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Posted on 7/18/25 at 11:20 am to SlidellCajun
I don’t totally follow
How can a builder lower “prices” other than overhead or fees?
_________
The builders set the prices for new construction and it trickles down to existing home prices. They push them higher until the buyers collectively push back by not buying houses as quickly and/or selecting house that are priced lower than "market prices". Happens every year. The higher prices are a combination of higher costs and higher profit.
How can a builder lower “prices” other than overhead or fees?
_________
The builders set the prices for new construction and it trickles down to existing home prices. They push them higher until the buyers collectively push back by not buying houses as quickly and/or selecting house that are priced lower than "market prices". Happens every year. The higher prices are a combination of higher costs and higher profit.
Posted on 7/18/25 at 11:52 am to bigjoe1
Hopefully the nations “homebuilders” go bankrupt
I suspect there’s some law like with ice cream where if the product is too shitty they have to call it a “home” instead of a house
We don’t have a shortage of housing in this country, young people are too weak to buy a house off a dead boomer and knock out the pink tile bathroom
I suspect there’s some law like with ice cream where if the product is too shitty they have to call it a “home” instead of a house
We don’t have a shortage of housing in this country, young people are too weak to buy a house off a dead boomer and knock out the pink tile bathroom
Posted on 7/18/25 at 2:54 pm to KWL85
quote:
The builders set the prices for new construction and it trickles down to existing home prices. They push them higher until the buyers collectively push back by not buying houses as quickly and/or selecting house that are priced lower than "market prices". Happens every year. The higher prices are a combination of higher costs and higher profit.
Builders don’t control the cost of materials and that’s over 80% of the cost of a new home.
So that leaves overheard.
Let’s say a home costs 500,000 to build and the builder wants 15% for his fee. That’s 75,000 in this instance. If he “slashes” his fee in half that only amounts to 37,500 of roughly 7.5% of the cost to build. Not exactly earth shattering
Posted on 7/20/25 at 9:09 am to SlidellCajun
Can agree with your comments, but this does contradict my comments. . You can say that $37,500 is not earth shattering, but it is the portion of money that sets market prices in an accelerating market. Have watched this occur for 20 years as a real estate investor.
Posted on 7/20/25 at 9:20 am to SlidellCajun
quote:
Builders don’t control the cost of materials and that’s over 80% of the cost of a new home.
Is that 80% just materials, or is that materials and labor. Is the 15% just profit basically, or is there overhead in that 15%?
Economy of scale also comes into play when builders are building out subdivisions. The 80% number should drop with the increase of volume.
Eh, I let AI figure it out
Posted on 7/20/25 at 9:50 am to DarthRebel
What AI is that?
Posted on 7/20/25 at 7:16 pm to SlidellCajun
quote:
What AI is that?
Just chatgpt.
Here is Grok
Posted on 7/20/25 at 7:25 pm to bigjoe1
Meanwhile, 90s basement homes are skyrocketing. No one else likes these mass build trailers now.
Posted on 7/21/25 at 9:06 am to SlidellCajun
quote:
If he “slashes” his fee in half that only amounts to 37,500 of roughly 7.5% of the cost to build. Not exactly earth shattering
7.5% is huge to a homebuyer AND home seller
This post was edited on 7/21/25 at 9:07 am
Posted on 7/21/25 at 12:26 pm to lsu13lsu
Yeah but that would be if the builder is willing to cut their fee in half which I don’t think many will do.
Posted on 7/21/25 at 12:37 pm to bigjoe1
Thats weird, i was told that lowering the interst rate would make homes more affordable
Posted on 7/21/25 at 3:47 pm to DarthRebel
Maybe St Tammany will slow down.
Posted on 7/21/25 at 4:02 pm to SlidellCajun
quote:
I don’t totally follow
How can a builder lower “prices” other than overhead or fees?
Because they have been overcharging since late 2020. What we are seeing now is a market correction. To make matters worse, most of the so called builders these days are so damn clueless they don't even know how to lay the house out for the foundation. They have to depend on the foudation guys or framers to lay it out.
For the record I have been a residential contractor since the mid 1980s.
Posted on 7/22/25 at 7:58 am to thunderbird1100
quote:
Pretty much all new single family homes in decent areas (good schools) around here are close to $700k-$800k+. You have to get a bit out to get to even say the $500k-$600k range. I dont understand how people are buying those up in this interest rate environment personally.
And just for reference, there are 2500-2750sq-ft homes near our area that are new builds being listed for high $700k range. Property tax is 1.2% between county and city and insurance would be around $3500/yr for that.
