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Real Estate
Reply to "Smaller new construction homes, where are they?"
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[quote=Anonymous]I think it's a lot like portion sizes at restaurants. There are all these fixed costs that go into running a restaurant and the food costs themselves are a relatively small variable cost. In order to cover all the high fixed costs restaurants need to charge a high price and they do that by offering huge portions. If they made their portion size reasonable (i.e. cut in half) the price might only decline 10% and folks would balk (even more than they already do). Home construction is similar. The lots are expensive, getting crews out to do foundations is expensive, building crews and materials are expensive. A 6,000 sf house might only cost a negligible amount more than a 3,800 sf house and builders have decided (or the market has decided) that it's better to sell a 6,000 sf house for $2.4 million than a 3,800sf house for $2.2 million.[/quote]
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