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WHY DO NEW HOMES COST SO MUCH?

This is interesting that 25% of the new home costs are government related fees on new construction. It also is a same story that can be told in different areas of the county. The quorum notation rings true month after month. The months turn into years of waiting and time costs money which gets  passed on to the consumer.

Why is that?  The cost of new construction continues to increase.  Why does that happen?  Government studies show that 25% of the cost of a new home has to do with government regulations, permits, planning board requirements, etc.

The cost to develop land has sky rocketed again because of government regulations.  The cost of getting a sub-division approved takes years.  The developer has to hire an engineer to design the sub division.  Then there is the wetlands engineer, the traffic study engineer. the endangered species engineer, etc., etc., etc.  The you go before the boards that are usually part time and only meet once a month.  Then there is the issue of quorums.  You need to have a majority of the board be in attendance in order to vote.

I once went to a conservation board meeting three months in a row only to have no quorum.  The members are volunteers and are usually not paid.  Four months to get a sign off.  I paid my engineer to sit at three meetings for nothing.  All of this cost money.  Time is money.

Now picture this.  You finally get all of the approvals.  Yeah!  Not so fast sport.  You are now required to put all of the infrastructure in before you can pour a foundation.  What does that mean?  The electrical, water, sewer, telephone, cable, drainage, etc all must be installed.  Then a binder coat of asphalt must be laid down.  All of this must be inspected by the municipality and the individual inspectors before they can be covered.  Of course all inspections are done within 24 hours of ordering. Ha!

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Comment balloon 4 commentsCheryl Ritchie • April 29 2012 01:46AM

Comments

Good morning Cheryl,

Great reblog, Conrad's post had excellent points.

Posted by Lisa Von Domek, ....Experience Isn't Expensive.... It's Priceless! (Lisa Von Domek Team) over 7 years ago

What would our lives be like if the government would do what they were set up to do, help the people, arbritrate between the states so as one didn't step over the other and take care of international affairs. Oh I know there wouldn't be 2.3 Trillion dollars of waste a year. The people would save 1 4 trillion in double taxation, we would have 30 million NON Americans in the country telling us how bad we are and we could cut the federal payroll by 3 billion dollars and congress would be at the local level more and steal less. 

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) over 7 years ago
Great reblog! People often focus on price per square foot to build "XYZ" and pay no attention to the process. IMHO that is why I think so many construction loans went south because the rest of the cost was never figured into the calculation. And as this reblog so clearly points out, must of the cost is all about inefficiency, waste and lack of common sense in regulations.
Posted by Emily Medvec Qualifying Broker, Realtor | Serving Santa Fe & Northern NM (Hello Realty) over 7 years ago

I tell all my buyers that homes are as cheap as they will ever get, and this is why. It's a never ending problem of big government spending needing more money everywhere you look.

Posted by Larry Brewer - Benchmark Realty llc (Benchmark Realty LLc) over 7 years ago

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