I hired an architect and contractor to build a house for me, and worked with them for 1 year, until last fall. I noted the tight labor market, and having to wait for many weeks just to get a backhoe operator. Everyone was so busy, and most didn’t return calls. (Don’t get me started on why I was scheduling workers myself, and my contractor wasn’t. Hint – he was a loser)
The term “cost-per-square-foot” includes land. If they want to talk only about construction costs exclusive of land, they would not use the term cost per square foot. They’d say, “construction costs, excluding land” or perhaps “building cost”. You can see this yourself when you look for houses at zillow.com, where they disregard the amount of land in calculating cost/sq ft. This makes no sense when you compare a house on a 5000 sq ft lot with a house on 5 acres.
Pattinson said, ” In addition to astronomical land prices, soaring builder insurance costs and accelerating governmental exactions,this price-shaving strategy also faces the headwind of sharply rising construction costs due to the China effect, Hurricane Katrina and other macro-economic factors.” Certainly the tight labor market and recent competition from hurricane rebuilds have increased construction costs. However, I believe (and correct me if I’m wrong) that the greatest factor in increasing the cost-per-square foot, is the land. And of course the high builder profit margin.
The point that people must understand, is that a huge component of the cost of any house is the land it sits on. And that high workers’ comp fees increase labor costs for all Californians.
My friend owns a restaurant chain in San Diego, and she told me the same as the subs: she must pay to workers’ comp about 30% of wages, even though they have not filed a claim.
It sounds like Barratt builds really nice homes, from what you described. I like that they’re going to focus on affordable housing. A thoughtful company.
