They actually can build homes cheaper than that, there’s a certain price point where they feel they’re making the kind of profit they want which is basically the cost of a older home profit-wise. There’s a recent article that came out that I’m can’t find right now but I read it just a couple months ago that talked about the 400 to $500,000 price range is the profit margin that builders want to make. That means they’re probably making 20 to 30% profit. And while they can build cheaper homes they make less profit so they are not motivated to.
I run a company, and it often is. Think about it this way. If you sell a 250k home,10% would be 25k. A developer often sells an entire neighborhood, so let’s say conservatively 30 homes. That’s 750,000$. If that’s not enough profit to keep building, well, you now know the problem with our society.
They actually can build homes cheaper than that, there’s a certain price point where they feel they’re making the kind of profit they want which is basically the cost of a older home profit-wise. There’s a recent article that came out that I’m can’t find right now but I read it just a couple months ago that talked about the 400 to $500,000 price range is the profit margin that builders want to make. That means they’re probably making 20 to 30% profit. And while they can build cheaper homes they make less profit so they are not motivated to.
OK. you go develop those homes then.
since you’re such an expert and seem to think a 10% margin is totally worthwhile?
I run a company, and it often is. Think about it this way. If you sell a 250k home,10% would be 25k. A developer often sells an entire neighborhood, so let’s say conservatively 30 homes. That’s 750,000$. If that’s not enough profit to keep building, well, you now know the problem with our society.