North County Jim said, “I don’t think he’s including land price appreciation into his increase in construction costs.”
It would be highly unusual for a builder to exclude one of the most, if not THE most, expensive component of construction, when he gives his construction prices. When we finished building our house, in September 2005, the land cost was 30% of the appraised value. It was probably 25% of the price when we started construction. Perhaps a builder’s costs would be slightly less, as he buys in large quantities.
Pattinson states that cost/sq ft has been increasing over the past 2 years.
I’m saying that the increasing cost of land over the last 2 years has been the major contributor to that.
As far as the rest of his speech, I’m not sure how much to believe. Builders try to make us believe if it weren’t for the environmentalists and government regulations, they could build affordable housing. I don’t buy it for a minute. It’s possible to build cheaper housing, but hey, then they’d actually have to reduce their profit margins!
Has anyone checked on the rising profit margins of public builders?
