Smaller Lots, Bigger Homes
Last Thursday there was an article in the Wenatchee World, which was extracted from the Washington Post, that was outlining changing preferences among home buyers. This article seems to reflect what is happening here in the Wenatchee Valley. The bottom line is: bigger homes on smaller lots.
While I was talking to a builder the other day, he indicated they can’t justify building small homes anymore because of the cost of land. The cost per square foot of the home is too great in relation to total value.
Here is just an example illustration of what I mean:
Scenario 1
Lot $65,000
1600 square foot home @ $125 per square foot = $200,000
Total cost $265,000 ($165 per square foot)
Land cost equals 25% of the total value
Scenario 2
Lot $65,000
2500 square foot home @ 125 per square foot = $312,500
Total cost $377,500 ($151 per square foot)
Land cost equals 17% of the total value
The larger home is 8% less expensive (per square foot) than the smaller home.
Given a choice, the builders working on a profit margin, will opt for the higher value every time. It’s more efficient for them to build one large home rather than two small ones for the profit generated.
The problem with all of this is that it’s making it more and more difficult to find builders willing to construct the smaller, less expensive homes. A solution, of course, is to find inexpensive land so the option of building smaller homes is more palatable to the builders. This will, no doubt, require moving our affordable expansion sights to outlying areas (probably toward the Columbia Basin) with large quantities of less expensive land.
For answers to your questions, contact:
Carol@TopPropertiesWenatchee.com
source: Smaller Lots, Bigger Homes
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