Market Value vs. Replacement Cost
I obtained these figures from Page 19 of the Spring 2009 issue of USAA magazine. They have their source listed as the National Association of Home Builders (NAHB).
We know that construction costs havegone up in recent years, but how much?? I looked over some of these numbers and it really puts into perspective the problem that many home builders are facing in our current economic climate.
Framing and Trusses:
- 2002: $27,887
- 2007: $34,600
Insulation:
- 2002: $2.387
- 2007: $3,471
Drywall:
- 2002: $8,047
- 2007: $11,185
Tiles and Carpet:
- 2002: $6,506
- 2007: $11,058
Plumbing:
- 2002: $8,229
- 2007: $11,753
Siding:
- 2002: $6,411
- 2007: $12,476
Exterior Door:
- 2002: $1,143
- 2007: $2,080
Foundation:
- 2002: $10,512
- 2007: $15,249
Cabinets and Countertops:
- 2002: $6,568
- 2007: $12,477
Electrical Wiring:
- 2002: $5,011
- 2007: $8,457
Windows:
- 2002: $4,966
- 2007: $6,322
Roof Shingles:
- 2002: $3,941
- 2007: $7,070
Stairs:
- 2002: $863
- 2007: $1,674
TOTAL CONSTRUCTION COSTS - EXCLUDING LABOR:
- 2002: $151,671
- 2007: $219,015
It is very easy to understand why builders are not putting up that many spec homes in the area. As the values keep declining (to a point where we are similar to 2002 median prices on homes) and construction costs keep rising it is impossible to compete with a new home.
Jason Tangen - GRI, e-PRO - Real Estate Broker Associate with Edina Realty in St Cloud
http://StCloudEdina.com - Home of the e-Market Analysis (on-line home value estimator)
http://JasonTangen.EdinaRealty.com - Search Open Houses in Sauk Rapids MN
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