Ever dreamed of building your perfect home in the Mid Valley? While the idea is exciting, the reality is that new construction costs have been steadily rising, often due to hidden expenses. Let’s delve into the factors driving up the price of your dream home.
Building a new home is a significant investment, and it’s essential to understand all the costs involved. Beyond the obvious expenses of land, materials, and labor, several hidden fees can significantly impact the final price tag. One major factor is the System Development Charges (SDCs) imposed by local cities on new development to fund infrastructure improvements. However, the law that created SDCs was passed in 1989, meaning a significant portion of existing homes were built before this and paid nothing.
Here’s a quick look at the approximate current SDC costs for a single-family home in our area:
- Corvallis: $25,000
- Albany: $20,000
- Lebanon: $19,000
- Sweet Home: $15,000
- Brownsville: $10,500
Beyond SDCs, other permitting expenses add to the cost. Generally, you can expect to pay another $12,000 to $15,000 for permits alone.
I had a recent conversation with a developer in Philomath who revealed that when building a neighborhood, their estimated cost for the street – including street trees, sidewalks, sewer lines, water, and other utilities, is about $2,500 per foot. For an average 40-foot lot frontage with a house on each side, that’s roughly $50,000 per house just for the road!
Additionally, stricter building codes for energy efficiency, while great for the environment, have significantly increased construction costs. The 1% Corporate Activity Tax (CAT) also adds up, being applied multiple times to various components of a new home before it even reaches the job site.
The kicker is that appraisers don’t value new homes higher than existing ones, despite the added costs. This means newer homes, which have paid for all these additional expenses, are often valued the same as older homes that haven’t.
So, what does this mean for you? It means that buying an existing home might be more affordable than building new. It also highlights the importance of understanding all the costs involved when considering new construction.
If you’re considering building a new home, be sure to factor in these hidden costs to avoid any surprises. Or if you are considering purchasing new construction, understand all the expenses that have gone into the price tag. And as always, I’m here to help you navigate the complexities of the real estate market and find the right investment for your needs.