I assume the parent was using $500k as the total home price (building + land[1]), so the savings is only off the building cost, which is a fraction of the total

I assume the parent was using $500k as the total home price (building + land[1]), so the savings is only off the building cost, which is a fraction of the total price. Should have made that assumption explicit though. I think the OP's core point is sound -- (total) home prices are like 50% over historically reasonable levels, so it's daft to explain it by even 20% overpricing for construction (which, again, applies to only a portion of the total sale price). [1] And the typical home does not cost $500k to build.