Building vs buying home costs?

christie25August 10, 2014

I'm very new to this. For high end homes does it ever make more financial sense to buy the plot of land and then design/build it yourself? (with a general contractor and architect)

Do you guys have any idea how much it would cost to build a house like this?

http://www.zillow.com/homedetails/40-Fox-Hill-Rd-Woodside-CA-94062/15600329_zpid/

It's basically perfect but the location isn't ideal and it's rather expensive. Is this an avenue worth pursuing or should I just keep an eye out for the perfect house?

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kudzu9

What size and price range you are considering? You link is to a 9000 square foot house on 19 acres for $7.5 M. I suspect this is not the type of home most people on this forum have experience with...

    Bookmark   August 10, 2014 at 4:37PM
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carsonheim

Typical per-square-foot prices for homes are highly localized. Anywhere from 200-400 and up, depending on where you build. Here in my part of Texas, this house would cost probably about $1.8 million, because this are is relatively inexpensive. Move this house to the Northeast, Chicago, LA or San Francisco and you're looking at probably 3.5 million and up.

Plus land....

    Bookmark   August 10, 2014 at 6:09PM
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Oaktown

I expect it would cost you quite a bit more than the $7.5M if you were to buy a similar property and try to build the same house today. It actually seems like a pretty good deal if this is the kind of home you are looking for -- plus I've heard that building approvals in that particular town can be pretty slow. Location is a big deal -- look at the pricing for new construction spec homes in the area you're considering, I doubt you will do much better than those prices starting from scratch, especially once you factor in your carrying costs.

Have you talked to local builders yet? Some of them will help you from the very start, even with looking for a property. Good luck!

    Bookmark   August 10, 2014 at 6:14PM
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christie25

Thank you for all the replies!

Oaktown -

That's very helpful. I wasn't sure if it was even worth engaging local builders, I wouldn't want to waste their time if there's no way of it being economical.

I would think it would be cheaper to buy a prebuilt house but all the nice houses here seem disproportionately expensive (the house I linked to is the best deal i've seen because of size and lot, but it's far from most places)

I'm allocating about $1M to land so everything else can go into house. If something similar can be built for

    Bookmark   August 10, 2014 at 7:35PM
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pixie_lou

You want to build a 9,000 sf house for $3 million. That's $333 per sf. When I look at the RE listings in Woodside, CA - the lowest cost per sf is in the mid $500 range. And many are selling for well over $1,000 per sf. Granted I don't know anything about that area of California so I don't know if Woodside is the high price neighborhood or average cost. But I'm guessing if you could build brand new at one third to one half the price per sf, then nobody would be buying these existing homes. In other words, I don't think you have a big enough budget for a 9,000 sf home.

This post was edited by pixie_lou on Sun, Aug 10, 14 at 20:36

    Bookmark   August 10, 2014 at 8:34PM
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caben15

Woodside is one of the most expensive and exclusive towns in the United States. An acre of land there is at least $2M (more likely $3M) and that is before removal of an existing older home, grading, etc. You will not find land to support a house of this size there for $1M.

You don't say where you are but it's sort of implied you're in the bay area. If so, then you'll have trouble finding land anywhere convenient that could support a property of this size for that budget. You might find some larger plots further up 84 towards Skyline, down south on 17 in the Los Gatos Mountains beyond Saratoga. I suspect you will like these locations even less though unless you enjoy being remote or have a business reason to be so far south.

For most people on this forum, the real estate market in the SF Bay area and on the Peninsula in particular is just completely bonkers so please suspend your disbelief for a moment if you've not participated in this market. If you just like this style of house and could live with a 1/4-1/3 acre lot you may be able to find land in Redwood City's Emerald Hills neighborhood (also zipcode 94062) for the low $1Ms. It is very hard to find even quarter acre lots in the bay area as residential land has been saturated since the early 1970s, so you will be buying an existing house to tear down & replace. Existing homes on the peninsula range from $1M for a 1500sqft house on a 6000sqft (San Carlos/Redwood City area) lot to $2-3M for a 2500sqft house on a 11000sqft lot (Los Altos/Palo Alto area). In the lower density neighborhoods (Woodside, Portola Valley, Atherton, Los Altos Hills) you are looking at at least $2M for a teardown on an undesirable acre lot. In Atherton it's going to be $3-4M for a teardown on an acre. This is the cost of living inside the Silicon Valley bubble.

