On this page:
- Estimating the Cost
- Build or Buy?
- The Basics of the Bottom Line
- Decisions and Plan
- Preparing to Build a Custom Home
- Cost Comparisons
- Level of Difficulty
Building a new house is the best way to customize a home to meet your needs and fit your taste. In many cases, the planning phase of home building actually lasts much longer than the construction process since there are countless decisions to make and details to attend to in order to ensure the finished home turns out to be everything you imagine.
In addition to the planning and daydreaming, though, there is land to buy, permits to secure, contractors to screen, plans to produce, and a thousand choices to make. A homebuilding project can last several months and be very time-consuming and stressful.
One essential way to streamline the process and minimize problems and confusion is to work with a contractor you can trust. Since good communication is vital to the success of a major project like this, hire a contractor with whom you can be confident so you will be comfortable asking questions, discussing your options and budget, and dealing with issues as they arise.
Estimating the Cost of Building a Home
How is New Home Construction Estimated?
The size and layout of a home are the first considerations in estimating the cost of construction. These details help contractors determine the basic construction materials required to build the house and make it weatherproof, and give a preliminary indicator of the complexity of systems installation, such as wiring, plumbing, and HVAC. With the scope of the job known, a pro can estimate the manpower required to complete the build in the expected timeframe and price the materials needed.
How Can I Get a More Specific Estimate?
Since the requirements for basic construction, such as framing, insulation, drywall, roofing, siding, doors, and windows are relatively consistent, most contractors can provide a rough estimate for the construction of a typical house based on your location and your description of the home. In order to get more specific pricing, details about your finish preferences and material choices must be considered, as well as the actual plan or blueprint for the structure. Upgrading from builder-grade or economy materials to higher-end building and finish materials such as siding, roofing, doors and windows, flooring, cabinetry, and fixtures will quickly elevate the overall price of construction.
How Much House Can I Afford to Build?
Since every aspect and feature of your home will affect the total cost of construction it is difficult to know how much house you can afford to build. Though the price of any custom house build will be unique, and your location is a very significant factor in the cost of construction, there are general ranges a local contractor can refer to in order to give you an idea of what the home you have in mind may cost.
How is the Cost of New Construction Calculated?
New construction pricing is often presented by the square foot or by the number of rooms in a home. This type of pricing provides consistency for real estate marketing purposes, but is a reflection of the average cost of building various styles of homes in a given location. Since the overall size, customized layout, wiring, plumbing, HVAC, and finishes of a particular home comprise its total cost, you won’t be able to get a precise estimate in the early stages of planning your home, but you should be able to find out the average per-square-foot price for new construction in your area so you have a starting point. With various influences on pricing the typical range is broad, from as low as $80 per square foot to over $300, not including the cost of land.
How Can I Finance Building My Home?
Financing new home construction is different than typical mortgage lending as well. Be sure to understand the lending and dispersal process and plan for funding the acquisition of land as well as the construction of the home. Managing construction loans is more complex than simply closing on the house when it is finished, so work closely with your lender to avoid delays and shortfalls.
Why Does My Location Matter?
As with most things in any location, the cost of living directly affects the cost of construction. Prevailing wages, the availability of skilled workers, and local and state regulations for licensing and insurance directly impact a contractor’s cost of doing business. More practical issues such as site accessibility and parking, weather conditions, the availability of materials, and local code requirements also influence the cost of construction, since they affect the time, skill, and construction methods required for a project.
In What Areas is it Most Expensive to Build a Home?
Because of these issues, it is common for costs to be higher in urban areas than in rural places, and higher in climates where the building season is limited to fair weather months than in places where construction can be carried out year-round. Also, the expense of materials is often greater in remote locations where access limits the delivery of supplies, and environmental regulations can make building near any waterway quite expensive.
Build or Buy?
The Beauty of Customization
Perhaps the most popular reason for homeowners to build a custom home rather than buy a finished one is so they can have it built to their specifications every step of the way and have it in the location of their choosing. The more complex the layout and roof line of a home are, the more it will cost overall, but there are few limitations to designing a home to suit your needs, taste, and lifestyle. From cosmetic touches to HVAC technology, specialized accessibility, or low-maintenance exterior finishes, you can specify virtually every aspect of a custom built home.
How to Customize Your Home
Even in planned communities there is a great deal of opportunity to customize a new home to suit your preferences. Moving into a house built to your specifications is generally more expensive than purchasing an existing house, but eliminates the need to take on disruptive renovations soon after buying.
The Reliability of Something New
Near the top of the list of reasons to build instead of buy is the low initial maintenance requirements and assurance of code compliance. Every home requires some maintenance throughout its life, but many homeowners opt to build instead of buy so they will have the assurance that all materials and systems are new and warrantied, minimizing the likelihood of having to make expensive improvements or repairs in the short term.
