I am part owner of a residential construction company. 3 guys, a truck and tool trailer, and a good list of subcontractors! We do both remodeling and new construction (currently finishing up a new home well north of 1 mil).
My brother and I were at the International Builders Show in February, and I can tell you that the term "affordability" is getting discussed heavily in the industry right now. I feel like with current costs we will see a lot more 1500-2500 sf homes than the 5000 sf monsters of years past, just for this reason.
For us, most of the increase has been labor. It's not so much that skilled labor is expensive, more so in my area that is just doesn't exist, at least nowhere near the level needed for demand. For the last 5 years or so I likely could have sold a solid 50% more work if we had the labor available, but we are very selective as to who we put in an occupied remodel. This problem has been coming for a long time, and the industry has tried to mitigate it to some extent, but unfortunately most kids are told they deserve a management or white collar role, so here we are.
You may look at those numbers and think they're outrageous, and 10 years ago they would have been, but if you are going to W-2 your employees, carry appropriate insurance, and build with sound practices that really is what it costs.
What should a 1-2 mil revenue a year contractor make? There's a lot of liability in running these kind of projects. It also takes a lot of admin work to keep a new house project on track. I personally don't think a $200,000 a year salary for a guy like this is out of line, having lived in that world. I don't personally make that, but it's on my mind as I'm setting rates.
I see the suggestion a lot of GC'ing your own, and this can be done, but a word of caution on that. Building systems are becoming ever more complex, and it's easier to get into moisture and air quality issues if you don't understand how systems work together. One of the biggest issues I see with this is a lack of understanding on the correct order for trades to move through the project. Another big issue is that there are a lot of little detail issues that fall between trades that we take care of as a GC. The customer likely never knows this is happening, and sometimes they simply don't get done when the homeowner is their own GC, and cause problems down the road. Finally, I have a really solid list of subs, and if you don't have an "in'' in the industry you might not even know who they are. The good ones often do very little advertising.....
Most communities still have a few really good builders, however, you will pay for them and you will wait for them. Good luck.
