land values / construction cost

hedgehog_IHB

hedgehog_IHB

New member
I've been watching house prices in Orange County for a while and I have some idea of what prices/sq.ft. are in different areas.



But how do you assess prices of unbuilt lots? There are few lots available so there aren't a lot of samples to base an estimate on.



I suppose one could approximate lot value = comparable house - construction cost, but I have no idea of what construction costs are supposed to be either.



Could anyone share some information? Thanks.
 
It really depends on what level you want the home finished to.



Since most custom lots by nature are higher end homes, the construction cost is higher than your typical tract area. I was told average construction cost in Shady Canyon was around $500 per square foot... I believe this included everything so if you laid out $2mil for a lot and put a 5000sqft home on it, you were out $4.5mil to get in the door.



I was told for Convenant Hills, the price was around $300/sqft.



These were at slightly different times, and around 3-4 years ago.



Cletus
 
[quote author="hedgehog" date=1242627194]I suppose one could approximate lot value = comparable house - construction cost</blockquote>


That is how the calculation is done. Check out this post: <a href="http://www.irvinehousingblog.com/blog/comments/land-value-101/">Land Value 101</a>
 
Hmm, interesting. Thanks for the reply. $500/sqft seems really high though.



I was thinking more in the range of putting, say, a 2500sq.ft. home on a 7000sq.ft. lot. $500/sqft could make that a non-starter. Also, it's not really clear how to value the new home premium. One could compare to a new home development, I suppose.



Definitely not thinking Shady Canyon, which unfortunately is the only area in Irvine, where you can buy a lot. Bot there are lots available in Tustin and Costa Mesa. It's not clear to me how to determine a reasonable price though.
 
What kind of materials would you be using? Would you have upgraded baseboards, higher quality cabinets, CAT5 wiring, is it an open floor plan, etc.? I mean, it really is a loaded question. Build cost could be anywhere between $75-$250 a sqft., depending on what you are thinking about in materials and design. Without that, then all I can give you is the wide range I gave you.
 
Land Value 101 is a classic post! I searched the forums, but I didn't search the blog itself.

I didn't realize it initially, but it makes perfect sense now, that the land value is more volatile than the finished product.



Graphrix, I'd probably go for higher quality materials. At this point, I am just looking for a range. Thanks for the info.
 
[quote author="hedgehog" date=1242653763]Land Value 101 is a classic post! I searched the forums, but I didn't search the blog itself.

I didn't realize it initially, but it makes perfect sense now, that the land value is more volatile than the finished product.



Graphrix, I'd probably go for higher quality materials. At this point, I am just looking for a range. Thanks for the info.</blockquote>


Then you would most likely be looking at $175-$225 a sqft. for a build cost with a builder who is in the "know" on some deals on materials. I.E. the poor contractor who is broke and selling a spool of CAT5 wiring for half the wholesale cost.



And in the land value 101, and that sqft. price and you should have an idea of what a lot of land is worth. Actually, let me give an example. There is a .50 lot for sale in N. Tustin for $279k. I'm going to use $200 a sqft. to build, and without seeing it and how much work will be done for the retaining wall for the slope, means I might be low. I can build a 3000 sqft. home then for $600k, and the total comes to $879k. Are 3000 sqft. homes selling for $879k in N. Tustin right now? Not really, and six months from now they certainly won't be.
 
You are right on the money, of course. However, there is non-tangible value too. I don't really like the prevailing architectural styles in Orange County. I prefer more modern architecture myself. That's the main reason I am considering this idea. And, yeah, I'm not crazy to buy right now...
 
The lot at <a href="http://www.redfin.com/CA/Coto-De-Caza/6-Sawgrass-92679/home/5054718">6 Sawgrass</a> in Coto de Caza is scheduled for auction today. It is 1.84 acres or 80,150 square feet and the last asking price was $999,999 or $12.47 per square foot as a short sale. I will probably know the disposition tomorrow or Graphrix may know the disposition today.







There is another smaller lot, <a href="http://www.redfin.com/CA/Trabuco-Canyon/23352-Via-Alondra-92679/home/5055629">23352 Via Alondra</a> with an asking price of $349,000 for 6,098 square feet.
 
[quote author="hedgehog" date=1242685644]You are right on the money, of course. However, there is non-tangible value too. I don't really like the prevailing architectural styles in Orange County. I prefer more modern architecture myself. That's the main reason I am considering this idea. And, yeah, I'm not crazy to buy right now...</blockquote>


Modern Architecture then add another 60% for construction cost.
 
[quote author="bkshopr" date=1242710396][quote author="hedgehog" date=1242685644]You are right on the money, of course. However, there is non-tangible value too. I don't really like the prevailing architectural styles in Orange County. I prefer more modern architecture myself. That's the main reason I am considering this idea. And, yeah, I'm not crazy to buy right now...</blockquote>


Modern Architecture then add another 60% for construction cost.</blockquote>


Why is this? Because the lack of supply also means less standardization?



At some point, people will finally realize that good, efficient and thoughtful design >>>>>>>>>>>>>>>>>>>>>> cheezy Tuscan villas.
 
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