Long time lurker first time poster.

I am\was interested in building a house on a piece of property that was given to me. It has a good well, electric and gas, but needs a new septic tank installed. I would also like to do it as energy efficient as possible using or a combination of 2x6s with foam, SIPs, and ICF (I like but way to expensive) but the current costs I am getting are around 130-180+ per sq ft. for a finished house.

Lets take the middle 155 per sq ft and put it to a 2000sq ft house and we are talking $310,000! That is considering I already have plans (which I don't) and thats not including the new septic, landscaping, driveway, ect...

Now if I look at new construction or existing (2000sq ft) I can get so much more house including property, septic, well, non finished basement, garage, for 80-150 per sq ft. And some of the properties are on or next to water or have 5+ acres most have granite counter tops, wood floors and other expensive features.

While I know that building a house will let me make it more efficient it only saves me money on my heating and cooling. But will end up costing me more money.

Lets say having my house built with everything else that is needed costs an extra 50,000 which is on the extreme low side. A 30 yr mortgage at 5% add the extra 50,000 and with my bad math will cost me $46,000 in interest. So it comes out to $96,000 extra in the very best of cases to build on my lot.

Am I missing something here, does this seem right? I do like the property that I have but I am far from rich, so if my math is correct I can't see any reason in the world to build which sucks.

I would appreciate any input, experience, corrections to my figures, or other advice you may have.

Thanks in advance,

Don

Yes it's too expensive. Sometimes I wish I had never started.

Unfortunately you are right; right now it is more expensive to properly build a good long lasting house with increased insulation, decreased infiltration, low HERS score, HRV, rainscreen siding etc. If you are looking for a cheaper alternative, go with the least expensive used house rarther than new house with already out of date systems, so you can afford to upgrade the house when fuel prices skyrocket again. At some point the market value for poorly insulated houses built in 1950 or 2010 will decrease to reflect their true value; we just don't know whether that will be 5 years or 30 years out. If you build, whether you do-it-yourself or hire a builder; make certain you firm up ALL of your costs (no "estimates" or "ballpark" numbers) so you don't have any surprises. Many builders, expecially now, will work with do -it -yourself builders to help put the whole package together & get support contractors in when needed.

PS: I'm assuming you have already compared the long term ownership costs of 21st century houses vs the old fashioned (2x6/fiberglass) buildings?
Bob

Most houses are now 30% off but I doubt that there is any large "sale" on new building costs. It's a good time to buy a quality used house and make a few upgrades.

To make a long story very short: yes.  I'm in the process of building now and it's going to cost me about $25k more to build than it will be worth when I'm done.  Is it worth it to get exactly what I want?  I don't know, come ask me again in 5 or 10 years.  It's ridiculous that ICFs or other high efficiency concepts offer 'no contributory value' to borrow a phrase from the appraiser.  We're coming out around $145/sq ft for our 2400ish sq ft ranch with basement and above grade walls made from ICF, but that is with us doing all the flat work and a bunch of the trades 'on the side.' Best of luck to you. 

read up on www.ownerbuilderbook.com, its a forum with many self builders with lots of good info.

Posted By galnar on 03 Sep 2010 11:13 PM 
  It's ridiculous that ICFs or other high efficiency concepts offer 'no contributory value' to borrow a phrase from the appraiser.  

An energy mortgage increases a consumer’s buying power by enabling mortgage lenders to count the monthly energy bill savings that a home’s energy efficiency features deliver as additional income. There are two kinds of energy mortgages: energy-efficient mortgages and energy improvement mortgages.

The energy-efficient mortgage credits the savings from a home that is already efficient into the loan qualification process and capitalizes the improved features into the appraisal. An energy improvement mortgage increases the buying power of a consumer by financing energy improvements that are shown to be cost-effective and capitalizing the ensuing monthly savings into the mortgage loan. All of the national secondary mortgage markets--conventional as well as federally insured programs--offer energy mortgage products.

Both types of energy mortgage programs rely upon a home energy rating to calculate the savings generated from a home efficiency features. Home energy ratings involve an inspection of a property’s energy features–its insulation, windows, condition of heater/domestic hot water heater, for example--by a specially trained residential energy efficiency professional, known as a home energy rater

Your resale value will be higher in the ability to demonstrate the monthly utility bills

A study published in the Appraisal Journal documented that the market value of a home increases $20 for every $1 decrease in the annual energy costs. According to a recent analysis by the Pacific Northwest National Laboratory building a home to exceed the Model Energy Code would result in an annual savings of $170 to $425. Applying these findings to the analysis published in the Appraisal Journal would equate to an increased home market value of between $4,250 to $10,625.

That $10k would help close the gap. Now if I could just get my appraiser and banker to read this thread.

Jelly, I wish you good luck and hope everything turns out for you.



Bob I, while I agree it would be great to have a 21st century home considering new technology and the cost of ownership. How many years would it take for the payoff to show up, especially when you are talking $100,000+.



Galnar, Sounds like you are building a heck of a house and I sure hope it works out for you 10 years from now.



Slenzen, thanks for the link I have not seen this one yet but it looks like a great site.



