I have asked myself this question many times. As a realtor and real estate investor who has remodeled several homes and come very close building a spec home on several occasions, I have to say it's not as simple as one may think.
First, as you mentioned, current property values are still low, much lower than builders need it to be before they can build and turn a profit when they sell. According to my builder contact, the price per sq ft to build a standard home today is about $125 to $150 a sq ft.
If you were to build a 2000 sq ft standard home (mid range finishes) would probably cost you between $250K to $300K and the $100K for your lot. Based on these figures, your total would be between $350K and $400K for a brand new home, and about 1 1/2 years to complete (from permits to final CO).
Your other alternative would be to find a newer home (20 years old or less) and remodel it. This takes less time, is an easier task to oversee, and the total cost may be less than building a new home. If you go this route, make sure you contract a reputable, licensed and insured contractor who will pull permits for everything.
So, to answer your question, it really depends on your needs and how much time you are willing to devote to the project. As for the cost, in both cases, it will mostly depend on how much you are willing to compromise (less or more) in the quality of the finishes you chose for either project. And, finally, how soon do you need to be in your home.
I realize that it's going to take some time to find an existing home. Maybe you need to lower your expectations. I would suggest that you look for the best location and property lot size (7,500 to 10,000 for a 2000 sq ft home). Don't worry so much about what the improvements (building) looks like or its size as long as there is room for an addition. You will be amazed at what a reputable professional can do with an existing property.
If you would like to discuss this further, you may contact me at 786.302.0351 or email me at juan@insideMIAMIrealestate.com.
Juan Sanchez - Broker Associate - Real Living FSR - Coral Gables, FL USA