ᐅ Single-Family Home – New Construction Project from Day One – And the Planning Begins
Created on: 7 Feb 2020 22:54
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DaSch17
Hello dear community,
For the past few weeks, I have been following this forum and have already gathered some valuable tips for our own planning.
I would like to use this thread to keep you updated from the very first day of planning until moving in. I hope to receive some valuable advice from the community and that this thread can also serve as a guide for other first-time homebuilders.
Now, a bit about our building project:
As mentioned, we are still quite early in the process...
It all started, as it probably does for most, with requesting a catalog from a prefabricated house company. In our case, it was FingerHaus around mid-December.
This was followed by a phone call with a sales representative from the mentioned company and arranging a first consultation. This appointment is scheduled for Sunday, 09.02.2020.
Since then, we have been intensively working on budget planning, possible floor plans and building plots, as well as ideal typical living space layouts.
So far, we have not purchased a plot yet. However, we are in contact with a municipality that is currently planning an expansion of a new residential area. Fortunately, this allowed us to help decide the size, location, and shape of our future plot. Our desired plot is reserved for us.
Key details of our planned single-family home:
– Location: Southwestphalia, Siegen-Wittgenstein district
– Living area: 179 sqm (1,925 sq ft)
– Concrete slab foundation
– Gable roof
– 1.5 stories with gable roof
– Single garage with extended length for tools/storage room
Our budget:
– Plot including property transfer tax: 70,000 EUR
– Construction costs: 470,000 EUR
– Additional construction costs including earthworks: 70,000 EUR
Our schedule:
– By May 2021: Selection of the construction company
– By July 2021: Contract signing, building permit / planning permission application
– By July 2023: Completion of construction work
– By October 2023: Completion of owner-performed work (painting and flooring) and move-in
We understand that the start of construction depends on the delivery time of the prefab house company, which can vary between 6 and 24 months.
We have now selected 8 different companies with whom we want to conduct initial meetings:
– FingerHaus
– Hanse Haus
– SchwörerHaus
– Bien-Zenker
– Schäfer Haus (contact via family)
– Büdenbender Haus
– WeberHaus
– a local developer
After these initial talks, we want to proceed with more detailed discussions with 4 of these providers.
–––––––––––––––––––
What should we pay attention to during the initial meetings? What is particularly important? Should we disclose our budget to the sales representatives?
For the past few weeks, I have been following this forum and have already gathered some valuable tips for our own planning.
I would like to use this thread to keep you updated from the very first day of planning until moving in. I hope to receive some valuable advice from the community and that this thread can also serve as a guide for other first-time homebuilders.
Now, a bit about our building project:
As mentioned, we are still quite early in the process...
It all started, as it probably does for most, with requesting a catalog from a prefabricated house company. In our case, it was FingerHaus around mid-December.
This was followed by a phone call with a sales representative from the mentioned company and arranging a first consultation. This appointment is scheduled for Sunday, 09.02.2020.
Since then, we have been intensively working on budget planning, possible floor plans and building plots, as well as ideal typical living space layouts.
So far, we have not purchased a plot yet. However, we are in contact with a municipality that is currently planning an expansion of a new residential area. Fortunately, this allowed us to help decide the size, location, and shape of our future plot. Our desired plot is reserved for us.
Key details of our planned single-family home:
– Location: Southwestphalia, Siegen-Wittgenstein district
– Living area: 179 sqm (1,925 sq ft)
– Concrete slab foundation
– Gable roof
– 1.5 stories with gable roof
– Single garage with extended length for tools/storage room
Our budget:
– Plot including property transfer tax: 70,000 EUR
– Construction costs: 470,000 EUR
– Additional construction costs including earthworks: 70,000 EUR
Our schedule:
– By May 2021: Selection of the construction company
– By July 2021: Contract signing, building permit / planning permission application
– By July 2023: Completion of construction work
– By October 2023: Completion of owner-performed work (painting and flooring) and move-in
We understand that the start of construction depends on the delivery time of the prefab house company, which can vary between 6 and 24 months.
