Why Buy an Existing Home Instead of a Lot?

John Head Colony Realty Corporation Podcast

Why buy an existing home instead of a lot to build on? The answer boils down to cost.

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Why buy an existing home instead of a lot?
The answer boils down to the price of existing homes versus what it costs to build. Say you consider buying an $85,000 lot. On top of that, you have to tack on development costs (clearing trees, installing a septic tank, etc.) and building costs. Furthermore, over the past four or five years, building material costs have risen—most builders are quoting anywhere between $160,000 and $225,000.
That’s a pretty wide range, so let’s give a couple of examples for scale. If you’re building a little beach box with just carpet and vinyl flooring and maybe upgraded countertops, you’ll pay closer to $160,000. If you’re installing heart pine floors, upper-end cabinets, tile surrounds in your master bedrooms and bathrooms, etc., your price will be closer to $225,000.
So if you buy that same $85,000 lot, but you find out that building a 2,000-square-foot home would cost $200,000, that’s when things start to get expensive. This is why single-family home sales are far outpacing lot sales in our market.

Over the past four or five years, building material costs have risen—most builders are quoting anywhere between $160,000 and $225,000.

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A lot of people are curious about buying lots because between 2008 and 2014, you could buy one for as little as $20,000. However, that’s not the case anymore.
That being said, lots are still a viable long-term investment if you’re thinking of building a beach house, so give me a call if you want to get the ball rolling on this project.
As always, if you have any other real estate needs, feel free to reach out to me as well. I’d love to help you.