The Expert Podcast

…Real estate industry is begging begging contractors to build more properties. Here's an article with a quote. Saying that the us real estate market needs more housing Great Okay We know that. And this real estate extra says America needs more How housing. Making a note to developers get out there and build us more housing.

Right telling builders come on man Get out there like motivation to build more houses. Well newsflash for real estate industry not to be a wise guy, but developers in builders and contractors they want to build That's what we do for a living. If you're contracting and you're not building you're not making any money. If you're just sitting around twiddling your thumbs you have no money coming in And a lot of money is going out You have overhead on your equipment, your materials your your bond your insurance. So you have to be building.

So we want to build houses. The problem is. The combination of economy and costs We…are not making it really conducive. To build new single family homes. A lot of it has less to do.

with the cost of materials. As it does. Things like permitting. And approvals. So…

if in many parts of the country you start a permit process today they could take eight or nine months sometimes more than a year to get the permitting done. The way the market is right now If you have to sit on that property have carrying costs. And unknown future…lumber costs. It doesn't make sense to build that house The other thing is with interest rates as high as they are. And average house that you'd build even a low end house.

By the time you buy the land and you have the permits and fees you might have a hundred dollars a hundred thousand dollars into site costs and improvements. And utilities and permits And just before you even scratch the ground with a Digger, A hundred grand. Now you are going to build let's say even a modest 1000 square foot house, right? Even if somehow you could build that house for $200 a square foot which. May not be the easiest.

to do. Right with material cost and everything else But if somehow you could be very efficient and build that house for two to a hundred thousand dollars Now you have 300 grand into that. A hundred thousand or that 1000 square foot house. What are you going to sell that house for the average cost for a home right now is 400 grand. Is that how it's going to sell for more under.

400 grand. Even if you sell it for 400 grand. Well, you're going to have carrying costs on that. Property for one year you're going to have real estate commissions and. costs I…

add all that up That could be 50 grand. Right. So now your cost of sale and the cost of transaction is 350 If you ask 3 99, yeah You made 50 grand. But here's the thing. How many of those can you build in a year?

And how much does it cost for you to run a business? Even if you build four of those a year. And somehow you make 200 grand. As a builder you're putting your money at risk. You're almost better off going to take a job.

At a construction company and making a salary of a hundred $150,000. Rather than. Putting your. livelihood at risk, and that's a lot of big assumptions That's assumption that you can build a house for $200 a square foot, which is a big if that's also the assumption that you're going to sell that house in a year.

For 400 grand. It's also a big assumption that. The interest rates aren't going to go up even more. Or the lumber costs are going to go up even more. So we want to build houses, but there's a lot of pressures

against developers and contractors building single family homes, remodels. additions upgrades. even commercial. Tenant improvements. Or something that's a little more sure because you don't have to go through as much of a speculation Those things are commissioned in advance by the client.

Let us know what you think in the comments about this. The state of affairs for building new single family homes in the United States.