bostonbubble.com

[Guest]

So I have been looking feverishly to find a home for the last 8 months in the 625K-825K range. The areas I have been looking at were Lynnfield Sudbury, Wehnam, Concord, Carlisle, Winchester, Manchester-by-the-sea, Andover, Arlington, Natick, Westford, and Wakefield. After a long exhausitng search I have decided to say screw you to all of the sellers and build a custom home. I couldn't take walking through another home with the ridiculous asking prices combined with the disgusting kitchens, bathrooms, carpets, and overall outdated homes.

Yes, buiding new I will be paying a higher price and with a bit less land (just under 1 acre) however knowing I will have a clean, modern, and fairly priced investment I will sleep much much better at night. I was also able tonegotiatea VERY fair price compared to what is on the mkt in this area. In addition, the builder seems like a VERY fair and reasonable person with a great reputation and builds an extremely good home from top to bottom as I walked through the model and another one that someone is currently living.

I hope all the insane sellers out there read this and come to their senses that the old outdated and horrible looking homes you have is not worth the crazy asking price you have in your mind. Two others who I met in the new development said they built for the same reason They were both relocated here for a job like myself and got fed up with the mindset of these sellers. Looking fofward to not spending my Sat and Sun walking through old run down pieces of crap! New home here I come!

[GD]

I've been thinking about this recently, after a daunting 2 year search.

At your price point, it definitely feels like building new is worth it. I want a smaller house, and budget is half yours, so new build is not worth it as yet - psf too high. But I think land + 150psf will be a generous budget for a quality custom build here. The land cost is really high though.

http://ths.gardenweb.com/forums/
Have you tried this forum? It's pretty good, lots of tips about building. I've already saved a great spreadsheet in case we choose to go that route (project management).

Good luck.

[GenXer]

Guest: "Stand back as I shoot myself in the foot".

Good luck. If you haven't learned from what is going on around here, that's pretty much what you are going to do. From what I've seen, not only are those houses massively overpriced (i.e. 'custom' constructions), but they also depreciate faster than you can say 'underwater'. This is not the time to do a new construction because you'll pay a premium for land, and you'll blow your budget out of the water, if the builder knows what he's doing (that is, if he knows how to screw you, which most of them are experts at). You'll end up with a $1M house with no landscaping (you won't have any money left for that) that's worth $700k in a year. That is, if you build somewhere where prices are falling. If you build someplace in Newton, price may not come down as much, but you'll shell out a lot more for land than it's worth.

[CL]

Guest - financially, it's typical for newbuild to be more expensive than compromising on existing home. You pay for the flexibility for everything everything your way, and you bear the risk of (quite likely) overrun in cost.

If you do decide to go for newbuild, my suggestion is to balance your investment to overweight land/location value and underweight the psf. So build a smaller home in the prime area in Winchester instead of 4000 sq ft mansion (at 200-300psf) in Natick. Land /location keeps value much better than house, especially areas that has been fully built out. GenXer has a point - newbuild (just like new car) depreciate quite quickly.

If I were you, I will try finding a small but conforming lot in a prime area, fixer-upper type that is selling at/close to/below tax-assessed land value, and do a major renovation, rather than building anew. Saw those from time to time.

[Guest]

Hey All. Thanks for your input. Believe me I have done my due dilligence in calculating all of the above topics you mentioned as well as a whole lot more.

The price I can get for this new construction is LOWER than many of the homes that are on the market in this same town but it has a bit less land to it. The comps of this new construciton are really hard to believe. The builder is able to get the lots from the developer cheap since he is buying them in bulk packages of 5-6 lots at a time and the developer wants to unload them since he had the previous builder bail on him and now he is stuck holding all of these lots. It's no different than a homeowner wanting to sell their home at a big discount before rates go up, tax credit goes away, foreclousres hit the market. The only difference is these are lots going for good sized discount and the builder is building the house at a VERY fair price since he is also well aware of market conditions.

I know many of you are thinking "yeah right what a sucker" but believe me if you ran the comps as to what asking prices are in this town for existing homes 20+ years old along with what recent homes sales prices have been in the town you would have the same perspective. I ran the numbers and looked at every angle. In fact, there is currently a 1.3 millions home and two proposed million dollar homes going into this development with a two more in the high 900's. My plan is to build a home in the low 800's or possibly just under 800 if possible. I'm still negotiatinout the details. Also, thanks for the above link I will check it out.

