By David Wilkening
In today’s depressed housing market, it might seem like a poor time to build your custom dream home. But perhaps you should “dream on” a little more.
One reason is that the cost of building is coming down. “Build now if you are going to build, for building material prices will probably never be lower than they are today,” said Allen E. Beals of the Dow Service Daily Building Reports.
One major reason is that with new home demand dwindling, the price of some construction materials has started to sink. The slowed demand for building materials can be seen in the U.S. consumption of dimension stone – the term for granite, marble, slate and other stone used in construction. Consumption rose 26 percent in 2004 from 2003, but just 5 percent in 2007 from 2006, according to the U.S. Geological Survey.
As a result, manufacturers and suppliers are competing fiercely for the remaining business and driving down prices, according to Cleveland-based market analysts, The Freedonia Group Inc.
The cost of prefabricated granite has dropped from the building boom highs of four years ago – as much as 50 percent or more, said Cheryl Tarido, a sales associate at California-based Medimer Marble & Granite.
Suppliers with inventory are becoming desperate to get rid of it. “The prices will (continue) to come down. They can’t afford to hang onto the inventory,” according to Gordy DeNecochea, a former administrator at the US State Department of Housing and Community Development.
Prices for another common building material, lumber fell 40 percent in 2007 from 2006 levels, according to Adam J. Fein, founder and president of Pembroke Consulting, a Philadelphia-based manufacturing consultant.
Motivated developers who picked up land during the bubble are also motivated to sell. Land prices, which are often the single biggest expense for custom homes, in some areas have fallen more than 40% in the past year.
“In terms of finding land you want at a good price, this is the best market that I have seen in my 30 years of home building,” says Carl Heldmann, a builder and author of “Be Your Own House Contractor.”
Custom builders are also feeling the pinch. Their bids to build your dream home may be lower than in years. None of this means you should immediately rush out and build your custom home, however, experts warn.
There’s a major difference between buying a tract house and building a custom home. With a tract home figure out how much you can afford to spend, then enter the marketplace to see how much home you can buy. But in a custom home, take into account many other variables such as how expensive one feature or another will cost.
If you do build a custom home, you will have to hire a lot of supportive help such as architects, carpenters and a builder to manage the construction. One way to start the process is to get a rough estimate of what it will cost to get the master suite bedroom or the other special features you want in your dream home built. When you come up with a figure, you can then discuss your proposed project with custom builders to determine whether you can realistically proceed.