Question: I've been looking at buying a new home in Overland Park, Kansas for the past 5 years. Despite the real estate downturn, the new homes plans we like from certain builders keep going up in price. Why are they going up in price? Shouldn't they go down in price?
Dan S. from Overland Park, Kansas
Answer: Great question, Dan. There are quite a few reasons why new homes are going up in price in Overland Park, Kansas.
1) The new home plans from the new home builders you want are highly desirable floor plans. Higher demand means higher prices.
2) Despite the real estate downturn, construction materials are still rising.
3) Also despite the real estate downturn, land keeps going up in value. A lot that might of cost $55,000 5 years ago, might cost $80,000 now.
4) New homes in Overland Park are in the Blue Valley school district, which is a highly desirable area for buyers.
5) Although relocation has been down nationally, relocation in Overland Park has still been hot.
6) In addition to construction material cost rising, the cost to build have increased. A recent government study showed that 25% of the cost of a new home has to do with government regulations, permits, planning board requirements and so forth. The cost to develop land has skyrocketed again because of government regulations. The cost of getting a subdivisions approved in Overland Park can take years. I worked on a subdivision back in the 90's. It took 7 years before I was able to sell the first home in the subdivision. The developer had to higher a traffic study engineer, a design engineer, an environmental studies engineer, planning architect and probably more that I didn't know about.
After the studies the developer had to go the city planning meeting to get plans approved. There would be months before certain studies got approved because of not enough city council members for a vote. It was frustrating for the developer because he was paying engineers to attend after hours meetings and nothing would get accomplished.
Now get this. After all of the approvals by the planning commission didn't mean start building homes. The developer had to get all of the infrastructure in first. Yep, that is right, streets, sewers, telephone, electrical, cable, and drainage all needed to be in before the first foundation was allowed to be poured. During the whole process a inspectors needed to inspect and of course they came out at a minutes notice.
Hope this helps Dan. If you have any additional questions, feel free to send them my way.
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