5 ms·

Buy land instead, build a home, rent meanwhile. In max 2 years you can have your dream house and cheaper than current market.

goldenkey 5y ago
How do you do that in an established city?
- amcoastal 5y ago
  There are tradeoffs everywhere. You have to assume that when stacking millions of people on top of each other everyone will not own a home. That's not a "policy" issue, it's just physics. If you want to live in city for whatever reasons, you just have to take that into consideration.
- pmorici 5y ago
  Find someone who owns an oversized lot and offer to buy their yard or buy a tear down.
- deleted 5y ago
  [deleted]
StevePerkins 5y ago
You'd have to find a builder. After 2008, that industry re-tooled and now there are considerably fewer builders working in residential development. And even those only want to work with developers on building new subdivisions, not work with individuals on single homes.
- bananapear 5y ago
  What do you mean by "re-tooled"? What changed in 2008?
  - StevePerkins 5y ago
    Re-tooled in the sense of adapting their organizations to pursue commercial development opportunities more so than residential development (e.g. hiring more people with networks and experience in that market). The 2007-2008 crash wiped out a lot of over-leveraged residential developers, and individuals building single homes. From conversations I've had with people in that industry, their sense is that we learned next to nothing and that a repeat of that experience is inevitable. So commercial development became seen as more desirable and less risky. Now that I think about it though, I haven't had any conversations since COVID! I wonder if the rise of remote work will have enough impact on commercial development to flip that calculus again.
  - syedkarim 5y ago
    We hired a builder about five years ago to build our home. What we found after talking with a dozen (or more) local custom home builders was that the math doesn’t make sense for lower-cost custom homes. A custom home, in this case, is anything that is not a part of a development or subdivision. The GC (general contractor/builder) charges about a 20% management fee on top of all costs that are paid to build the house. GC have minimal full-time staff of their own and use sub-contractors for most everything. Builders with really good reputations might charge up to a 30% management fee. The net income, after the builder’s operational costs (insurance, taxes, overhead) are 10% of the home cost if the management fee is 20%. A builder can only take on so many projects per year. Typically three or four. The amount of work that goes into managing a $300,000 project (not including land) is mostly the same as one that costs $600,000 or $1,200,000. Why make $30,000 per project when there’s an opportunity for $60k or $120k? After 2008, I believe banks started being much less willing to provide construction loans to builders, as many went upside down on projects when the market crashed. The bank doesn’t want to repossess a halfway-done new construction project, which is the hardest thing to resell. There are fewer speculative custom homes being built now, compared to before 2008. And builders are no longer taking any kind of risk on projects, so their customers need to acquire financing on their own. Relatively few banks offer reasonably priced construction loans. We were required to have the land paid in full and also bring 30% as a down payment for the construction loan.
parkingrift 5y ago
You could potentially build a cheaper home, but it is extremely unlikely. Individuals almost never have access to small enough plots of land for this to be feasible. This really only works in the exurbs or rural areas.
fzzzy 5y ago
Building is quite expensive.
ryathal 5y ago
Unless you plan on doing the building yourself, building is more expensive than buying.
paulnpace 5y ago
> Buy land instead, build a home You can't. That's why the prices are so high. The price of construction will be built into the price asked by the land owner such that the overall price is within bounds of an existing home, and usually more expensive as a new home is seen as a premium product. Historically, new homes are more expensive than existing homes, as it was in the U.S. prior to the 1990s that a new home was an upgrade from an older home for the people purchasing the new home, and the older home would be purchased (or rented) at a lower rate than the new home, a process that has disappeared due to constriction on supply and nowadays has spawned the term "market affordable housing", as I have seen this term used by charitable organizations that historically focused on housing for the extremely poor, now change somewhat to advocating for housing that merely lower class can afford, as this class is slowly being pushed completely out of affording any form of housing outside of shared rooms.
harambae 5y ago
I just wanted to chime in (since you're being downvoted) that this is exactly what I'm doing and I viewed things roughly the same way as you. The difficult part is finding a reasonable plot of land. During housing booms (bubbles?) land also tends to be overpriced, and you need to be aware of local regulations (how far well water needs to be from a leach field, etc.) In my case, I'll only be required to go into work twice a week at most in Boston, so I'm building the house 3 hours away in Maine. I enjoy the rural lifestyle and also have personal connections to a builder - I'm not saying this is for everyone necessarily. In this type of climate new housing can be justifiably built to an incredibly high level of insulation with only some intentional (and controllable) fresh air allowed. ICF is better than wood if you plan windows ahead of time. Eventually this will save you money in heating costs when you live in New England. Anyway, yes it's still possible to build houses in America.

