What Is My Home Worth? Market Value vs. Reconstruction Cost - Part 2

Why is reconstruction (insurance rebuilding a property) more expensive than new construction?

1. Economies of Scale - It costs more for a contractor to build one home at a time because materials are not purchased in bulk. A single household item that matches the one that's been destroyed will nearly always cost more than if it had been part of a larger purchase.
2. Top-Down versus Bottom-Up: Repair work for a partially destroyed home is done from the top of the home down as opposed to from the foundation up. This is more time consuming and labor intensive.
3. Demolition & Debris Removal - This step is necessary before construction can begin and adds to the total cost.

See reasons 4-6 in our next post.