Several of my friends and family know that I had moved around a few houses in the past 20 years. We bought and sold a condo, a house, rented in the middle, bought and remodeled an old house, and separately had built a brand new house. All these moves and changes had taught me a few things shared here.
So should I buy a house or build a house?
It depends!
Buying is an expedient way to get into a house of one’s desire, budget for time and money. Building opens up a plethora of options that can potentially give our dream house with likely overage on time and/or money budget.
What causes big variations in costs for buying similar house in different neighborhoods?
Houses and real-estate land are constrained limited supply items. There are only certain number of houses or plots possible in each neighborhood. Neighborhoods are located at variable distance from urban centers, grocery stores, schools, kids and outdoor facilities. Plus commute patters and employment health along with neighborhood local requirements influence the pricing for similar houses to have different outcomes. Home Location depends on { budget, land area, house newness, schools, commute options, friends}
For instance, houses in Bellevue, WA tend to have a higher price compared to houses in Issaquah, WA. Even within Bellevue there are places like Lakemont with better streets, views, and housing tend to cost more than older neighborhoods like Lake Hills neighborhood.
I use the car analogy often. Everywhere we get houses, much like every car drives a person from point A to point B. However much like how the comfort level and safety changes change from car model to car model, there are local differences in the houses based on exact location too. While some particular house may command a better pricing, the overall neighborhood influences the pricing significantly as well.
When building a house, what price can I expect to pay?
It Depends!
Cost for building a house can vary from a few tens of $ per square feet to 100s of dollars per square feet. It highly depends on the type of build one choose to go with. A house built using existing (time tested) designs with a mass production building costs lower. A house built by one using the owner as the general contractor has a higher likelihood to cost more in time, but less in budget $$.
A custom house with detailed design from an architect (or firm), with multiple revisions for the city planning office, with no reuse of existing foundation or structure, will cost more. More creative ideas like modern build outs, sustainability friendly designs, with higher end appliances and furnishings, using best of breed materials (read as tiles and granite instead of carpets and wood), add more to the bill.
With any custom built house, there is some wastage involved. The design and build may not be what we thought it will be. So as a producer we tend to change things mid-way. Such changes cost more to plan, undo, and redo things. For instance when we built our house, we purchased porcelain coated iron bath tubs for 3 of our bathrooms. We did not like how they fit with our house design. Unfortunately we could not return it in time to the supplier, so we ended up selling these off at 50% of price to others and bought a different tub. Net result was a cost run up of about $2,000 including the wait time for the contractors to come back in again.
In the Seattle / Puget Sound area, our cost of construction has been going up over the past ten years. What used to cost $200 per square feet on average, now can cost up to $300 per square feet to construct. Often stronger employment in a region means stronger demand for labor resulting in higher costs as well.
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