Business & Finance

The actual people that built the house are averaging in the $10 per hour range. It doesn't take that many hours or people in all the different trades. The rest of the people involved are just a bunch of vulters making a mark up off of other peoples hard work in the form of unjustifyable income. In the end the expenses are extremely inflated.

Your question addresses 3 points: 1.) the real estate market 2.) the cost of building a house 3.) vultures profiting on real estate; and all within an emotionally charged statement

Regarding the "housing market" which is an average of several Bear and Bull real estate markets, there is a larger percentage of down markets then up so all assume the world is in turmoil. No two markets are the same. For example: Reading, PA home sales rose 6% while Miami, FL homes sank because of mortgage defaults and Los Angelos, CA homes fell because building costs couldn't keep up with Sale prices. I think in your questions you are asking if there was a "natural correction" in the market as a result of over priced real estate. The correction can be attributed to poorly underwritten loans and derivitive schemes. Real Estate prices, like securities, are based on supply and demand. With strong demand = strong prices. Now the cost of building and profiting from home building is entirely different issue.

The process of building houses, as with many businesses, incompasses the allocation of scarse resources. Normally a developer buys a large tract of land at so many $10,000's per acre. They then pay for water, sewer, electric, roads, and storm water managment. This can cost additional $10,000's per acre. After they get zoning approval and permits to building and subdivide (and spend more money) then have a aquisition and development cost basis that is pretty high. The Developer enlists a builder (a General Contractor) to come in and building the homes and charges a fee to manage all the sub contractors and allocate the proper resources and negotiate lower mark ups on materials (sticks and bricks) the labor is a small portion of the cost and alot of times is much higher then $10 / hour unless it is large scale construction or temp labor. So in all a $15,000 1 acre lot of land could be $150,000 to develop and build and everyone would want a profit to make the project worth undertaking thats where your new home price comes from...why spend a dollar if you can't make 2?

Market valuation is derived from finding "comps" which are similiar properties sold in a similiar area. The developer and building hope to acquire, develop, build the house for less then the market price and make a profit.

If builders are taking losses then I would say no the "market" is not really where it should be.

Again, each market is different... some houses are over priced but every one needs to profit so things make sense

Questions for you: the people making $10 / hr... who is going to manage them? Who is going to fund the project? Who is going to insure against a mechanic's lien? The mark up's are entirely justifiable. If I spend 4 years getting my degree in land development and constrution I want a return on my education and hardwork.

Take care