goldenkey 5y ago

How do you do that in an established city?

amcoastal 5y ago
There are tradeoffs everywhere. You have to assume that when stacking millions of people on top of each other everyone will not own a home. That's not a "policy" issue, it's just physics. If you want to live in city for whatever reasons, you just have to take that into consideration.
pmorici 5y ago
Find someone who owns an oversized lot and offer to buy their yard or buy a tear down.
deleted 5y ago
[deleted]

StevePerkins 5y ago

You'd have to find a builder. After 2008, that industry re-tooled and now there are considerably fewer builders working in residential development. And even those only want to work with developers on building new subdivisions, not work with individuals on single homes.

bananapear 5y ago
What do you mean by "re-tooled"? What changed in 2008?
- StevePerkins 5y ago
  Re-tooled in the sense of adapting their organizations to pursue commercial development opportunities more so than residential development (e.g. hiring more people with networks and experience in that market). The 2007-2008 crash wiped out a lot of over-leveraged residential developers, and individuals building single homes. From conversations I've had with people in that industry, their sense is that we learned next to nothing and that a repeat of that experience is inevitable. So commercial development became seen as more desirable and less risky. Now that I think about it though, I haven't had any conversations since COVID! I wonder if the rise of remote work will have enough impact on commercial development to flip that calculus again.
- syedkarim 5y ago
  We hired a builder about five years ago to build our home. What we found after talking with a dozen (or more) local custom home builders was that the math doesn’t make sense for lower-cost custom homes. A custom home, in this case, is anything that is not a part of a development or subdivision. The GC (general contractor/builder) charges about a 20% management fee on top of all costs that are paid to build the house. GC have minimal full-time staff of their own and use sub-contractors for most everything. Builders with really good reputations might charge up to a 30% management fee. The net income, after the builder’s operational costs (insurance, taxes, overhead) are 10% of the home cost if the management fee is 20%. A builder can only take on so many projects per year. Typically three or four. The amount of work that goes into managing a $300,000 project (not including land) is mostly the same as one that costs $600,000 or $1,200,000. Why make $30,000 per project when there’s an opportunity for $60k or $120k? After 2008, I believe banks started being much less willing to provide construction loans to builders, as many went upside down on projects when the market crashed. The bank doesn’t want to repossess a halfway-done new construction project, which is the hardest thing to resell. There are fewer speculative custom homes being built now, compared to before 2008. And builders are no longer taking any kind of risk on projects, so their customers need to acquire financing on their own. Relatively few banks offer reasonably priced construction loans. We were required to have the land paid in full and also bring 30% as a down payment for the construction loan.

parkingrift 5y ago

You could potentially build a cheaper home, but it is extremely unlikely. Individuals almost never have access to small enough plots of land for this to be feasible. This really only works in the exurbs or rural areas.

fzzzy 5y ago

Building is quite expensive.

ryathal 5y ago

Unless you plan on doing the building yourself, building is more expensive than buying.

paulnpace 5y ago

> Buy land instead, build a home You can't. That's why the prices are so high. The price of construction will be built into the price asked by the land owner such that the overall price is within bounds of an existing home, and usually more expensive as a new home is seen as a premium product. Historically, new homes are more expensive than existing homes, as it was in the U.S. prior to the 1990s that a new home was an upgrade from an older home for the people purchasing the new home, and the older home would be purchased (or rented) at a lower rate than the new home, a process that has disappeared due to constriction on supply and nowadays has spawned the term "market affordable housing", as I have seen this term used by charitable organizations that historically focused on housing for the extremely poor, now change somewhat to advocating for housing that merely lower class can afford, as this class is slowly being pushed completely out of affording any form of housing outside of shared rooms.

harambae 5y ago

I just wanted to chime in (since you're being downvoted) that this is exactly what I'm doing and I viewed things roughly the same way as you. The difficult part is finding a reasonable plot of land. During housing booms (bubbles?) land also tends to be overpriced, and you need to be aware of local regulations (how far well water needs to be from a leach field, etc.) In my case, I'll only be required to go into work twice a week at most in Boston, so I'm building the house 3 hours away in Maine. I enjoy the rural lifestyle and also have personal connections to a builder - I'm not saying this is for everyone necessarily. In this type of climate new housing can be justifiably built to an incredibly high level of insulation with only some intentional (and controllable) fresh air allowed. ICF is better than wood if you plan windows ahead of time. Eventually this will save you money in heating costs when you live in New England. Anyway, yes it's still possible to build houses in America.