Monday, March 25, 2019

The same house costs $500,000 more to build in California than Texas



...“In Texas, they have one new home community under construction today for every 10,000 people. In Florida, they build one new home community for every 20,000 people. In California, the ratio is one community per 45,000 people. The result is that [home builders] who build and sell substantially the same house in Texas for $300,000 as they build in California for $800,000,” writes Pete Reeb, a principal at John Burns Real Estate Consulting, in a new analysis.

California is a unique — and difficult — market for three primary reasons, according to Reeb. It can take 10 years or more to get a master-planned community approved for development, according to John Burns Northern California expert Dean Wehrli.

“And it’s a BIG IF that you will even get approvals, while subdivisions that already have substantial conformance with local zoning laws can take three to five very expensive years,” adds Reeb.

Additionally, California’s development fees are exorbitant. Homebuilders have to pay $25,000 to $75,000 in fees for a single home to be built in some areas of the state. Of course, that expense pushes prices higher for homebuyers.

Finally, although California has plenty of land to construct on, there are many restrictions on where homebuilders can and can’t build....