Stick-Built vs Existing SFH Value - (New Construction Motivation)

[Kelvin Letron Brantley]

Assume "good" real estate market conditions...

My (severely naive) conventional wisdom tells me that if I build a 3/2 home on a vacant lot, my "All In" costs for the home would be considerably less than if I were to purchase a home of the SAME configuration on the same lot.  My thought process for arriving at this conclusion is that although the lot size is the same, the value of the improved lot is not the same as a vacant lot because there would be no improvements yet on the vacant lot.  Therefore if I build...I would be paying JUST the material and labor costs of a new construction.  Where as an existing home would be subject to perceived market value.

Now I do understand that there are some "it depends".  

-  It depends on whether you build it or someone else does and what their rates are...
-  It depends on contractor costs
-  It depends on other land holding costs.

But generally speaking, if I build a house versus buying and existing one, would it typically be cheaper?  I'm trying to understand the motivation for investors to pursue new construction.

Thanks for entertaining this question :o)

Letron