Part two: What's it cost to build a new home in Southeast Texas.
Looking at the sales data there is a clear pattern that develops when analyzing the new construction costs in Southeast Texas. Here's a graph showing sales price by area. These are homes that have sold. This shows the price the builder was willing to sell for. In most cases we will assume they sold for a profit.
The range is fairly narrow. On the low side there are a few sales under the $100 per square foot mark. On the high side there have been a few sales that approach $140 per square foot. The neighborhoods where new construction has sold above $120 per square foot are: Dominion Ranch in Port Arthur, Westchase in Beaumont, Barrington Heights in Beaumont, and Fairfield in Beaumont. Interesting that there haven't been any new construction sales in Lumberton that closed for over $120 per square foot this quarter.
Here's a graph that shows the range from low to high.
It is a pretty safe bet if you want to buy new construction in Southeast Texas you will need to budget at least $100 per square foot of living space that you desire. If you add some bells and whistles and a prime Beaumont location be prepared to spend around $120 per square foot. If you really want the newest and best materials then you'll be pushing the $130 per square foot mark.
Now the builders aren't going to tell us what their profit margins are but I've seen them knock about $8 per square foot off once a home has stayed on the market a couple months. Two years ago that was not seen in Southeast Texas. In 2006, Builders didn't have to negotiate. Full price or no sale. That was then. 2009 is a whole new world. Buyers have a lot more control. We don't know how long the builders will continue taking offers but its safe to say until the economy starts to pick up and the inventory number start to decline home builders will still be considering all reasonable offers.
One last piece of information to chew on. Southeast Texas isn't home to any of the national builders who use the economies of scale to their advantage. In Houston for example you can find new construction for less than you can in Southeast Texas. Here you'll find a much smaller group of home builders but the flip side of that is you will get a higher spec level in a Southeast Texas home. New home buyers can expect granite counter-tops, tray ceilings, crown molding, covered porches and that's just naming a few upgrades that are common in the area.
So if you think $120 a square foot seems high, its not if you are buying new construction in Southeast Texas.