you take the pole barn into account. I absolutely believe it would cost that much to build it at the quality level it's at. It's also closing in on 150 days on the market. For a liveable house that is unheard of around here. I haven't checked recently, but last I talked to our realtor, the average time on market was like 22 days. Earlier this year anyway. Why didn't we buy it? Too expensive. If I'm spending that kind of $, I'm damn well going to have everything as I exactly want it. And I can do 99% of that, by buying land for the same or similar unit cost, and building.
Interestingly on that place, the owners are retired. They are downsizing. I know the builder of their new place personally. Flat out they need someone to pay full replacement cost for their current place to be able to afford the new one (house to house, land excluded)... so they sit. I expect that place to sell for high 500's, maybe 600k when it finally does. Well below custom build cost.
Edited by SnowMan, 13 July 2018 - 08:43 PM.
these are 60 inch or better at breast level trees. Not really big enough for board lumber but, a bit too big for pulp. Make nice fence posts, though.
