What does it cost to build a house in Plumas Lake and are the builders/developers “making millions”? Recently, there have been some comments about developers (moving forward) paying 100% of the cost of schools, or other community infrastructure, given the “millions” they are making off home buyers in the community. Based on these comments I thought it was important for community members to understand what some of the costs are and what developers/builders are paying.
COST: LAND
A developer/builder must pay for the land to build the subdivision. They may have owned it for a long time, or they might have purchased it recently. When it was purchased might make a big difference on the overall cost (and feasibility) of the project.
COST: SUBDIVISION INFRASTRUCTURE
A developer/builder must pay to put in infrastructure in the subdivision itself. This includes roads, sidewalks, drainage, and utilities (such as water, wastewater, and more).
COST: BUILDING PERMITS & IMPACT FEES
In addition to about $5k in building permits, developers/builders are paying almost $90k in impact fees to local government agencies to offset the cost of their development on shared community infrastructure (such as schools, parks, major roads, fire service, water treatment, wastewater treatment, drainage, etc). While a developer/builder may voluntarily pay more (like they do through development agreements with PLESD), the law limits these fees to the specific impact that the house causes. [in other words, a new development can only be required to pay for its specific impact on the need for a middle school or high school that serves the full community. How many students from that neighborhood are expected to attend a high school or middle school? That is the share of total costs that they can be required to pay].
COST: CONSTRUCTION
The most expensive portion of building a house is the labor and materials to build it. Sources vary, but $200 sqft seems to be on the low end (according to google) for the Sacramento area. That means for a 2000 sqft house, it would cost about $400k to build it. If we add up just construction costs and impact fees, we are almost at $500k, and that doesn’t include land and infrastructure costs. I would suggest that the profit margins are smaller than people assume and if a developer/builder isn’t going to make at least a small profit, a project will not move forward until such a time that costs are sufficiently less than the anticipated sales price.
