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How is building more expensive than buying an existing home?

I am want to have my own house built from the ground up,but I am reading everywhere that it is cheaper to buy an existing home.
But how so?
I see companies build new homes than sell for an outrageous jackup or a house that sold for hundreds of thousands dollars less a couple years earlier.
  • December 10 2013 - US
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Answers (3)

Profile picture for gator70
Some homes are selling below the cost per square foot to build them. 
  • December 11 2013
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Profile picture for blue screen exile
Remember, for building new, it takes about 2 years, and you still need a place to live in the interim.

Also remember that for new construction, you are paying present prices for labor and materials plus normal overhead and profit.  When you buy "used", all those things were paid for previously.  Inflation factors affect what those materials and labor cost, as compared to what they used to cost.

For a rough idea of construction costs for new homes, try the website:
http://www.building-cost.net/CornersType.asp

You can search for vacant land on Zillow, and you can search for houses similar to what you want to build on Zillow to compare the costs both ways.

It is best to do your research before making your decision.
  • December 11 2013
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I am want to have my own house built from the ground up,but I am reading everywhere that it is cheaper to buy an existing home.But how so?

It completely depends on your area, and the price of land. If land is cheap, and if improving it - with a house - will increase the value of the property more than the cost of both the land and improvement - bingo !

But that scenario differs between areas, based mostly on construction costs, price of land, and market values in general. Waaay too many factors to be only say its black or white.

Bottom line - check with a Realtor who deals with vacant land in the area you want, construction costs, contractors and lenders who are willing to lend on new construction and see if building a new home is for you.


  • December 10 2013
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