If you're able to put 20% down, have no PMI and no HOA (most are going to be HOA neighborhoods in new build areas), that's a monthly payment of $5k for mortgage at 6.5%, taxes and insurance.
5 freaking grand. To live comfortably in that you would need to be taking home $20k/mo which is 25% of net pay (this is over $300k/yr gross easily). If you want to do 28% of gross income which I personally wouldnt do, thats still like $215k/yr. Now I know this isnt only dual income households, but again even with that alone, it's not going to be north of $140k-$150k range.
Median household income in this area is around $100k. I cant imagine the households bringing in $215k+ is particularly high
This post was edited on 7/22/25 at 8:00 am
Posted on 7/22/25 at 9:48 am to Chucktown_Badger
Help me understand what home buyers concerns about the broader economy are.
_______
I understand you are coming from the sentiment that real estate markets are local, which is largely true. But this sentiment is usually related to the logic that home sales for the country do not dictate the sales for a local market.
To answer your question, buyers are concerned about the broader economy in areas that are dominated by companies that are significantly affected by the broader economy. An example would be areas dominated by auto sales. If the economy is hurting the big auto makers, then home buyers will be reluctant in areas where they have many employees.
Another example is areas around home offices of huge companies like Walmart. Walmart is being negatively impacted by tariffs to the point of announcing layoffs. The are also forcing reductions on to the many vendors that have a large presence in the northwest Arkansas. These pressures are currently affecting home sales in this market.
_______
I understand you are coming from the sentiment that real estate markets are local, which is largely true. But this sentiment is usually related to the logic that home sales for the country do not dictate the sales for a local market.
To answer your question, buyers are concerned about the broader economy in areas that are dominated by companies that are significantly affected by the broader economy. An example would be areas dominated by auto sales. If the economy is hurting the big auto makers, then home buyers will be reluctant in areas where they have many employees.
Another example is areas around home offices of huge companies like Walmart. Walmart is being negatively impacted by tariffs to the point of announcing layoffs. The are also forcing reductions on to the many vendors that have a large presence in the northwest Arkansas. These pressures are currently affecting home sales in this market.
Posted on 7/22/25 at 10:11 am to bigjoe1
One thing the big builders are doing is buying points off the mortgage for buyers. It lowers the buyer's monthly payment without the builder having to lower the home price. That in turn makes the surrounding homes seem more valuable for comps.
Posted on 7/22/25 at 10:21 am to KWL85
quote:
To answer your question, buyers are concerned about the broader economy in areas that are dominated by companies that are significantly affected by the broader economy.
That may be a little too specific. I am currently on the sidelines looking to buy a home in the next year. I am watching inventory go up and prices go down. I think there is uncertainty over interest rates, tariffs (inflation), housing prices plummeting, market crash, etc...
All of those things together make buyers leary because they don't want to pay too much for their house, pay to much in interest, be house poor because inflation hits, etc. There are a lot of balls in the air right now, and I think people are just a little gun shy.
Posted on 7/22/25 at 10:51 am to SlidellCajun
quote:
Builders don’t control the cost of materials and that’s over 80% of the cost of a new home.
So that leaves overheard.
Let’s say a home costs 500,000 to build and the builder wants 15% for his fee. That’s 75,000 in this instance. If he “slashes” his fee in half that only amounts to 37,500 of roughly 7.5% of the cost to build. Not exactly earth shattering
I'd wager these large developers that are more than just local, and even plenty of local guys, are making closer to 50% profit when things are good. Now, don't get me wrong I understand that have significant risk that the market holds. But its a hell of a lot more than 15% if they are the developer of the land and the contractor on the home.
There's still developers selling $250k new builds in some areas. I saw some recently listed for sale outside of Pensacola. I was shocked at the price actually.
In regards to these new homes neighborhoods for $700-800k, the one thing people forget is that many of them are larger homes in the 2800-4000 sq ft range. So while the price can be shocking, that's a good size home and not that much more per sq ft than a home that is 2200-2400.
This post was edited on 7/22/25 at 10:53 am
Posted on 7/22/25 at 11:49 am to baldona
quote:
I'd wager these large developers that are more than just local, and even plenty of local guys, are making closer to 50% profit when things are good
It's supply and demand. They will charge what they feel the market will absorb. In a sellers market, they make more money. In a buyers market, they make less or lose money.
I suspect the big builders have sophisticated logistics processes to help minimize the impact of materials. I doubt they add up the cost of materials and add 20%.
Also, builders specialize in making cheap houses look expensive. Ever lived in a DR Horton home? Faucets, flooring, trim, cabinets, doors, etc, are cheap, but can look like high end products.
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