IMHO, you can build for a LOT LESS than $150 per square foot outside the major developments. So, the argument still holds true. Prices everywhere have a ways to go down.
I know this is off topic, but it may have some relevance. I built a home in Point Washington a few years back to try and spread some good will to two decent people. I charged them about $55.50 per square foot and broke even. That's got to be proof that the cost of construction is largely dependant on the cost of labor.
Some workers will welcome the opportunity to work at a fair rate when they want to provide for their family. This economy has humbled some of our neighbors.