Home Building in a Down Economy

The downward spiriling market has produced a major decline in home building.  This decline is making some doubt that now is now the right time to build a home.  Is the decline in residential home building a good thing or bad?

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The current financial crisis is affecting everyone, but it is particularly difficult on the home construction market. Construction jobs are in decline, and many folks are losing their homes to foreclose.

 

 

From the positive side – many home building contractors are very slow and have dropped their profit margins.  Thus, one could assume the cost of building a new home has at least stabilized, if not declined. 

 

On the negative – lenders have tightened their lending policies,  AND, just as importantly, they’ve increased the requirements on building contractors – which has in turn driven up the cost of home building insurance or liability insurance. 

But, if you are set on forging ahead and getting home building estimates, here are some suggestions. 

 

First, get in touch with several local builders that have constructed houses similar to the size, quality and features that you want. By talking to them, you get a straight answer as to how much it is going to cost for the entire project plus what materials they will use.

 

Ask them the following questions:

 

1) Are your home building costs increasing, stabile or declining?

 

2) What is the general per square foot cost range to construct a a standard home like (list an address of a home he/she has completed)?

 

3) What new home features are most expensive presently?

There are numerous other questions you would want answered, but this is a start for your prospective home builder.

 

Don’t forget to put a 5-10% additional allowance to your budget when you make your estimate because plans change and in most cases, you and you contract will encounter unforeseen circumstances. Naturally you have to deal with the situation otherwise there will be delays when everything will be finished.

Also remember -  the cost per square foot is higher for a small home than a big one. Why? Because the cost of items is spread over and a two story home if that is what you want has a smaller roof and foundation. The same goes for plumbing and ventilation.

 

Another thing that could reduce cost is the shape of the home. Houses that are shaped like a rectangle, square or dome shaped are more affordable to build since there are not that many angles or corners which increases the amount of labor and the materials that will be needed.

 

As much as possible, work with even numbers because this reduces wasted materials. The ideal home to make should be not less than 32 feet deep otherwise your roof trusses will have to be custom made which will cost more.

 

Until the market stabilizes – one would have to think long and hard about about constructing a house when there is a decline in home building due to the financial crisis. The best advice is to keep these tips in mind when the economy does improve so you will already have an idea how much money you need to build it.