Construction Price Drop?

[Bob Orts]

For the first time in a long time, I'm seeing construction prices drop here on the mainland.

What was 2 years ago quoted at $X, take it or leave it, we'll get to it when we do, is now a third less with a we can start now cause we're camped outside and we’ll even do the laundry, walk the dog and visit your mother-in-law for you.

Even the large home improvement stores, who from time to time would run out of certain material last year, now have a yard overflowing with lumber. The contractor’s only checkout is now the empty express lane. Prices are actually lower today that in the past years.

Those contractors who 2 years ago at the home shows required a credit check and first born just to get their business card let alone talk to them are now throwing themselves into the aisles. Where before you had to beg for info and all you got was a flyer, now they are handing out bags of promotional goodies to stop you so they can try and solicit your business.

When you exit the highway to find a group of guys with their trucks, ladders, tools holding a sign saying “Will Remodel for Food” makes you start thinking…

Is this trend starting to show on the BI?

[John S. Rabi]

I don't see any price drop in Kona and I believe the GCs are still bidding $110 to $130/sq.ft. for a "regular" home on the East side. (That's double the price from seven years ago.)

Aloha,
John S. Rabi, ABR,CM,CRB,FHS,RB
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[Genxor]

Currently , everything remains the same.

New homes continue to pop up & lots are cleared.

Depending on where you are on the mainland, I know things are still slow. My parents, in Fredericksburg Va , said that Ryan Homes had an auction for a select number of their unsold homes. The normal selling price was 700k, at auction they were asking 389k. But again, only a few to auction at that price.

Puna continues to tick along ......

[Hotzcatz]

I'm seeing less requests for drafting and most of it is for smaller homes or renovations instead of new big houses. When they go to find quotes for construction work, they quickly get quotes back from multiple contractors. Before they had a hard time finding one quote, let alone getting it quickly.

All of the folks getting drafting done in the past year and a half - actually almost two years now have been intending on living in the house or renovation - no spec building at all. Many of them are building on "kitchen money" or bit by bit as they go along, not getting a construction loan at all.

I'm expecting house prices and construction costs to continue dropping until 2009 or maybe even later. Once these sorts of trends start, they continue going for awhile. It is sort of self-feeding, too, since a lot of the previous frenzy was fed by the rising valuation of houses. People had a $70K house, the values went up to over $150K (for the exact same house!) so they refinance get a big chunk of change and go buy a new truck, go to Vegas, put the kids through college, etc. They spend all the money, the value of the house continues to go up to $400K, they refinance the house and get an even better monthly payment by getting an adjustable rate this time since they plan to refinance before the rates go up. But, OOOPS! The house value doesn't keep going up, it is dropping! Meanwhile, the interest rate is now double, and they are doing everything possible to now make the monthly payments. They can't refinance because not only is the value of the house less than they owe, but since the implosion of the sub-primes, the financing requirements have tightened up.

Price of gas is going up, price of food is going up. Amount of foreclosures are going way up, too.

The last land tax sale wasn't very well attended and the lots didn't sell for over market price like they did at the tax sales at the height of the construction craze.