Timing the building of a house is like trying to time the stock market. It can’t be done because there are too many variables. I think the question is, is it the right time for your situation. Educate yourself as best you can on the challenges of the current building environment and decide whether it’s the right time. We may go into a recession…or not. Interest rates may go up, or not. When we bought, interest rates were 10%, but it was the right time for us.

Totally agree. What was your building quote for the house though? We did a lot of investigation and just thinking of needing 4K every month for 25+years (before any lump sums we can pump in) puts shivers down my spine. In the good old days when rates were at 20% ppl built houses that cost 50K, very different ballpark than in this inflated housing market and incredible high builder and material cost?! Just thinking of the adage: "owning a house is your retirement fund"

I would love your price point. Our lot cost over 2 million and our build was 1.2 million on top of that and that was four years ago. Prepare to have 20-30% overages and that’s your true reality on costs.

I understand the second thoughts. Our friends just put their build on hold, and their contractor basically said he agreed with their decision and that he wouldn’t build right now either. They are in a strong financial position, but they are reluctant anyway. Obviously a lot depends on your local market, too.

It is a dilemma. One thing to keep in mind is that if rates come down in the future, you can always refnance.

""It's an investment into your future".

A house is a place to live. I bought my house in Michigan in 2000 for 400K and sold it in 2012 for 330K after investing about 70K and hundreds of hours of labor. Got my down payment back at closing and considered myself lucky.

Where do you live that RE taxes will only be $6k a year? If you're already second-guessing your decision, come back in a year with the standard "Why is my contractor (pick one or all) 1. Not getting done 2. Doing such a poor job or 3. Presenting me with $100k in cost overruns?". Maybe now is not the time.

So my 2 cents...

Just because you would have been better off building two years ago doesn't mean that building today is a bad decision. You might still be better off financing your new build at 6% than not building at all. How nice it would have been to build the house a few years ago is not relevant to your decision and can actually lead to a bad decision. The questions you need to answer are: (1) Are you comfortable making the payment? (2) Will you be better off in the future if you build the house?

Generally speaking, the beginning of an inflationary period is a great time to invest in real estate. I just got a 6.75% cost of living adjustment to my pay, so my pay is increasing while my house payment is remaining constant on a house that is also likely to increase in value as others get pay increases. Mathematically, you are better off if your marginal equity (equity in new home - equity in current home) increase more than the interest portion of your payment increases. However, that assumes that you are equally satisfied in either home.

Another way to look at it is... If you are unhappy in your current home but decide to wait until interest rates come down, then you might wait ten years to build the exact same house. Which is going to cost even more money to build in ten years, so you will have a great interest rate on your new home but still have a more expensive payment because now the principal has increased.

This is not to say you should build the house. I have no idea what inflation is going to do in the next ten years and so for all I know you spend a lot and prices come down and you end up upside down.

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Inflation... I have no idea what is going to happen in the next ten years, however, I question the Fed's wisdom on this one. The traditional model is that when interest rates are below inflation then spenders have an advantage over savers and so people spend. Traditionally, to curb inflation we raise interest rates above inflation to favor saving (as is demonstrated in this thread). However, I question the wisdom of the traditional model when I just paid $20 for a $4 bottle of Siracha because of supply chain shortages.

Kind of thinking here the builder is putting the screws to you. The average cost to build a home in any state not including land doesn't come close to the $250 per square foot you're paying. The average is California and Hawaii at $200 per sq. ft. with the average cost nationally at $150 per sq. ft. (source: Forbes updated Jul 5th 2022)

If not the builder I'm guessing you're building a mini mansion with high end everything with all the bells and whistles, and maybe you need to Shave some of the custom and luxury items from the build. One of you two need to come down to earth in the tune of $100K to $150K is all I can say if you think $650 is absurd.

As of today lumber prices are $650 per 1000 board ft compared to $1300 at the peak in March, so a builder is paying $25 per sheet of OSB now compared to $45 in March. Ask the builder if he's using an old price sheet for lumber, but something isn't right with the builder or you're not disclosing how much gold leaf is going into the house.