We have now selected 8 different companies with whom we want to conduct initial meetings:
– FingerHaus
– Hanse Haus
– SchwörerHaus
– Bien-Zenker
– Schäfer Haus (contact via family)
– Büdenbender Haus
– WeberHaus
– a local developer
After these initial talks, we want to proceed with more detailed discussions with 4 of these providers.
–––––––––––––––––––
What should we pay attention to during the initial meetings? What is particularly important? Should we disclose our budget to the sales representatives?
DaSch17 schrieb:
If the price doesn’t drop significantly, we will probably put the construction project on hold for 2-3 years and revisit it once the market has calmed down.
Yes, exactly. In 2 years, the situation will look completely different.
What makes you say that? Are you hoping the COVID lockdown will lower prices? I wouldn’t count on that. Any other trend that could bring down construction costs? I don’t see any, and I’m afraid that’s wishful thinking. Banks are unlikely to raise interest rates after the crisis. And I don’t think so many people will die from COVID that suddenly homes everywhere will be left empty.
kaho674 schrieb:
Yes, exactly. In two years, the situation will look completely different.
Why do you think so? Are you hoping the COVID-19 lockdown will lower prices? I wouldn’t bet on that. Any other developments that could reduce construction costs? I don’t see any, and I’m afraid that’s wishful thinking. After the crisis, banks are unlikely to raise interest rates. I also don’t think that so many people will die from COVID-19 that suddenly houses everywhere will be vacant. I take a fairly pragmatic view...
If even we, with a monthly household income of 7,000 EUR and a total budget of 610,000 EUR (7,000 USD and 670,000 USD approx.), can no longer build cost-effectively (meaning price and quality in a reasonable balance), then who still can?
Currently, more than 10 million people in Germany are on short-time work. Some will become unemployed after this period. The others will think three times before making such a large investment. Prices for new builds and existing properties will have to fall over the next 2-3 years. Supply and demand determine the price. And this does not yet take into account that interest rates could just as well rise again. Credit spreads are already increasing significantly due to credit risk. The interest rate level is currently being artificially kept at a low point. If the European Central Bank does not further tighten or even reduce its monetary policy measures (as required, see [BVG judgment]), the construction industry will be finished.
The sector has been addicted to the “low interest rate” drug for the last decade. Everybody knows what withdrawal does to someone. I could imagine a massive market correction in the medium term.
On the other hand, interest rates must continue to be artificially kept low in order to prevent sovereign defaults in Italy, Spain, and possibly France, thereby saving the euro and consequently our financial and economic system. The consequence of this would be that homeownership—especially new builds—in Germany will become an absolute luxury, meaning fewer and fewer people will be able to afford a modern single-family house... Again, the market mechanism “supply and demand determine price” applies here.
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saralina8726 May 2020 09:09We are building with a general contractor who manufactures the walls off-site (solid timber). For the house, we are at about 2,450 euros per square meter (approx. $270 per square foot) and have a relatively high standard with KfW 40 energy efficiency. We are not building in a remote area but rather in a relatively high-priced border region between Bavaria and Baden-Württemberg.
So, I think there should still be some room for price reduction!
So, I think there should still be some room for price reduction!
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BackSteinGotik26 May 2020 09:10kaho674 schrieb:
Yes, exactly. In two years, the situation will look completely different.
Why do you think that? Are you hoping the COVID-19 lockdown will lower prices? I wouldn’t bet on that. Is there any other development that could reduce construction costs? I don’t see any, and I fear that’s wishful thinking. After the crisis, banks are unlikely to raise interest rates. And I also don’t think so many people will die from COVID-19 that suddenly houses will be left empty everywhere. The direction of prices depends on the balance between optimists and pessimists. You are following the narrative where paid prices keep rising without limits, and this time the cycle never ends — the bulls. This prevailed for a long time, but now a black swan event has occurred, bringing fear and doubt. Why do the property managers keep reporting that prices on portals are still rising?
