I guess it depends on how you look at the numbers.

My current place would sell for say $1.4M or so.

The lot itself is worth around $600-700k if it was empty.

A similarly sized home would cost well over $1m to construct to similar quality levels - normalizing a bit for modern construction techniques and all that.

So about $2.4m to build new, or $1.4m to buy a fairly similar 25 year old home next door. New construction here costs more than the older structures on the land in most cases. This ignores permitting and financing costs which throws a light wrench into those calculations, likely making it a bit more expensive on the build side.

That is using numbers I would pay a custom builder for, but even if you add in 20-30% profit for the builder the math isn't super great for the new build end of things.