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[quote=Anonymous][quote=Anonymous]So when you buy that house some portion of the purchase price includes the initial capital investment in the road?  If you're dealing with a SFH it seems like there wouldn't be very many houses (relatively speaking) among which to allocate the cost of the road as compared to say a townhouse community.  Seems like in that situation the house would be somewhat overpriced relative to non-HOA SFHs.[/quote]

It's tough to piece meal costs like that. You're looking at it on an individual lot basis and the reality is that Developers work in overall numbers but it's very complicated as it goes along. The are constantly re-spreading costs across lots as they arise. Say they do a proforma on a subdivision and figure it will be $1M to buy and $1M to develop. That development number includes all the house lots and they spread the cost equally across all, let's say, 10 lots. You're looking at $200,000 per lot for Acquisition and Development. Then the builder says, "I can put houses here for $300K each." Development costs $200K and building costs $300K per lot so they are all-in at $500K, and build a profit on top of that and that's where the house prices start. Someone has to pay for the road - it's not free. It's part of a development cost. And margins are a lot tighter than the example I just outlined, you can't really develop and build close to downtown for anywhere near those prices, I was just using round numbers.

I wouldn't get wrapped up in the development costs of a subdivision of TH's vs SFH's - you'll make yourself nuts thinking "how much road am I paying for?" There's a ton of stuff you pay for that is all wrapped into the cost of a new home that you never even realize. The development budgets I crunched for builders had dozens and dozens of line items. And there are a ton of costs that the county just "oops" loads onto your plate and holds you hostage for until you agree to do them. It's bullshit. But it's the price you pay for a new house. Developers aren't making money like people think. Maybe 20% profit, split between principals and a ton of risk. A ton.

If you want to live in a non-HOA neighborhood, then you still are paying just in another fashion. If they have to upgrade utilities and dig up the road in front of your house, they do pass that cost on to you. They always find a way to get it out of the homeowner.

I love this crap so I could go on forever, but if you have more questions fire away.[/quote]

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