Understanding Developing vs Existing

[Josh Broks]

Hi all, My name is Josh and I own few properties that I rent in the west coast. 

I found a great opportunity to buy a lot / land for development in an area that there is very low inventory. 

I am trying to figure out something that I could not understand. an average home 4br + 2bth 1400-1800 sqft very out dated homes are sold for 250K and  rented for 1800$ in average. 

Now I found a great location with permits to build there for residential, about 3.5 acres for 100K

I have done some research and the cost of building new construction is about 150$ per SQFT.

that means If I develop a house 1600SQFT it will cost me 280K including the land and basic appliances and permits.

Is it making sense that building a new house equivalent to existing house should cost me 20% more then buying an existing home? and if so how much more value would it have over the same SQFT houses that I can generate profit on it when selling.