Land is overvalued, thus the 40% increase in cost-per-squre-foot. Cost-per-square-foot includes the price of land. I always found this odd, especially because it makes it difficult to compare the cost of a house on 10,000 sq ft lot with a house on a 5 acre lot.
Anyway, the $/sq ft is up due to higher land cost. Also, according to him, to “government exactions, China effect, and other macro-economic factors”. Whatever that all means. Hurricane Katrina effects are temporary. None of his factors are fundamental long-term reasons that a house should be more expensive. Materials cost may be a bit higher due to increased demand in the hurricane region, but this will not make everyone’s house suddenly 10% more valuable. What a bunch of baloney.
As land costs decrease, they’ll be able to build the more affordable housing he’s talking about. He also said they’d build smaller houses, and move to more diverse locations, which I take to mean much more outlying areas. He wants to reduce the average sales price by 50%, so they must realize that’s the only way they can keep selling homes; perhaps the builders are realizing that the market for $600K starter homes is gone.
A bit of BS in his article. “…the myth of the housing bubble beginning to fade…” What myth??
