How much are you paying for your lots?
Coming from commercial side, so no clue in resi. This question is more specific to my area, so would love feedback from people locally, but am also interested in your own communities too with higher price points. Looking at my market, the Bay Area...heck lets narrow it down to the East Bay even, lets say around the 24 corridor Lafayette/Walnut Creek, Danville, Alamo where you can retail a house for $1.2 - $1.6 pretty easily [ example] for an average 3000 sf home.
For a new home development project in these markets, I am wondering what kind of land basis builders of one or two home developments are seeing (not the larger builders but smaller guys like us) for these urban infill lots.
If you are in this market, what are you paying for your lots right now or what have you paid within the past few years? How much appreciation have you seen in dirt? What are you building a typical SFH for in this market ($/sf)? Does this look similar to what you are underwriting?
For a 3000 sf new home:
5,000-8,000 sf Lot $500k
$400k build hard cost (no clue..$150/sf - $180/sf??)
$50k soft costs (no clue here. This is for connections, permits)
$10k a/e
Targeting a Cost of work ~$900k - $1m then retail off for $1.3+ or $420 - $460 /sf
One FINAL key question. Is there a land basis you guys are trying to stay under, and if your basis goes over this threshold, you do not go forward with purchasing the lot? i.e. You know you can retail for $1.3m for 3000 sf. Whats you max lot price you would pay for, since construction is pretty similar no matter what or where you build it (in CA at least..not talking about nationwide).
Thoughts?