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By Pat in Arnold, CA on 7/2/2010
It's final. All bids are in, and the second house we designed (downsized from the first set of plans) still came in above our budget by $150,000. Not easy to cut out that much in a budget, so we are selling our lot and not building. Our lowest bids came in at $600,000 for a 2,104 SF house in the Sierras (on a hill) and our budget was $450,000. The worst part is that we invested over the past three years thousands of hours of research and time, along with $55,000 in development costs in the project, i.e. architectural plans (two versions), engineering, soil testing, septic install, driveway cut/grading, etc. The price of land is depressed, and no one is buying land right now, so we will be lucky to sell it and break even.
The good news is we bought a better property with a 6-year-old house nearby for under $600,000. The house is a straw-bale home on 53 acres, so we are getting a ranch with a larger home.
The bank also cautioned us that most likely the home wouldn't qualify to build because it would appraise for less than the cost to build it. That is a huge problem right now. Foreclosure comps in the area are bringing prices down so far that new homes are not appraising for what it cost to build them. As an example, one contractor finished a home 6 months ago and the appraiser gave him $15,000 for the garage and it cost him $175,000 to build it with three car bays and an in-law suite upstairs. Just amazing. Building in California in our area is just impossible right now.