[Guest]

I may have confused everyone with the term "custom home". It's semi custom I guess. It's a home already built in the development however the builder gives you the option to change some things to your liking. Move a wall here, move a wall there, a bigger closet, bathroom sink on this side of the bathroom not over there.

So my mistake...it's a semi-custom construction. My reason for clarifying this is the cost of the home I negotiate is guarenteed therefore the price of the house cannot go above or below what is agreed upon so it is impossible for the the bulder to "screw" me regarding the cost to build the home. Just thought I would clarify that point.

[jfunk138]

I, like the OP, have also decided to go the new construction route. Much of the what the OP says about existing houses is so very true. I'm still a bear on housing and expect that in the short term we'll be close to upside down. Unfortunately I can't talk my wife out of the idea of buying. She can't bear the idea of raising a child in a rented home.

So rather than buy a crappy overpriced old house where I have to do improvements/repairs on something that is declining in value, I can relax in my brand new house without worrying about replacing the furnace/roof/carpet etc. Instead I can do nothing and watch the value decline. I won't have to worry about the $500 a month heating bills that seem so common on old houses. I can have all natural gas heating and appliances which are virtually impossible to find on older houses in the areas I have been looking. I can get 2 FULL baths in a 2,000 sq ft house another rarity in older construction. Yes, it's more expensive but there is value in modern amenities and conveniences.

[john p]

Where do you work; the South Shore is much, much more affordable than Essex County.

With new construction the biggest factor is the price of the house lot. Second is the dollar per square foot. Third, is the financing logistics throughout construction.

A decent house lot in Lynnfield (if you can find one) is about $350k. You can try to shoehorn in a McMansion and do a tearing down an old cottage overlooking Pillings Pond like many have done... Anyway, before you have bought a board you're in $350k. Then calculate $150 per square foot for middle of the road construction. For a 3,000 s.f. house that would be $450k plus the $350k so there's your $800k. I'd add in like $50k for extra transaction costs, so total would game out to be $850k.

Now let's take a stroll down to the North Shore to see what $850k buys (keep in mind that TWO commuter rail lines were put in within the past 12 years TOTALLY OPENING UP THE REGION, previous to which many areas were inaccessible and you could get great builder's acre house lots for $80K. Fifteen years ago, you could build a house down there for $90 per square foot because the cost of living was cheaper and labor was less. So your same 3,000 s.f. house was $350K with land. Today, that $350k house is selling for the low $500's depending on the lot and neighborhood and other variables....

Duxbury $769k:

http://www.realtor.com/realestateandhomes-detail/5-Pratt-Circle-Off-Valley-St_Duxbury_MA_02332_1115873343

Kingston $794k:

http://www.realtor.com/realestateandhomes-detail/Kingston_MA_02364_1112364432

Kingston $629k:

http://www.realtor.com/realestateandhomes-detail/54-Clearing-Farm-Rd_Kingston_MA_02364_1108172159

[Guest]

Thanks for your input and the links.... I work in Waltham so the South Shore is not out of the quesiton but the trafifc going down there is far worse than going North from what I've seen and heard. Not to mention Kingston is too far south to get to Waltham espcially when you factor in the traffic.

I was also under the impression North Shore schools are better...genreally speaking. From what th school rankings show in the Boston Globe this seems to be the case. These two reasons are the main reasons why I decided to purchase in the North Shore over the South Shore.

[balor123]

I work in Waltham too and the prices here are just ridiculous! I have a coworker who recently built a house in Wellesley with a reputable builder. It was planned to take a few months but ended up taking 1.5 years because he used a builder from outside town and they dragged his feet everywhere. He says if he had to do it again he would never build in this state.

[GenXer]

Let him try...he'll see very quickly that its not worth it. Cost over-runs are not linear or capped. They can balloon very quickly and can not be estimated unless you have a good set to work with.

[john p]

Have you guys been to Domenic's for lunch?

Carlo's Burritio's?

[Guest]

[Kaidran]

I think the mistake might be comparing it to estimates for building work vs new construction. I know building estimates can run over but it makes sense that a new construction would have everything factored in, or how would the bank know how much to loan you.

I'm quite jealous of the new insulation and energy efficiency you will get with a new construction.

[Guest]