Cmkavala, I did not even know that an “energy mortgage” exists and seems like a great program. I think that investing in energy efficient homes (or anything) is essential for our and our kid’s future. I would LOVE to build a house like Galnar running ICF from basement to roof. But to do that would cost, over an existing house, well over $100,000. Now I already have property that was given to me for free, so let’s add the cost of land, water, gas, sewage, and architect. Ouch.



So back to the point of my post:
If you are building a house unless you are super rich, or are able to do the majority of the work yourself an energy efficient house will cost you SO much more money than it will ever be able to pay you back.

Posted By Don1975 on 04 Sep 2010 10:00 PM



So back to the point of my post:
If you are building a house unless you are super rich, or are able to do the majority of the work yourself an energy efficient house will cost you SO much more money than it will ever be able to pay you back.

Don;

I think the answer is geographical, it depends on home values in the area you will be building.  In our area  homes can be built conventional for $90. sq. ft., energy efficient (SIPS) for $95. and exististing home bought (including land for $85 - 100)

People are under the impression that since housing values are at all time lows, it must be a great time to build. Unfortunately it is a great time to buy existing, but not so to build new. Although there is a glut of unemployed contractors out their looking for work, material costs (for the most part) have continued to rise.

So for someone just wanting a house to live in,  it does not pay to build any house. (in my area)  Its not to say that it is not cost effective in other areas of the country where housing values have not been so hard hit.

You are mis informed to beleive that energy efficient homes are that much more, our experience has been 2 - 5% more (in our area)

Don75 "new construction or existing (2000sq ft) I can get so much more house including property, septic, well, non finished basement, garage, for 80-150 per sq ft."
I'm unclear if you are saying that you can have a new non energy efficient home built for $80, vs 130 for energy efficient construction, but if so, you aren't comparing apples to apples. There just isn't a 50% premium for building a good house. Compared to existing houses, maybe, but there you're comparing building costs of years ago to current costs. Johr had a valid point - good time to buy a cheap used house & do some major energy upgrades. Galnar's house is valued 25k less than costs, but that is in a depressed real estate market, which won't last; within a few (5+/-) years RE values will have leveled out and the real value will be there - sooner if fuel prices spike.

One of the advantages of fast & cheap construction is that many of the flaws can be hidden under the granite counters and aren't obvious for at least a few years. A Yugo can be gold plated or look like a Mercedes, but the Mercedes will be going long after the Yogo is turned into tin cans.

Have another talk with your appraiser and banker. You might also consult with a different appraiser and/or a realtor who may have knowledge of other sales of energy efficient homes that received the value you are looking for. Appraisers have been slow to come around to giving value for energy efficient features, but some are embracing these critical changes and are working with buyers and builders to find the needed value.

Significantly more interest in and increased valuation of energy efficient buildings will only occur when energy prices rise.

I have no problem with more taxes to increase energy prices - as long as that tax increase is offset by an equivalent decrease somewhere else.

mortgages eventually get paid off, utilities are forever ...........to save $200. a month for the life of a 30 year mortgage = $72,000. and will continue to pay dividends for the life of the home that could exceed 100/200 years

Intelligent people see the value added

Chris, Believe me I aware of the multiple, multiple, reasons a ICF is the best way of building a house money aside. I think that $200.00 a month greatly depends on your location and if you have alterative heating such as a fireplace.



But I was looking to start a conversation about with today’s market, what sense does it make to build. For example 2000 sq ft. house with new tech building material would cost as far as I have seen 155+ per sq ft. and I think that is being conservative. So that comes out to $310,000 plus in my case just a septic which add another $6000.



Real world example, $200,000.00 buys me one heck of a house 2000sq ft. +, fireplace, land and all, in today’s market.
So let’s just say that saves me $100,000 add the interest (5%) of an 30yr loan and I am at $193,255.00 savings.



I know that has much as I would love to build, there is no logic in paying an extra $193,255.00 for an insulated house and intelligent people see that in their bank account.

Existing housing stock being less than the cost to build new should obvious.
You pay a premium to have a house custom built for you, you pay a premium to have all the materials and systems brand new and you pay a premium for advance features and techniques that go way beyond standard construction.

You may be able to get a nice house for less, but it wasn't built and finished for you and it may or may not be well built, you really wouldnt know until you pulled that house apart to determine how well it was assembled. So if you factor in remodeling costs to make that existing house fit you in finishes and mechanical upgrades it would probably end up costing you more.

Don1975;

I was using SIPs for my comparison, with out supplemental heating. We are currently building "Energystar" SIP homes in our area for less than $100/sq.ft. Turnkey, of course it is geographical. You ma be in an area of limited choices with less competition, but $155+ sounds like gouging

If you can buy an existing house and get a smokin' deal, buy it! Nothing says you can't live in it for a couple years and sell it, hopefully make a nice profit and build what you really want. You could even buy and sell a couple of times until you have enough money to pay cash to build your dream home, exactly the way you want it! In the mean time, you can be looking for your vacant property to build on for in the future and hopefully get a good deal on it too.

Posted By cmkavala on 07 Sep 2010 07:11 AM

...Intelligent people see the value added

What if there are no intelligent people in the area?