At this point, I think we can retire the term “dirt cheap” when talking about… dirt.

Particularly, when it comes to the price of “dirt” (vacant lots or tear-downs) in Birmingham, Bloomfield Hills, and other coveted Metro Detroit suburbs.

So how does someone looking to build a home for themselves afford land, when competing with builders who are scrambling for inventory?

Overpay (but, by less than you’d think).

The process starts with the price of the land, because what the builder pays for the lot, will go a long way in determining the price of the home.

LOFTY LOT COSTS DRIVE UP BUILDER SPEC PRICES

The numbers will vary from location to location, but the formula remains pretty much the same; builders know how much they can spend on the lot in order to stay profitable, based on home values in the area. If they go above it, they’ll likely lose money in the end.

However, someone looking to build for themselves, isn’t necessarily dealing with the same constraints; it’s how Mat Ishbia can spend $70M to build a house for himself - he doesn’t need to profit off of it (at least, not initially) so he’s limited only by what he wants to spend.

Westchester Village in Bloomfield Hills is a great example. Currently, the ceiling for a builder spec home in that neighborhood is around $2.5M, though a couple of builders are likely going to push $3M this year.

Which means their lot costs can’t go much past $700K, or it’ll be hard to turn a profit - especially with the finishes and upgrades expected at that price point.

Now… if you went in at $725K or $750K for a lot in that neighborhood, but kept your the budget for the house “reasonable,” you could probably walk away with a home that has the personal touches you want, below the cost of a builder spec.

Most custom builders in the area currently charge $400-$500/sqft; for a $3,000 sqft house, on a $750K lot, even on the higher end of that range you’d still be below the current $2.5M price tags in the neighborhood.

With a builder like Lombardo Homes, using their “Anywhere Lombardo” program which offers a collection of their existing floorplans for a set price (but with very limited customization), you can save even more.

Their 3,000 sqft Princeton floorplan for example, comes in at under $420K; factor in the lot cost and you’re still under $1.5M.

So whether it’s $3M spec homes in Bloomfield Hills or $9M spec homes in Birmingham, don’t be intimidated by those prices, because you don’t have to spend that much to get a beautiful new home in those areas.

Let’s connect to discuss what you are looking for in a new home, and how to make it happen!

Pictured at top: fun with drones.

The owners of The New Home Experts®, have over 40 years of combined experience in real estate, including time with builders like Pulte & Toll Brothers.  They also provide market research for area builders, developers, and national firms.  If you’re considering a new home, remember: the builders' rep represents the builder, not you.  Work with the only local agents in Metro Detroit to specialize in new homes, and save money in the process – ask us how!