Any opinions on building a home on the Eastside?

[CkDedmon]

I'm considering a relocation to the Eastside (Bellevue or Kirkland) around Fall 2008. Just curious if anyone had opinions on the cost of buying land and having a house built...

- Any ideas on typical cost to build? Price per sq.ft.?

- Is the cost comparable to purchasing a home already built?

- In a declining market, should I expect to end up with a house that is worth much more than I paid?

Thanks.

[Alan]

This might be a great time to build a home. If there is less demand for labor and supplies due to the housing slump. I don't really know if that is the case.

[sniglet]

Sure, it might be a little cheaper to build today than it was a year ago, but it might not make a lot of sense. When you look at prices in markets that have already seen a significant decline (e.g. Orange County, San Diego, Minneapolis, etc), builders simply can't make construct homes profitably (i.e. you can buy a read-made home cheaper than you can build it).

The Puget Sound is only now beginning to see a decline (we are about 2 years behind everyone else), but once the foreclosures and REOs pick up, then building just won't be able to compete with existing homes.

[ira s]

If you can somehow find well priced land, and you have the skill to at least act as your own general contractor and be willing to do countless hours of grunt labor, it might be worth your while.

[deejayoh]

I don't know that there is any real way of doing this short of pulling together plans and getting quotes. I know people building houses on the east side in expensive neighborhoods and spending $200-250/sq foot. Costing them $600-700k just for construction - but that's in medina and clyde hill, so maybe it pencils out since they already owned the land.

Other parts of the east side you'd probably be hard pressed to make the numbers work at $150/sq ft.

I'm looking at a lot in Seattle and figure I probably couldn't spend more than $175/sqft to make it work for the neighborhood. That's not much of a budget for custom construction.

[thelongwait]

You might want to check out ubuildit.com (not affiliated in any way) if you have no prior experience being your own general contractor, but I have not dealt with ubuildit.

I doubt that you can get a build lot for less than 200k even if you sub-divide a larger lot. Which part of Eastside are you considering? For me, I gave up on this idea as the final cost doesn't pencil out, not counting the cost of your own time and labor.

[thelongwait]

Exactly what part of Bellevue/Kirkland are you considering? (that's what I meant to ask)

[Alan]

I was assuming you already own the land.

Land prices will not be immune to price declines. You will have to decide for yourself if you think prices will continue to fall.

[CkDedmon]

Thanks for all the feedback...I'm expecting it to not be a viable option either, although I thought I'd look into the numbers.

Probably my favorite neighborhoods are East of Market Street in Kirkland, but also looking in Rose Hill, etc. on the east side of Highway 405.

Without subdividing a lot, it looks like land alone will be $400,000 to $500,000. So, unless the construction costs are under $500,000, it's probably better to just buy an existing home.

[Notabull]

[Ubersalad]

FYI, construction loan is nearly impossible right now. Adding to the difficulty of constructing your own home.

If this was 2-3 years ago, I would say to build your own. 600-700k for a nice house and another 500k or so for the land.

[deejayoh]

[Ubersalad]

Doubt she has any clue. Construction loan is a niche, and I am sure I know far more than she knows in terms of construction loan.

Try and find a reliable construction lender right now, I am sure it's equally difficult. Problem with construction loans is they don't disperse all the funds at closing, they do it in phases and I recall IndyMac wanted to do it in like a million phases to ensure the builders are not going over budget and can't complete homes. So if a lender freezes their pipe, which may very well include construction loans because its fund have not been disbursed.

I am not in the business anymore, so of course I may be outdated in the latest guideline changes. But I don't see how things would be easier if not more difficult than what IndyMac was doing.

[deejayoh]

I thought the all-in-one lending was mostly done through community banks - not big lenders like IndyMac?

[Ubersalad]

Perhaps now only community bank can approve these loans. I never dealt with community bank, so I couldn't say for sure, but I doubt they can match what WAMU, National City and IndyMac can offer.