Why Are There So Few Affordable New Homes?

If you are in the market for a new home, you've probably noticed there are few options for affordable new homes. There is a good reason for this and a builder describes the current situation and offers up an alternative solution for those willing to get creative.

[esther]

Its the quality of these builds today from these major builders! I have heard all kind of stories on new builds!

[jatablue]

A very good explanation and defense of homebuilders and their profit plan. I worked for a Westlake based builder for a few years thru 2005, after a stint with Bob Schmitt Homes, and I can honestly say that was our average margin and estimated goal....to profit approx 30% on a typical 4-5 Bedroom/2-3 Bath semi-custom built home. My builder was a smaller local one who built in Bur Oaks, Westlake, and other areas such as neighboring Olmsted Falls and Columbia Station, OH. He would build smaller 2000 SF or less homes but did not prefer that as his margins went down considerably to the lower 20% range. Very well done video Michael.

[semereabbariamichael]

You have inspired me to build my own house! I will be taking your class shortly

[phil]

Very informative for only 5 minutes. I wish in the future can make these a little longer.

[Krazie-Ivan]

notice quite a few owner-builders planning/building pole-barn construction to save money on huge sqft... kinda sad & unfortunate, imo, as a weak & weather/pest prone structure will have costly maint & energy bills. typical stick construction isn't much better, but there seems no convincing people an added upfront cost for a proper envelope is worth more than fancy finishes & stadium-seating sized rooms.

developers have known this forever. there's no profit in an efficient sustainable build, but loads in cheap sqft (bedrooms/office/den/game rooms/etc) adorned with shiny things. only ourselves to blame?

[kweaver]

Okay but how do I get a construction loan? No banks want to give one without a GC

[collin]

Sure, you can buy a lot for 100k like "armchair builder" suggests, but those are typically undesirable areas, and you could probably buy an existing neighboring home for about 300k (or way less to have a fixer upper that will save you much more money).
I work for several developers. Honestly, all of the margin on houses is now for the land prices. The profit is made on obtaining cheap land in a desirable location at a bargain.
Trust me, you will spend a MINIMUM of 200 to 300 dollars per foot just for construction depending on how much of the labor you try to do yourself and how many corners you want to cut. So if you want a 1500 square foot home with a 500 square foot garage, you are talking more like 400k-600k to build the home to a decent level.

[chadd]

I see a hundred videos encouraging owner builders but not really saying much about how to get financed.

Yea Mr YouTuber, sounds great. Id like to build my own home. Only one tiny problem.... FINANCING!!

These banks are more than happy to lend me money so long as I fork 20% over to a GC.

[kingbonezai]

The problem I have with the 30% mark up is that while it is less than luxuries, it is a whole lot more than other necessities such as food, utilities, or such.

30% if a couple hundred grand is a lot.

I am 100% for profit and capitalism, but 10-20% seems more reasonable

[liesascott]

The new homes are so pathetic and cheap in appearance that they should be outlawed.
They look like the first try of a high school kid.
As a designer and builder (woman!) I am disgusted with the incredible greed and carelessness of these designs.
It takes so little effort to turn a plain home into a real nice house and costs so little more that it is insane not to do it.
These "homes" are results of reckless moneymaking.
In the South one should at least spend the money to place the home on a slab foundation and cover the exterior with some sort of man made cement veneer. It keeps the house cool and helps to keep the bugs out.

[Thatscardo]

Makes no sense tons of available land people are homeless and struggling. But homes start at 100k too many zoning laws, rules and more rules squeezing people. Government only care about building high rise and projects.

[KenYamaguchi-sgzr]

Great Stuff! Thank you for posting! On another note, let's stop KOMRAD KAMALA & TIANANMEN TIM! Pass it along to Donald Trump & everyone you know. Stop these Manchurian candidates!

[chadd]

Probably because GCs have given themselves a fat raise doing the exact same thing as before wheras the labor hasnt gone up and materials have gone up only some.