The Proper Permits
Since new homes are inspected at virtually every stage of the construction process, homeowners can be assured that their newly built house is properly permitted and meets local requirements for safety and quality of construction so they won’t have to worry about repairing or improving previous work that may not have been done to code standards.
The Security of a Good Investment
Like any investment, it is important to make sure the real estate market in your area will support the type of home you plan to build and the level of customization you intend to incorporate. When properly planned for its market a newly built home is nearly always a profitable investment immediately, while it’s not always certain that improving an existing home will provide an adequate return on your investment in a short period of time.
The Basics of the Bottom Line
Location, Location, Location
Unless you are building a home in a planned community, choosing the right site can be a challenging part of the process that is completely separate from construction. Whether you plan to build on a city site, in the suburbs, or out in the country, land must be acquired before construction can begin, and the features and location of the site can affect the difficulty of connecting to power and local utilities, where applicable, or drilling a well and building a septic system where municipal services are not available. These important steps require proper planning and permitting and must be addressed before construction begins. Additionally, the features of the site may influence the ease and cost of building your home’s foundation.
Who’s in Charge?
General and building contractors are the top-level coordinators of a home build, and their job includes securing permits, overseeing inspections, hiring and paying subcontractors, scheduling phases of construction efficiently, and providing materials as needed throughout the job. Hiring a general contractor (GC) can add up to 15 percent to the total cost of construction, but can save you many hours of screening and hiring subs, dealing with your code enforcement or building authorities, scheduling projects logically, and ordering materials as each sub requires.
Being Your Own GC
If you choose to act as your own GC you could stand to save a respectable sum, but be prepared to sacrifice a great deal of time and energy coordinating the project. Homeowner-contracted builds also tend to take longer than GC builds, simply due to the learning curve a non-professional must overcome to learn the process as it is underway.
What’s in the Plan?
Although building a custom house is your perfect opportunity to add every detail that will make it your dream home, it may not be practical to go all-out right away. Carefully consider what are must-have features and what are things you can add or upgrade later if they are stretching the budget now. It makes sense to plan the most effective layout and size possible and use the highest quality materials you can afford when it comes to framing, siding, insulation, roofing, windows, and doors. However, if your desire for granite countertops, hardwood floors, and custom window treatments are tempting you to cut short the structural budget, consider what you can upgrade later in order to ensure you have the highest quality build you can.
What to Do Now and What to Do Later
Changing paint colors, upgrading light fixtures, adding crown moulding or wainscoting, and similar cosmetic jobs can be done easily down the road, saving quite a bit on the initial price of the home. Replacing flooring, cabinetry, and counters is much more disruptive, but the choice between wood and carpet on the floors or between granite and laminate for counters can change the initial costs substantially. The level of finish you choose for your house can have a major influence on the total cost of your home, changing what might be a $100/square foot project to a $200 one in no time.
Decisions and Plan
From the Ground Up
Among the countless details you will need to address while planning and building your home, the foundation is often overlooked as the essential starting place. The ground conditions at your site will influence how difficult and costly it will be to prepare an appropriate foundation and local codes will define the minimum requirements for safety and stability, but the type of foundation you choose can have a big impact on the bottom line of the project. A slab, crawlspace, or pier foundation typically costs several thousand dollars less than a full basement, but a full basement can provide extra living space and increase the value of the home. Be sure to consider all the foundation options that are appropriate for the style and size of your home as well as your location and climate.
Keep Maintenance in Mind
Maintaining the exterior of your home will be essential to prevent damage from the elements, so be sure to consider maintenance requirements as well as aesthetic appeal when choosing materials for the outside of the house. Vinyl siding is generally the least expensive option and requires little maintenance, but generally doesn’t provide the same character and depth as more expensive materials like wood, stucco, fiber cement, or even wood composites. Likewise, asphalt shingles are an economical and lasting roofing product, but a higher-end material like concrete or clay tile or natural slate could last a lifetime—though it will cost several times as much as asphalt.
Behind the Scenes
The often unseen systems in a house are some of the most vital components needed to make the home comfortable and functional. Be sure to choose a heating and cooling system that will operate efficiently and is sized appropriately for the home. Consider your fuel choices and maintenance requirements, and don’t underestimate your needs. Installing an undersized or lower-quality system may be less costly up front, but can lead to higher energy bills and inadequate heating and cooling. Likewise, carefully plan the location and features of your plumbing and wiring systems, since upgrading later can be very costly.
Hundreds of decisions about the interior of your home will affect the bottom line of your construction project, from the appliances, flooring, and cabinets you choose to whether your trim work is painted or stained. When budgeting for finish materials, remember that synthetics are generally less expensive than natural materials, and custom products are always more costly than stock items. For example, a vinyl, laminate, or carpeted floor could be half as expensive as solid hardwood, natural stone, or tile and solid wood custom cabinetry could cost several times more than those built with particle board.
