We’ve looked at how newly built homes are priced and how those prices have changed in recent years; now, we look at costs.
The last couple weeks, we’ve looked at both how a single-family home is priced and how its price (and the components that go into that price) have changed throughout the years – and now finally, we’re looking at the actual costs to building that single-family home, courtesy of some great data from the NAHB.
Home construction is something that many of us take for granted, but as our graph below demonstrates, there are quite a few components that builders must keep track of.
One of the largest components is the cost of the lot. When I first started building custom homes I could purchase a very nice piece of property with city sewer and water for approximately $15,000. Of course location was factored into this as it would be now. The prices slowly escalated as the years went by. The last custom home I built was in St. Charles, in 2007. I paid $150,000 for a house I had to tear down before I could even begin to build and had to put an additional $30,000 into it to replace the sewer and water lines. That’s $180,000 just in dirt! Even with the economy as it stands today, that same lot that you could purchase back in the day for $15,000 would now run anywhere in the neighborhood of $80,000 and up in price. Besides the actual costs as you’ve outlined above, this is the single most expensive component of the equation for builders.
Linda,
great point on the cost of lots; we hear this often from homebuilders, and not just here in Chicago, but in other metro areas as well. Thank you for your perspective!