Anyone have a graph?
How much profit is there in homebuilding?
By CL Follow Thu, 31 May 2012, 4:46pm 4,235 views 31 comments
In Emeryville CA 94608
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Well, I believe you have to own the land first. Then the bank will give a construction loan. I have read it costs minimum $80 per square foot to build. This is what I think I know.
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Emeryville, CA
KILLERJANE says
Wouldn't this vary from community to community, for labor?
And how much is time, materials, permits, licenses, debris boxes, etc. I wonder if there is a breakdown?
It would seem like we should break it all down, so that we can know where our money goes and which is the slices is the culprit!
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Denver, CO
KILLERJANE says
This might be a good link:
http://www.byoh.com/costestimating.htm
It says $80-$110 / sqft (I believe it can go much higher than $110/sqft)
It also gives this breakdown:
25% material, 25% labor, 25% land cost, 12.5% builder profit, & 12.5% builder overhead.
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I have also read for every one house built equals 2 full time jobs/year.
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My friend built a house, approx 1100 square feet in 2004 in echo park. I believe he spent close to 300,000 to do that. The price kept rising during the project. It started out around 180,000 but ended much higher. When you build or do contractor remodels, beware! It seems like about a hundred more headaches and stress. Lots of decisions to make. If you are a first time buyer, builder be careful, your emotions of doing it will/may overtake sound reason and common sense. It happened to me and my husband. We spent 80,000 and would have been better off saving the dough and investing in something else. A lot of decisions we made as newbies were NOT so smart. You just get excited about the feeling of it all.
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KILLERJANE says
They say it costs $150 per sf.
http://ochousingnews.com/news/valuation-of-lots-and-raw-land
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An individual speculator would be paying retail prices for house construction. This would be upwards of $150 SF
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You're familiar? You can 'build' a better gfx than that!
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KILLERJANE says
I don't know but I started to research the subject and came accross that info.
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Shutdown The Liars says
You sound like bored colledge student, not a builder.
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GraooGra says
Oops I was referring to 'you're a liar' gfx
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Get a job! famiLIAR!
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He adds the comedy.
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The interesting info is also valuation of land. The guy is saying that the price of land is a residual value and equals = sale price of the house -(cost of building + profit).
Someone here said before that cost of building is $60 per sf. I thought it is too low and yes the article says that only mass builders aproach the cost of $85/ SF. Regular people or "speculators", as he says, pay north of $150/SF.
I was wondering if that price includes finishing with painting, carpeting, cabinets, etc or only raw building.
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Is that $85/SF pure profit? or does that include worker's wages?
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There is a few lots for sale in my are. The diferential in prices is huge. Some are selling at $249k, some at $49k. I never looked at them but in today's market I started to think about building my own house rather than buying. I don't even know how to start. I need to pick up some literature about the topic....
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xenogear3 says
It is a cost of building for person who wants to build and sell the house, so it must include wages and builder's profit.
However OC Housing News article stresses out that regular person who would want to hire a contractor and build the house would pay about $150/sf.
Prices are totaly different then. Read that article. I placed the link earlier.
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From my friends experience I know that that it takes about 10 time longer to build that buy an existing home. It takes a lot of steps, decisions.
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KILLERJANE says
A friend of mine, the contractor, built a house with a help of his teenage son. It took him a few months but they were determined and knowledgeble of course.
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Should be easy enough to research a few home builders stocks to see exactly how profitable it really is.
I fI had to guess, I'd say it's profitable to do so even now, and way moreso when the housing bubble is going on.
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Shutdown The Liars says
A friend of a friend was building large developments in southern Ca. He said excluding land cost and site prep costs (roads and utilities) their costs for labor and materials was $35/sf. This was just before the crash.
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"The National Association of Home Builders in their recent report shows the current average cost to build a house is $79.67 per sq. ft excluding land, builder profit and overhead, financing costs, and marketing and sales costs."
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Land and/or site prep can be a large portion of the cost depending on where you are building, the type of lot, access to utilities, etc.
$35/sf sounds low... just based on the price of materials - even if the contractor gets a wholesale discount.
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Troll Hunter says
So how about some listings of houses you've built?
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Go for it.
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CL says
Naturally, but that's not the point of the question. A good answer to the question would give the medium costs of building a middle class house in the U.S.
A better answer would include a sampling of areas from low-cost to high, like Idaho, South Carolina, Boston, NYC.
A great answer would give a map of the U.S. with the median cost per sq.ft. of middle class houses around 2000 sq. ft. with the map painted from green to red by the cost per sq. ft. and a legend depicting the various price ranges.
And that's how you answer a question like "How much does it cost to build a house.". Now to answer the question "How much profit is there in homebuilding?", do the same as above only replace the cost per sq. ft. to the profit margin as a percentage per sq. ft.
Of course, answering either question requires having actual data, which is why the only answer you ever get from the Internet on questions like these is "it depends" and "it varies". True, but completely useless answers.
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"A great answer would give a map of the U.S. with the median cost per sq.ft. of middle class houses around 2000 sq. ft. with the map painted from green to red by the cost per sq. ft. and a legend depicting the various price ranges."
Right. So couldn't we get a pie chart showing what percentage went to materials labor, profit, or FINANCING?
Then we'd know the markup on each, and how much room could be squeezed out of buying a house.
Seems like without it, no wonder home buying apparently defies the traditional improvements of Capitalism.
And it would clearer identify who makes out on this biz.
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bob2356 says
So how about some listings of houses you've built?
Not sure if that comment is even directed at me, but I’ll freely admit I’m not a builder. But I know that land (at least in my area) isn’t exactly cheap. Additionally, I have friends and relatives in building / surveying / civil engineering fields. Based on their input I have priced out what it takes to go from raw land a fully engineered lot a well built house. It’s an expensive endeavor. MHO is that some in these forums greatly underestimate the cost. Heck even if they are spot on – you know the old adage - you get what you pay for.
In short, about six months ago I looked into the possibility of building, but it wasn’t feasible for me – at least not right now. A 2500 ft2 colonial was going for $100/ft2. And that’s assuming I had the land to put it on.
My uncle is a builder. There’s this one development he’s working on now. Owns the land and builds to spec. He’s still doing OK, all things considered – so far as I can tell. Next time I see him, I’ll ask him how much profit he’s really seeing these days.
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EastCoastBubbleBoy says
Nope, it's for trollhunter who claims to be "making" $55 a ft. Still waiting. Don't know what the fascination is with a new house anyway.
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If you are considering building, you have to investigate a modular home. We did and it was a great experience and the cost to build was lower while still getting a great house.
Definitely do your research. Spend the time to learn as much as possible before you jump in. We bought the book from here and it was a huge source of info.
http://www.modularhomesnetwork.com/
Good luck!
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Pleasanton, CA
What about building using shipping containers or a sand bag home. Does anyone know what kind of savings for either?