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Typically, real estate prices are based on "comps"- comparable homes in the immediate area. If there is nothing comparable in the area, it usually devalues the home (even if the home itself is very nice). For example, even if you have a 5,000 square foot mansion with vaulted ceilings, custom cabinets and Italian marble throughout, that home will be devalued if the next largest homes in the neighborhood are only 2,500 square feet and have none of those features.
In short, if he wants to build something at $200 per square foot (good luck staying in budget!), he should build in a neighborhood where homes are comparable to his project and sell for at least $200 per square foot. Or he can live there forever or take it in the shorts whenever he sells.
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