In real estate the argument is location, location, location. Meaning you aren’t paying for the house so much as the land the house is on. The more in demand the parcel and the bigger the parcel, the more expensive the house is.
But putting that aside, how much does housing cost (meaning how much does an actual house cost, ignoring the factor that location and size of the land parcel plays in price)? The closest approximation I can come up with is checking housing prices in low cost of living areas with low demand.
Prices seem to be about
$80-100 per sq ft for single family homes built in the last 20 years.
$30-50 per sq ft for older single family homes.
$40-60 per sq ft for a condo in decent shape
$20 per sq ft for a house that is a fixer upper
Granted the parcel in land can have negative value. I assume a home in the ghetto in Detroit is worth less than the cost of the building materials in the home.
But what are some rough numbers for this scenario?
You can also check modular/kit homes, which are pretty good these days.
These dudes for instance are offering a 200 square meter home for around $AU100k plus tax and ‘assembly’, which apparently means ‘add same again to the cost for labour or do it all yourself’ according to the pricing sheet
If I’m calculating right, I think that comes to around $US60-70 per square foot
If you ignore the cost of the land (which as noted is based on desirability of the location), then the cost of a dwelling is based purely on the cost of the materials, and the cost of the labor to assemble the materials. Which one would expect to be pretty constant.
Back in 1993 I asked my construction-savvy boss what the going rate (per square foot) was for a single storey house in my region. “From $80 to $100,” was his response.
In 2001, when my [two storey] home was functionally completed, I determined a PSF value of $94. That figure excludes the land and landscaping costs.
Property where I live is really cheap because it is in a flood zone that has been badly hit twice since 1955. The property cost was nine percent of my total construction cost. What I saved in land cost was made up by building according to flood codes.
Older (1950’s) suburban neighborhood here, with all the property tax information online. A spot search tells me the houses’ values are about 60%-65% of the total assessment.
Despite the age of the housing stock, this is still a pretty desirable suburb. Houses here generally sell in less than 30 days.
Same here on all counts, except my home is assessed at around 53% of the total value. The total assessed value is probably pretty close to what we could get in a quick/easy sale. Maybe could get 10-20% more.
But the property might actually be worth more if folk bought it as a teardown, to put up a McMansion. They’ve got the land worth $240k, but I think a buildable lot would go for at least $300k.
I wouldn’t be so sure. In an overheated market you might see a shortage of contractors, which could make things significantly more expensive (both directly and indirectly due to drawing out the duration of the project). I believe cities in the Puget Sound region are experiencing this right now, and it is a contributing factor to cost overruns on capital projects. I could imagine residential development suffering the same issue.
Also, the high cost of living (partially due to the high cost of land) is likely to make the cost of providing a contracting business higher. And I expect the “price the market will bear” for contracting is different for an area where an average house will sell for $1,000,000 versus $200,000.
I’d strongly suspect that any contracting job I tried to do here in Bellevue will be significantly more expensive than the equivalent job near my in-laws in rural Georgia. And I suspect the same would be true for building a house from scratch …
According to the local tax office our “improvements” account for about 40% of the total value of our property, with the land accounting for 60%. Here houses are going on the market with the “Sold” sign already attached to the sign!
This was going to be my suggestion. Here in Chicago, the information is found at the Cook County Assessor’s office and is accessible by web.
My current house, the land is 22.5% of the total value of the property. About the same with my last house (22.1% is what I see there from the assessor’s office.) The size of the lot is about 4000 square feet for both, and the houses have a footprint of 700-1000 square feet.
My insurance agent says the replacement cost doesn’t include digging for and installing a basement, since even if the structure burns down completely, the basement (walls, floor) is rarely damaged.
Are we talking about the value of a existing house or the cost of building a new one? Unlike land, existing house values decline over the years. We sold our family home last year and we sold As-Is knowing repairs were needed. The house value was about 20% of the total sale cost, and the new owners had to agree to renovate in order to qualify for the mortgage.
A quick check shows ~$150+ sq ft for a new ground up house.
My family home was half-destroyed/ half seriously damaged in a house fire 3 years ago. The value our adjuster came up with for restoring the home was about 25% higher than the purchase price of existing comparable homes in the neighborhood. I assume it included a lot of cleanup and debris removal.
The amount was also more than the value of our policy ( by a VERY small amount ). Which meant we were technically underinsured. Which meant the insurance company cut us a check for the full value of our policy and we had no obligation to rebuild. We purchased a smaller home that was more appropriate for my aging mother and disabled brother - who had been struggling with the stairs and sprawling layout for a while- and banked the rest. Then we sold the burnt out house and lot to someone who wanted to rebuild it and flip it.
This was for the structure only. The contents of the house were handled separately under a different part of the policy. We did OK under that portion, too — you’d be surprised how much junk one can accumulate in 50 years and, even at the depreciated value, it added up.
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Our replacement cost for our insurance for the last house we bought was approximately 33% more than the purchase price of that home (including the land.) So I guess it varies. We were a little surprised, as well. (This was with USAA).