patrick.net

That's easy:

If the total cost of owning is higher than the total cost of renting the same thing over the normal owning period (currently 6 years) then the price is too high.

http://patrick.net/housing/calculator.php

Dont Get Bilked says

$60/sq ft for new construction, less lot and utility connections (or well and septic).

Dude... where are you building for thoes kind of prices? South Dakota?

Prices are still declining. "Drifting downwards" would be the best way to describe it. It has been a long steady decline, not a precipitous drop off.

Even if a builder can build at $60/ft2 - you still need to factor in land acquisition, engineering, design, etc.

Patrick – all metrics, from price / annual rent to your calculator suggest that is a borderline case.

I just did an inspection on a house recently. It needs a bit more work that I had expected - and trying to determine if I proceed, walk away, or renegotiate.

I don’t need a house, I need a fence… since it seems I’m always sitting on it.

If the total cost of owning is higher than the total cost of renting the same thing over the normal owning period (currently 6 years) then the price is too high.

That's in the ballpark of what I typically use.

Here are some samples of construction cost outside of core BA.
These costs $/Sq Ft include land, utility lines, and streets, material & labor, nice mark-up, sales costs, but not upgrades. Builders do know how to keep costs low. Custom home is completely different animal.
http://www.ziprealty.com/property/1854-MYSTIC-DR-FAIRFIELD-CA-94533/11901400/detail
http://www.ziprealty.com/property/2452-EL-TAMBOR-DR-PITTSBURG-CA-94565/82833301/detail
http://www.ziprealty.com/property/5825-CALIENTE-WAY-GILROY-CA-95020/11679034/detail