Because the other side, the bears, are coming. The pessimists simply see that the world is heading into the biggest economic crisis in decades. Because international investors are not building single-family homes. Because rental apartments are no longer really profitable in the current situation (even before COVID-19). Because rents will stop increasing. Because companies are no longer hiring people, as everyone is cutting costs. Everyone has to judge for themselves whether a 4% to 10% increase in costs or "value growth" is realistic, or more like a bubble.
Quite a bit has already been written about the price bubble (inflation).
By the way, deflation is when people delay purchases in anticipation of falling prices. You can imagine what that could mean for a highly speculative construction industry. There are already quite a few defaulting tenants in commercial real estate, and rental properties are also interesting in this context. Public sector demand as well. A stimulus package is okay, but what comes after that? The funds are basically empty.
And whether easy financing for 10 to 15 years for private buyers with little equity and income will remain as common as before is also yet to be seen.
saralina87 schrieb:
We are building with a general contractor who prefabricates the walls (solid wood) in the factory. For the house, we are paying around 2,450 euros/sqm (228 USD/sqft) and have a relatively good standard with KfW40 energy efficiency. We are not building in a remote area, but rather in a higher-priced region on the Bavarian-Baden-Württemberg border.
So, I think there’s still room for price adjustments! Thank you for your comment! I agree.
BackSteinGotik schrieb:
The direction of prices depends on the balance between optimists and pessimists. You follow the narrative where prices (paid) keep rising endlessly, there are no limits, and this cycle never ends – the bulls. They dominated for a long time, until a black swan appeared, bringing fear and doubt. Why do project managers keep reporting that prices on platforms are still increasing?
Because the bearish side is coming. Pessimists simply see that the world is heading into the worst economic crisis in decades. Because international investors don’t build single-family homes. Because rental apartments are no longer really profitable in the current situation (even before Corona). Because rents will no longer rise. Because companies are no longer hiring, and savings are being made everywhere. Everyone must decide for themselves whether a 4%–10% cost or "value increase" is realistic or rather a bubble.
Much has already been written about the price bubble (inflation).
By the way, deflation means people withhold purchases expecting prices to fall. You can imagine what this would mean for a highly leveraged construction industry. There are quite a few defaulting buyers in commercial real estate, rental properties are also interesting. Public sector demand as well. Economic stimulus programs are fine, but what comes after? The coffers are almost empty.
And whether easy financing for 10–15 years for private buyers with little down payment and income will still be common remains to be seen. I fully agree; see my post #123.
You’re welcome to wait for that.
The argument “if we don’t do it, who will?” pops up every two weeks in some thread.
By the way, this isn’t new; it has been complained about for five years or more.
You just have to consider when you want to have what from your house. If waiting 2-3 years and only then starting is okay for you, then go ahead.
Maybe inflation won’t rise either. It didn’t after the financial crisis despite bond buyback programs and low interest rates.
Maybe all the money around is looking for a place to go... and since there are no interest earnings, people prefer to continue supporting their children or grandchildren with house construction rather than paying negative interest (custody fees).
Maybe many short-time workers will return to work quite quickly because, with all the fiscal and monetary policy measures, the recovery may come sooner than expected.
None of this has to happen, but waiting can backfire as well.
By the way, it might not be luxury, but you are already in the upper segment. For example, the garage should not be included in the calculation of usable floor area.
The argument “if we don’t do it, who will?” pops up every two weeks in some thread.
By the way, this isn’t new; it has been complained about for five years or more.
You just have to consider when you want to have what from your house. If waiting 2-3 years and only then starting is okay for you, then go ahead.
Maybe inflation won’t rise either. It didn’t after the financial crisis despite bond buyback programs and low interest rates.
Maybe all the money around is looking for a place to go... and since there are no interest earnings, people prefer to continue supporting their children or grandchildren with house construction rather than paying negative interest (custody fees).
Maybe many short-time workers will return to work quite quickly because, with all the fiscal and monetary policy measures, the recovery may come sooner than expected.
None of this has to happen, but waiting can backfire as well.
By the way, it might not be luxury, but you are already in the upper segment. For example, the garage should not be included in the calculation of usable floor area.