I'm collecting stories for a book about people who saved money by delaying building their homes. So far it's a very small book.

Like you actually have employment

@kevin9408 said, "The average cost to build a home in any state not including land doesn't come close to the $250 per square foot you're paying. The highest is California and Hawaii at $200 per sq. ft. with the average cost nationally at $150 per sq. ft. (source: Forbes updated Jul 5th 2022)"

Your source contradicts your statement a bit. The article presents the cost to construct a simple 2,000 square foot, builder grade home without a garage or basement. I doubt that many people constructing a home are actually doing builder grade so the article doesn't really give you insight into the actual average.

IIRC they use a cost effective house kit (something like 84 Lumber's Cape May) and apply a labor premium or discount to certain areas to establish the cost to build in those areas. It is useful information for sure, but hardly the average cost to build in an area.

$200-250 is so low as an average and exceptionally misleading. Not saying it can’t be done but it’s false to list as even remotely reasonable for most.

I live in a major metropolitan area on the West Coast. When we were looking to build a decent quality home on our own, developed land 20 years ago -- a nice home, but not high end -- the bids from reliable builders were in the $300/sqft range. I can only imagine what they are today. We have friends who live in Hawaii and just finished building their retirement home; I know that budgeting $200/sqft would have been ridiculous..

I realize that the West Coast and Hawaii aren't helpful data points for people who live, say, in the Midwest, but I think the Forbes numbers give people an unrealistic idea because they seem to be based on the kind of simple home most people on these forums aren't planning to build.

Trying to figure out where Forbes can get a foundation done for $9K.

I'm guessing tract builders are around $200 in the mild cost areas of CA. Customs $250-350 typically PLUS permits/impacts/design/landscaping, etc.

Lumber has definitely come way down and plateaued to about double what my July 2020 numbers were. Ran these yesterday from 3600-3800 sf two story off slabs, not including truss costs. Meanwhile concrete increased & we're getting fuel surcharges

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You can always rent and avoid all those home ownership costs.

I would never work for a customer who thought my rates were "preposterous'. Try buyin' gas to get to your jobsite please.

I'm old enough to remember paying 17.99% (18%+ was not legal where we lived during the era of state chartered banks) and the way people qualified was with a payment rate of 13%. The idea was that the borrower would have negative amortization and a balloon loan that had to be refinanced in 5 years, with hopes that your house was still worth at least as much as you paid for it. We paid extra toward the principle each month to cover the difference between our payment rate and our loan rate. That house cost $125K, which was a stretch for us. The cheapest houses being built then in that very LCOL area started at $75K for a 3 bd/1 ba with about 1100 sq. ft.

Houses aren't meant to be investment vehicles. Those who realize a net gain on sale are fortunate, but it's not guaranteed. Even when one's net sales proceeds are less than what was paid for the house, it's important to consider that living somewhere else would have cost money, too.

Houses aren't investment vehicles .... for the wise investor. Since the average person isn't a particularly good investor/saver, the house does pretty well. Given the OP's example, it forces about $2k a month to be put away - in this case to paying off a loan. If instead, he spent that $2k on fancy dinners, he would be worse off. Obviously, putting the $2k in the market and living in a small apartment is the best investment.

People always need to live somewhere no matter what happens to the economy so investment in property will usually do well - or at least relatively stable. Generally, the US still has modest SFH pricing compared to other wealthy countries.

6% interest would seem to be a pretty good long term average - its just that the last decade has been held back from a very large world wide financial crisis and then a pandemic hit just as we were coming out of it.

When people are telling you "It's an investment into your future" - that sounds like they are selling you something.

Just to be clear, your home can be an investment in your future without being an investment vehicle.

We stayed in a home that we didn't really fit well in for many years because it was a neighborhood full of kids who were the same age as ours in a really good school district. My kids both got scholarships to top 20 schools and most of the kids they grew up with are attending great colleges, which certainly has a financial benefit in both savings on college tuition and their future earning potential.

A house can also have indirect financial benefits. It may be convenient for your needs which saves you time, a house that you enjoy may save significant amounts in entertainment spending, etc.