Getting a mortgage today to buy a home can be challenging.
Getting a mortgage today to buy a vacant lot can be near impossible.
As a result, current vacant lot owners who wish to sell may find this to be an inopportune time. But every problem contains the seed of its own solution.
Now may be the best time to consider building a house on that vacant lot, and for more than one reason.
First, the market in southwest Florida is in a recovery mode. There is a clear trend showing inventory is on the decline.
As a result, sellers may be better suited to sell their homes in another year or two. If it takes a year to build a house, the timing may be just right.
Second, construction costs are also more affordable now. It seems like just yesterday when materials were in short supply; concrete, for example, had to be ordered weeks ahead of time. Now you can place an order for concrete in the morning and have it delivered by lunchtime!
Third, while building is certainly not without its drawbacks and risks, it may be a solution to enabling a buyer to get the financing they need.
So what’s the cost? That’s the $64,000 question. (And then you have to factor in inflation and recession. Anyone have a calculator?)
You can build a house for $100 per square foot (and less in some cases), or you can build a house for $800 per square foot (and more in some cases).
I’m not trying to confuse the issue, but the fact is, asking how much it costs to build a house is like asking how much it costs to build a car. The question has to be answered with a question: A Ford or a Rolls Royce?
Interestingly, the Ford and Rolls Royce do largely the same thing; take you from place to place. The most extreme differences between the two exist, largely, in the “fit and finish.” The same is true of houses.
The nails, lumber and concrete to build a house are the same materials and have the same costs, no matter what kind of house you’re building.
So why is there such an extreme difference in potential cost? Much of the answer is due to the “fit and finish.” You can buy a faucet for $20 or you can buy a faucet for $500; you can buy flooring for $2 per square foot or you can buy flooring for $20 per square foot; and the list goes on and on.
So on the one hand, a house that costs $100 per square foot to build is not necessarily inferior to a house that cost $800 per square foot, it might just “feel” different.
And on the other hand, a large part of the pricing difference is often even vaguer and boils down to simple marketing — make someone believe something is worth more and they’ll pay more.
This may not be the concrete answer some people want when asking such questions, but grasping the potentially intangible concepts first can then yield the clarity you seek.
Is now the time to build? Definitely and positively maybe.
Jeff Popick has many years of professional service in all things real estate, and can help people buy, sell, build and finance. He also offers personal and objective consultations and mentoring. He can be reached at Popick@aol.com or 394-4000.