Reply to Is it cheaper to tear down our existing house and rebuild, or buy a new construction?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]So, in-close in, well-established neighborhoods, 20 mins to DC, how much does a well maintained 2500 house on 1.2 acres in desirable neighborhood cost to builder (i.e., how much will builder pay to re-build or tear down) approximately. Thanks.

OP, thanks for starting this thread, as it is a worthy question currently.[/quote]

The condition of your current home will be almost irrelevant to a builder if they are planning to tear it down. A builder is going to pay the same price as everyone else - ie, the market price for buying the house. If anything, a poorly maintained home would be more attractive as it would deter competition for the home and allow the builder to push for a low price. This holds true for anyone wanting to buy a home to tear down.

The cost to build depends on site work, labor, and materials. However, those prices don't change a whole lot in comparison to the price of the lot. The cost to build on a $1 million lot in McLean versus a $30,000 lot in Gainesville would be comparable for the same size and quality of materials. The difference in final sale price is the value of the land and its location.

There is always a cost benefit analysis to the cost of acquiring a property, the cost to build something new, the amount of expected gain, and how much that home could go for. Just because someone spends $1 million to build a home doesn't mean it is worth that price in the market. This holds true for renovations as well. Many people have made the mistake of over doing their home in relation to their neighborhood. [/quote]

Homes on lots more than 1 mil are humongous, because builders have to make money on the sale by selling luxury and more sq.ft. This spells trouble for owners wanting new a build on their lot, because they have to build huge and it will be around 2 mil just to build.  This is our conundrum and why we cannot afford to build.  If we build a small house (small is 4K sq.ft for our area) then it won't sell when we move and we may lose money, although there is a lot of demand for cheaper new homes, more than for $$$$ new homes.  It's just what the area commands, big luxury homes.  Builder will want to make money either way if they build small or big, but will you?[/quote]

To clarify my point of why we cannot afford it: it's the unfortunate equation of how expensive new construction huge homes are and lots are and how much *relatively* cheaper older homes are (even older mcMansions).  If you want to sell your house and not lose the equity you got in your land then you have to build big and it's at least 2 mil, even if you really want a place half the size.  If you do build half the size (like 4-5K sq.ft) then you won't sell easily for a price to recoup the equity in your land, because then you are competing with older mcMansions which in a $$$ area are bigger than your new home and need to sell it for the same price to break even.  Older Mcmansions may have more upgrades (your builder is unlikely to do), more mature landscaping/hardscaping, etc and they have bigger sq.footage.You will need a buyer willing to pay more per square foot and desiring a smaller home.

OP has to build what sells in her specific neighborhood, this will determine the price of her build.[/quote]

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