Buyers often wonder what is less expensive to buy an existing home for sale or to buy an empty lot and build your own home? With the real estate market on a historic trajectory upwards, this article will discuss advantages and compare both.
2021 is a historic year in real estate sales with the total “Dollar Volume of Sold Listings,” hitting over $171,000,000 in inventory sold. Anyone who has been following the real estate market this year knows that inventories are down, and prices have risen significantly in its wake just in the last year. 2022 has continued the same trajectory of 2021 with inventories continuing to trend downward.
Anyone who has shopped for an existing home has seen that there is not much to choose from and what is for sale can be considered over-priced or needs a lot of renovations and/or maintenance. It’s no secret it’s a seller’s market so buyers expect to pay high prices and many will consider building a home as a way around the current situation.
Building can be a great option if you find a company you can trust and you have the time to wait for your home to be completed but the question is will it save you money and the answer is possibly but let’s examine that closer.
First thing you need to do is purchase that perfect lot. A quick search of the Multiple Listing Service shows that in Las Conchas, one of the more desirable locations to live, has lots for sale ranging at the low end from $49,500 for a fourth-row lot up to $599,000 for an oceanfront lot. When purchasing a lot, beauty lies in the eye of the beholder so let’s take the median price of that range, $274,500 and that will get you in the second row.
Now that you bought a lot for $274,500 you need to find a reputable contractor who will stick to his quoted price, not abandon the job in the middle of construction, steal materials and show up every day to complete project on time.
Most people will shop for a homebuilder based on price only and choose the guy who quoted the lowest numbers. This is the biggest mistake and most of those contractors will abandon the job in the middle of the project because they underestimated costs. Happens all the time you can read the horror stores online so always choose a contractor based on quality and reputation and never shop on price. Here in Mexico, its price vs cost, there is the price you will pay upfront for choosing a lousy contractor then there is the cost to fix it once the job blows up and its usually double.
So, what are the costs, here in Mexico just like in the U.S. there is a supply chain crisis going on and inflation is worse jumping up every 30 days with 5 to 10% price increases. Currently the price per sq. ft. of livable construction is $150 a sq. ft. So, if you are building at 2000 sq. ft. home at $150 a sq. ft. of construction you are looking at minimum $300,000 U.S.D. to build that home. So, add that cost to the cost of a second-row lot in Las Conchas and you are looking at roughly $574, 500 plus permit fees, electric connection, and water fees of about $10,000. That puts you at $575,500 to build a home on a lot you desire.
Second row homes in Las Conchas average in the $600,000-$650,000 range so there is a little bit of savings to get the exact home you want that needs no maintenance repairs when it’s completed on the perfect lot that you chose. Contact me with any further questions.
About the author: Joseph Sanchez is president of Rocky Point Home Builders a design/build contractor specializing in custom home design, construction and engineered renovations and a real estate agent with RE/MAX Legacy. He resides here in Puerto Peñasco with his wife and three children and is originally from Chicago. For more information email him at firstname.lastname@example.org