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mjfhorsey
2009 Sep 8, 7:25am
I assume you will also pay for the land and then build the house. Based on size and location that is a price that is fully dependent upon supply and demand market forces and how badly the seller wants to sell. No workers involved there.
investor90
2009 Sep 9, 1:21pm
I agree. A frind of mine recently completed building a single story single family residence on 0.9 acre in Contra Costa County. The house is 4,000-sq feet with many of the nice amenities such as SLATE roof (real quality, not asphalt or cedar shingles), raised foundation (yes, like a REAL house), 3 car attached garage, concrete driveway, copper plumbing, real hardwood floors, travertine tile etc. NO ROMEX for electrical wiring.
They found the lot (homesite) on a street of similar sized recently built houses. All underground utilities including cable TV were at the home site. They paid cash for the lot. They bought the A&E plans from an architect who already had the plans approved for another house in the area. Afetr about 9 months, voila the house was completed.
They hired subcontractors to do all of the work, and the owner was the general contractor on the job.
As they were completing the job (lots of sweat equity), buyer looky loos in the area were offering $1.2-1.3 million as "low ball" offers. They didn't know that the "workers", were the owner-builders.
Guess what the GRAND total of the job was including permits? It came out to $75/sq ft for house, plus $75k for the lot = $375k.
This just shows you how much profit there is in these houses. Most similar houses use shoddy construction, have lousy roofs, slab foundations, romex wiring, plastic piping etc.
The Toll Brothers who specialize in so-called "luxury" houses have stated that the reason they build for the high-end market, is that it only costs a small amount to add the area and amenties that "luxury house" buyers want. I KNEW THIS! So the high end of the market is getting screwed even more!
I have several builders in my family, and know first hand about the shoddy way small SFR developments are built. I haven't even included all the payoffs to local politicians and building inspectors that are all part of the Developer/Builder/Realtor/Loan company/ Appraiser/ G.S.E. scam.
Bottom LIne: A house is only worth what a potential buyer wants to pay for it. My next house must be at least as good as the house above, or I am NOT BUYING. BTW: I am a CASH ONLY buyer. I currently rent and am having a ball. FREEDOM---no debt slave games for me.
Don't even mention the vile word "Realtor" or Estate Agent. Lock them all up and throw the keys away.
What is affordability? Realtors, developers, the US government, and mortgage companies say affordability is what you "can" pay as a PITI monthly house payment. Many times they recommend 30% PLUS ( up to 50%) of GROSS income which leaves NO ROOM FOR SAVINGS.
FACTS for the above:
No consideration is made for a family savings plan.
No consideration is made for saving for future family medical emergencies.
No consideration is made for saving for the possibility of LOSING YOUR JOB.
No consideration is made for saving money so you can pay down that 6% REALTOR commission that the BUYER ALWAYS PAYS.
No consideration is made for saving for a "back up" to the pension plans that are available (mostly failed 401k's etc).
In my view, each person should save a MINIMUM of 20% of NET income, not as an "investment", to be plundered by financial planners, but only as savings in a non-profit institution like a Credit Union.
FACT: A house in California costs only 50-$75/sq ft to BUILD. Why do they sell them for four times that amount. A house is built from wood, glue, nails and concrete. A house ALWAYS DEPRECIATES, just like another man-made item, the car. A car needs oil changes and repairs, a house needs repairs to roof, termites, plumbing, electrical and HVAC, plus landscaping , water electricity gas and annual property taxes. Add local use taxes and fees and add the interest payments on top of these fees, and you have a huge expense.
I will NEVER pay more for a house than it cost to build it.
Who gets the money for the house?
The building materials companies get their money first. The developers and builders and Realtors ALWAYS GET their money up front. But what about the workers and laborers who build the house? They always get paid last---if they get paid at all.
One solution is to save your money and build your own house. The workers would be paid as well as the building materials firms. But the crooks like the REALTORS (WHO ADD NO VALUE TO THE HOUSE) , developers and loan companies can go out and get a real job. Workers should get paid---not bullshitters and liars.
#housing