A note on resale: In the right parts of the Bay Area it should be pretty easy to re-sell a property in the $2-4M range, unless there's something significantly weird about it. When you spend more than that, or move off the beaten track a little bit, you're looking at multiple months to sell (vs. multiple weeks).

It should be possible to build this number of square feet for much less elsewhere in the country, but note that there is an expectation of quality/architectural detail in the San Francisco Peninsula's affluent hillside communities that is not easily replicated for less $ elsewhere.

    Bookmark   August 10, 2014 at 11:42PM
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Oaktown

Christie, I agree with caben that you should allocate more $ to your property search if you want to build in that area (W/PV/LAH). But, you can at least talk to builders even if you don't plan to engage someone right away -- and then you can get an informed opinion about current construction costs. I would guess it would cost more than $4M to build that house today, but you should ask someone who knows for sure!

Before we got started I talked to a local builder about our goals in order to get some parameters -- told them what we wanted to do, they gave me a rough construction cost estimate and suggested a minimum size property that we should look for in a few different towns. Then with that info we went looking for our property. It was a free consult, no obligations, but we did end up using those folks.

(I realize inventory is pretty low; another thing you could do is have your realtor pull up some listings from the past 3-4 years in your price range that did not sell, maybe try following up with some of those folks to see if they'd be interested in selling now. 2010-2011 was relatively slow at the upper end of the market.)

    Bookmark   August 11, 2014 at 12:54AM
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christie25

I really appreciate you guys taking the time to reply, thank you.

I have two different property searches in mind, a place close to palo alto/los altos as a main residence and a place within two hours with a lot of acerage as a weekend getaway (forested, not shurb filled land is ideal).

The woodside property was a little too close to be a weekend getaway (and expensive because of the close to bay area premium) and a little far/inconvenient to be a main residence, hence not ideal.

I was looking into the land between Big Sur and bay area as a possible spot which is where the $1M number for property came from. Maybe buying something like http://www.zillow.com/homedetails/890-Portola-State-Park-Rd-La-Honda-CA-94020/15603715_zpid/ and then building on it. If the Woodside property is a really good deal despite its proximity to bay area it would make more sense to look more seriously into that, but I'm indifferent to being 20 mins or 2 hours away.

Is there other [cheap] forested land nearby it would be worth looking into?

    Bookmark   August 11, 2014 at 7:23PM
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Oaktown

Wow, sounds great.

For forests -- maybe Felton or Scotts Valley? Or maybe more of a typical vacation destination like Carmel/Carmel Valley?

Is resale a consideration? Seems like most folks prefer the coast or on a lake or river for a weekend place.

    Bookmark   August 11, 2014 at 7:52PM
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caben15

christie,

We are building in the area, I can give you a more thorough breakdown of some of our unexpected costs if you PM me (click on my name, then click on "See my journal" and then you'll find a email link).

    Bookmark   August 11, 2014 at 10:59PM
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christie25

Oaktown -

I'll check out those places, thank you! Carmel is fun but I want a lot of land and it's hard to find near cities.

Resale is definitely a big consideration. Coast or lake or river would be amazing but I wasn't able to find much with one of those, 20+ acres and forested land.

I'm not in any hurry to buy, just wanted to start checking out the market and get estimates on how much it will cost. And figure out whether to be looking for land/tear downs or pre built homes.

Caben - emailed you, looking forward to hearing about your experiences with this.

    Bookmark   August 12, 2014 at 2:16AM
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Oaktown

Hope you can find your dream property! Since you don't need to be close in or on the coast, you should have plenty of options. I've linked another example for you -- I get spam emails from this person occasionally, guess they are working because I remembered her. The real estate agents will love talking with you ;-)

Here is a link that might be useful: 40 acres

    Bookmark   August 12, 2014 at 2:59PM
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