Building a home cost update

So Mr. and Mrs. Groovy over at Freedom is Groovy have been posting about their ranch building. They are further along than us in the process, despite our similar start dates and have been posting updated regularly. In fact, they just had their 26th update. 

The thing that is most amazing about their build, compared to ours, is not just the speed with which it is being completed, but also the cost. Some of this is due to the obvious geographical differences. They live in a small community in North Carolina while I live in a Northern California town recently ravaged by wildfires. Their costs for land, labor, and supplies is dramatically less than mine. They are also building a normal sized home (I believe under 2000 square foot) while ours is 3500 square foot.

Building Costs

Let's talk about their costs so far. I snagged this graph from their site

Screen Shot 2018 07 25 at 6.21.47 PM

As you can see, they already have their foundation and frame up and have only spent $87,993.90. Not too shabby.

Now my costs:

Screen Shot 2018 07 26 at 5.30.15 PM

So if you take out the land (valued at $350,000 by the City Assessor), then we spent $37,040 so far. This is less than The Groovies, but I have nothing but an empty lot to show for it. I have yet to purchase lumber, concrete, or even the dirt needed to grade my lot after the debris was removed. Yup, they dug a big hole to make sure they got all of the foundation that I will now have to pay to fill.

Out of the above, the architect, engineer, landscape architect, and designer all are still in play and I expect more bills. In fact, I received a bill from the soil engineer and the City for permitting the day before this posted. I suspect when this is all said and done the build will cost near $1.2 million which would value the home somewhere around $1.5 or 1.6 million. Pretty crazy.

Conclusion

I think the conclusion here is Geographic Arbitrage is a real thing. You can definitely save more and get more bang for your buck if you move to a lower cost area. For me, living in the North Bay of California I get little “bang for the buck” as far as real estate goes. What I do get is the benefit of “you have to pay to play” scenario. Living in Northern California I live 10 minutes from world class wineries and breweries, 40 minutes from the Pacific, 4 to 5 hours from Tahoe, Yosemite, or Mt Shasta, and an hour from San Francisco. So there are definitely trade-offs.

The other conclusion is that building in a post-disaster zone with a bunch of tariffs being thrown about by our government is not helpful. In fact, it has kept me up at night. So if you can avoid building a home, do that. If you are stuck having to build a home, then don't do it after a natural disaster. It's going to cost $100,000 more and take 1-2 months longer then you would have anticipated.

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