Preparing to Build a Custom Home
Planning is Everything
The homebuilding process can be long and stressful, so the most important steps for homeowners are often taken during planning. Take the time to educate yourself about common building practices in your area, financing options and processes, property values in the towns or neighborhoods that interest you, and what type of house, features, and finishes appeal to you. The more details you can address up front the more confident you will be throughout the process, which can minimize stress, confusion, and delays when working with contractors throughout construction.
Since building a home is an enormous undertaking and most homeowners are not well-versed in managing the construction trades involved, hiring a pro you can trust is essential to make the job run smoothly from start to finish. Request estimates or bids from several contractors or builders in your area so you can become familiar with pricing norms, get multiple recommendations for the project, and screen for pros you will be able to communicate with well.
Trust Your Instincts
Don’t discount the importance of your personal reaction or impression of each contractor; you will need to work closely together for several months, and having a comfortable relationship is important to the success of the project. Verify that any contractors working on your home are properly licensed and insured and be sure to have any bids, contracts, change orders, and warranties in writing.
|$142,000 - $200,000||$214,000 - $300,000||$360,000 - $700,000|
Since there are endless combinations of features and finishes that will affect the cost of a custom-built home, it can be hard to develop a frame of reference for your own project. Consider a few scenarios that illustrate how location, construction methods, and level of finish can affect the price of construction. Building a 2,000 square foot house with 2.5 baths, eight-foot ceilings, and the same layout plays out quite differently in various scenarios.
House 1: $142,000 - $200,000
- • Location: Built in an area with a lower than average cost of living such as rural Wyoming, the cost of labor for construction is considerably less than in more densely populated places.
- • Foundation: Choosing a slab foundation rather than a full basement foundation reduces the cost of basic construction. However, the potential for expanding living space is limited without a basement, so the value of the house is less than a comparable one with a full basement, or even a crawl space.
- • Kitchen: Modest finishes in the kitchen, such as basic appliances, laminate countertops, stock veneer cabinets, and vinyl flooring keep costs low in one of the most complex rooms of the house.
- • Finish Materials: Like the kitchen, builder or economy-grade finishes throughout the house result in lower material costs. On the outside, vinyl siding, metal roofing, and standard windows and on the inside, paint-grade trim with basic elements and a simple profile, economical carpet, laminate, and vinyl flooring, and low to mid-grade bath fixtures are typical of a home in this price range.
House 2: $214,000 - $300,000
- • Location: A cost of living closer to the national average in a place like suburban Indiana influences the expense of labor, bringing it higher than in lower-demand areas.
- • Foundation: A full foundation brings higher costs from both labor and materials, but increases the value of the home and creates the opportunity to expand living space by finishing the basement.
- • Kitchen: Mid to high-grade appliances and finishes in the kitchen quickly increase the bottom line. Choices like solid wood cabinets, solid surface counters, specialty sinks, and tile floors are common in homes of this type.
- • Finish Materials: Fiber cement or natural wood siding, high-efficiency windows, and lifetime asphalt roof shingles on the exterior set a house in this range apart from an economy option. For the interior, hardwood floors, paint grade trim with extra features such as chair rail and crown moulding, and mid to high-end bath fixtures are common in this class of home.
House 3: $360,000 - $700,000
- • Location: A home built in a densely populated city with a high cost of living such as Boston, Massachusetts will carry higher than average costs all around, including labor, materials, and permits.
- • Foundation: Taking a full basement foundation to the next level by finishing more than half of the level’s square footage instantly increases available living space and the home’s value. This extra space comes at a premium price tag, but is often done most economically at the time of construction.
- • Kitchen: A home of this caliber includes a high-end kitchen that borders on professional grade. Top-of-the line appliances, solid wood custom cabinetry, natural stone counters and tile floors, and nearly all manner of convenience can be found in the kitchen of this home.
- • Finish Materials: Brick siding, custom windows and doors, and elaborate trim details might characterize the exterior of a high-end home. Top-quality finishes can be expected on the inside as well, such as hardwood, tile, and stone floors, custom bath features, stain grade trim in complex styles, and custom staircase and railing systems.
Level of Difficulty
Coordinating a new home build is a complex job that requires good organizational and communication skills and a sound knowledge of residential construction and local building codes. Acting as your own general contractor can be very rewarding, but also very stressful and difficult; in addition to making all the decisions required for the project as a homeowner, you will be responsible for ensuring they are carried out properly and filling in the gaps when needed. Overseeing a major construction project is an advanced-level job so if you are not up to the task, take the time to choose a quality pro you can trust.