THE ULTIMATE LBI BUYER’S GUIDE

Does Building a New Home in the LBI Real Estate Market Make Financial Sense?

As a buyer in the LBI real estate market, let’s assume you find a nice 50x80 lot on the oceanside in Long Beach Township. This lot will cost about $1,100,000-$1,500,000 in the current market and can accommodate a well-designed 2,200 sq. foot house with large decks. This house will cost about $900,000 to build (with a pool), making the total project cost about $2,000,000-$2,400,000.

Similar new construction oceanside homes will sell for about $2,500,000-$3,200,000, so it is easy to see how building a new home can create instant equity and appreciation in the LBI real estate market! New construction is the way to go if you are looking for value in the LBI real estate market!

New Construction in the Long Beach Island Real Estate Market

Building a new home on Long Beach Island offers many advantages over buying an existing house. New construction will allow you to design and customize the house to fit your needs. Building a new home will often see immediate equity, as the finished home should cost much less than buying a similar home in the market.

Building a house involves:

• finding a suitable building location with the correct lot size and setbacks

• planning the new build and knocking down the existing house

• constructing the new dwelling under local codes in the LBI real estate market

• The process takes about a year on average, from finding the lot to designing the new home and finishing construction.

Since few vacant lots are left on LBI, most new construction occurs by sourcing an older, obsolete home and demolishing it.

Building a new house in the LBI real estate market will typically take 8-9 months, plus the time it takes to design the home. From start to finish, the entire project should take about a year or so. While this is an investment in time, the advantages of building a new home are numerous. When the right lot is sourced, and the right home is built, there should be a roughly 20%-25% equity position in the project. To put that into practical terms, if you spend $2,000,000 on a project (for the purchase of land and building of the house), this new home should be worth around $2,500,000 in the current market. Designing and building your own home will also allow you to select the best features for you. This may include additional bedrooms and bathrooms, larger decks, or custom details that make it your own. There are many ways to finance new construction depending on the type of project and your personal financial situation. Many banks offer construction loans, some of which may be refinanced into permanent, fixed-rate loans. I can get you in touch with local lenders who offer these products.

Lot Sizes and Locations When Building a New Home in the LBI Real Estate Market

The size of the lot and setbacks will determine how much can be built. Generally, anything smaller than 40' in width will require a variance from the town, but even these smaller lots can accommodate a well-designed and attractive home. That said, a wider lot usually allows for more flexibility in the new home's design. Throughout Long Beach Island, most side yard setbacks are 4' and 11' feet. This means a 40' lot would most allow a 25' wide house, and a 50' wide lot would allow for a 35' wide house. The extra 10' in a 50' lot allows for much more space and flexibility, something that is highlighted with wider lots. On Long Beach Island, most lots are between 75' and 100' deep. The depth of the lot is not as critical as the width, but depth is still very important. Many homeowners are looking for a pool to be incorporated into the home's design, so you need suitable lot depth. Ideally, it would be best to have a 75’-100' deep lot, as it makes it far easier to incorporate a pool into the build. It is best to have at least a 20-foot deep rear yard to accommodate a pool, but smaller lot depths can also manage a pool.

The location of the building lot on Long Beach Island will determine the price and the home's future appreciation. Typically, oceanside, oceanblock, and oceanfront locations will hold their value better than bayside homes in the LBI real estate market, but they will also cost more to purchase. Regardless of the location, you want to ensure that you do not "over-improve" a lot. This can occur by spending too much on the new house relative to the home's future value.

The construction cost will depend on the house's size, the installed finishes, the design of the home, and the overall market conditions. Quality new construction should cost about $300-$350/ square foot, not including landscaping. This budget should allow for Anderson windows, hardwood floors, granite countertops, and other finishes typically seen in the LBI real estate market. The size of the house will also influence the final cost of the building project. For example, a 1,000 sq. foot ranch-style house will cost much more per square foot than a 2,000 sq. foot house. This is due to certain "fixed" costs such as plans, permits, and demolition increasing the price per square foot cost of a smaller home. There are a number of builders and finish packages on Long Beach Island, all of which price differently. I can connect you with local and trusted builders so you can better understand the cost of building a new home in the LBI real estate market.