patrick.net

It is, but desireability of the location is the main driver for the value of the land. The value of real estate is the land value plus improvements (materials and labor).

New homes are considerably more expensive than used ones here in Florida. We have to insure our existing homes for more than they're worth to cover the cost of rebuilding.

Yeah, but how do you factor in older homes where some other schmuck has already paid the upfront cost of construction, perhaps years and years prior when construction costs (and land) were cheaper?

I would tend to think that a builder would not build in an area where the construction costs would be more than the price he could get for the house.

Tenpoundbass says

Habitat for humanity shotgun shack

Around here the Habitat for Humanity houses are pretty well built. None that I know of have a shotgun design. They are actual ranches or colonials with porches, etc. The people who build these homes are volunteers who will discard bad materials, and seem more interested in doing quaility work as opposed to the "get done-get paid-get gone-get drunk" workers that for profit builders use.

I’d never buy a new construction house.

Agreed. All new construction is built to no more than minimum code. But I would not blame the builders, it is the public that cannot see quality. In 1996 I bought and retored a 1950's ranch house. I stripped the house to the studs, put in insulation, copper pipes, modern electric, new HVAC, oil based paint, new (non chinese) drywall, new roof, plus new carpet and vinyl. I was not able to sell this house for anything more than the builders who restored similar homes wth little more than a cheap paint job, leaving the walls uninsulated, leaving the ungrounded electric with fuses, leaving the old furnace, and leaving the old galvanized water pipes. Well, at least I impressed the building inspectors.

Agreed. All new construction is built to no more than minimum code. But I would not blame the builders, it is the public that cannot see quality. In 1996 I bought and retored a 1950’s ranch house. I stripped the house to the studs, put in insulation, copper pipes, modern electric, new HVAC, oil based paint, new (non chinese) drywall, new roof, plus new carpet and vinyl. I was not able to sell this house for anything more than the builders who restored similar homes wth little more than a cheap paint job, leaving the walls uninsulated, leaving the ungrounded electric with fuses, leaving the old furnace, and leaving the old galvanized water pipes. Well, at least I impressed the building inspectors.

Blame it on America's obsession with newness. As long as the package looks new and shiny, it doesn't matter how badly it was built, or how poorly it will age. Even older homes that were built with a crafstman's pride with little or no updating simply look better when they're weathered than the crap built from the late sixties up til now.

I like the old stuff.

Land is the #1 determinant of house value. Building costs do differ across location, but not by nearly as much as land.

Houses are worth much less than replacement cost in much of the NE and Midwest, and that's why essentially nobody is building in Michigan, Ohio, upstate NY, etc., except for in very select locales that do have locational premia, like Ann Arbor.