Is it really cheaper to buy than to build in my area?

[Jay Staudt]

I keep reading that this is the case (that buying is less expensive than building in the current market), but real estate in my area is expensive. I live just outside D.C., and homes in the suburbs of Northern Virginia are quite pricey. Looking at properties currently on the market in my town (Manassas) shows the average cost/sq ft to be just above $150. There's an undeveloped plot for sale for $69k right in town that has been sitting for a long time and I was considering putting in a low offer or asking for seller financing. It's already got access to city water and sewer. I hear people talking about new home development costing somewhere between $80-125 sq/ft including dirt - then again, the dirt around here is pretty expensive as well. Any thoughts on whether that figure is feasible in this area?

[J Scott]

I don't know NOVA specifically, but I grew up in that area, and I would *guess* that you're looking at $100-150 per square to build, NOT INCLUDING land costs.

The bigger question is what kind of experience and network do you have? Would you GC the project yourself? If not, add about 10% to the cost. Do you have trusted subs who can do the work for a good price? If not, expect to be paying on the higher end of that price range. Do you know how to source materials for a good price? If not, that will impact costs as well.

In other words, you may find that you can build cheaper than you can buy, but you may find otherwise, depending on your experience and your network.

As for the land cost, if you're building 1000 sf house, that $70K could be a significant percentage of the cost (it adds $70/sf) and it could be MUCH cheaper to buy; but if you're building a 5000 sf house, that $70K could be relatively inconsequential in the total cost of the property (it would only add $14/sf to the cost).