[John151]

We are starting to kick around the idea of building a vacation home in Southern WI that will eventually become our retirement home.  I am shocked to discover builders quotoing $150+ per SQ ft (this is just construction, no landscaping).  I watch alot of HGTV where I see very nice existing homes for sale in other parts of the country for much lower prices that I can build in WI.  These prices go back to even before the market collapse.  What gives?  What do you think is a reasonable per sq ft cost for construction?

[rpf]

$150 per SQ ft. is a common number in many parts of the country. Existing homes may have been built when construction costs were significantly lower. Plus as was demonstrated, once again, in the last few years, even recently built homes may not retain their cost value as supply and demand can drive down prices on assets that must be sold. If a builder is not going to make money (or at least break even, if he's looking to keep a crew together), he doesn't build.

[John151]

Any idea of how much of the $150 is builders profit/overhead?  I ask because builders range from carpenters working out of the back of their truck as GCs, to high end outfits with full time crews and office staff.  Thus, trying to figure out how much overhead can be reduced by going with a smaller outfit. 

[TomS]

New custom construction is getting very expensive because of material increases and other than very high end homes, the margins probably aren't that great.

We've had 3 homes built (1 lake home) and I think the cost/ft is really not a great measure any more, especially when considering geography. Within a local area, with fixed and detailed plans and specific finishes, that still makes some sense if you're going to bid it out. What tends to drive most is the types of features/finishes you want, complexity of the plan, unique site issues, getting subs and raw material to the site if it's remote, their experience with the types of features/products you want on it, etc. If you look at the newly constructed and remodeled homes featured in "Fine Homebuilding", the cost/ft is anywhere from about $125 to well over $500 depending on those factors.

Our lake home was one a of a kind plan for the site, supposed to take 5 months to build, and took over 11. He said in terms of profit, he "just did this one for practice". It's not an easy business for them and any more they are going to take less risk, especially in a remote area where it's hard to sell it if something goes bad. We had a good contract, while giving him some flexibility. He still got the job done though it surely had to hurt at the time.

Probably the most important thing, if you can first agree on a price you can both live with, is to make darn sure you are very comfortable working with that builder and that they'll be around to finish the job. Things go wrong and you will have to work through it together.

[Nick77]

Im in Austin and new construction costs the builder approx $100 sq ft. We will be doing a lot things our selves and hoping for closer to $90 sq finished cost. Here $150 sq would be fairly high end finish out.

Its really hard for the custom builders to compete on a single home, track builders have huge advantages. $150 sq in remote location may not be so crazy.

[John151]

We have met with seveal builders and have learned that $150 per sq ft is the starting point, and for what we want, we will  have to spend $180-$225.  Yikes!   

[rollo]

  How about considering an existing home to buy and alter ? There are numerous foreclosures and great buys available.
  You could save approx. 30% if you act as your own Construction Manager. Have an Architect design your dream home as bid it out trade by trade or as a complete project.
  Contractors are not busy and you can negotiate the price. If you go the Constr. Mgmt route hire a Supt. to coordinate the trades. You will save money, get it built properly and have mostly a trouble free project.
  I was in that business for over 30 years, now retired, you can save a lot of money.


charles

[John151]

Charles - We have looked at existing homes, and this definitely would be cheaper, but we can't find anything we like.  We also want a decent sized lot with lake rights, which also reduces the options considerably.  Houses that this criteria come in two flavors - small houses packed into subdivisions (with a very suburban feeling) and monster lake homes.  We have purchased a nice 1.3 acre lot with lake rights (no view, but a short walk to the water).  We really like the lot as it meets all of our requirements.   

Regarding playing GC - I think this is the way to go, but not sure I have the time.  Also, the home site is 90 minutes away from where I currently reside, so this is a challenge as well

I will be contacting a carpenter that I know well and trust that lives 20 mins from the lot - perhaps he can play GC.  He used to work for a high end custom builder - so there is lots of potential here.

[JLM]

6 years ago we built in rural Michigan and spent $150/s.f. with 3 car attached garage and 2.5 acre lot but no water in sight (my number does not include finished basement). 

Since then the value of our house has dropped to half of what we invested in it.  In today's market, a new build will also be worth less than you invested too.  This impact's how much you can borrow, your net worth, and how much you'll lose at time of sale.

[doug s.]

it is definitely cheaper to buy an already existing home.  but, if you are committed to building, do a websearch on "kit homes".  there is a plethora of kit homes awailable on the market, at all different price ranges.  many are really nice, and less expensive than building a regular custom home.  in this market, i think you have some better negotiating room as well.

doug s.

[rollo]

Charles - We have looked at existing homes, and this definitely would be cheaper, but we can't find anything we like.  We also want a decent sized lot with lake rights, which also reduces the options considerably.  Houses that this criteria come in two flavors - small houses packed into subdivisions (with a very suburban feeling) and monster lake homes.  We have purchased a nice 1.3 acre lot with lake rights (no view, but a short walk to the water).  We really like the lot as it meets all of our requirements.   

Regarding playing GC - I think this is the way to go, but not sure I have the time.  Also, the home site is 90 minutes away from where I currently reside, so this is a challenge as well

I will be contacting a carpenter that I know well and trust that lives 20 mins from the lot - perhaps he can play GC.  He used to work for a high end custom builder - so there is lots of potential here.

   Sounds good. You do not need time to be on the project. hiring an Owners Rep or Construction super is the way to go.
    The biggest issue in home construction is not having all the decisions on finishes, and the like decided upon BEFORE construction begins.
Just make sure all materials are selected before construction begins. Nail it all down in the planning and working drawing stage and then it moves well. Your buddy just may be your ticket.
  If you like PM me if you need a brain to pick. My pleasure to help.



charles
SMA

[John151]

Charles - Great advice!  And thanks for the offer to help - I will likely take you up on that offer!

My carpenter wants to partner with a custom builder that he used to work for (and that I know).  The custom builder will do the foundation, framing, and roofing, and my carpenter will tackle the rest.  Hopefully this will result in affordable but quality construction.    Of course, we won't start until the plans are finalized (long way to go with his).