What Makes Housing Expensive?

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If you DIY build, you save:

  1. 50% labor/contractor. [1] is typical in practice. So for 1000sf, you save minimum of -$50k.
  2. The architect typically doesn't work with the tradespeople, so he lets them figure it out. This avoids the possibility of smart design at a deep level - which optimizes for the least work. Architects don't tell the trades how to wire/plumb/etc - the trades figure it out. This is a major cost inefficiency. -$10k at least.
  3. Builder usually does not optimize for build cost-to-performance issues. -$10k at minimum.
  4. Builder does not optimize for lifetime cost, but typically for market cost. This eliminates savings from energy efficiency or renewable energy. -$6k. ($180 utilities/month for water/electric)
  5. Custom architecture is expensive. Open source architecture avails design for free. Otherwise, usual customers are stuck with cookie cutter architecture. -$5k -[2].
  6. Developer profit - 16-20% (-$25k for 1000 sf at $125/sf) [3])

So you are left with $40k materials, $25k land - $65k. Save youself $106k for 1000 sf - compared to $171k.