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How Much Does a New Custom Home Cost?

The question “How much per square foot?” is the number one query I get from prospective clients. This makes perfect sense in that folks want to get a broad initial measuring stick with which to gauge the competitiveness of various builders.

Unfortunately, it is also one of the few questions that I simply cannot answer without a lot of other information. For example, can you tell me how much it costs (per day) to take a vacation? How much does a new car cost (per cubic foot)? What is the "average cost" of a dinner for two, or how much will a new laptop cost (per GB of RAM)? For $12, I can deliver you a “nice meal” for two, but it may not be what you had in mind.

The answers to the above questions are impossible for anyone to answer accurately without first asking many additional questions and gathering a lot more information. The same is true, even more so, when calculating the cost to build a new home of a specific type, or size, or quality level, at any given time, in a specific location. I can tell you what the “average cost” per square foot is for new construction (already finished, or being constructed) in the Multiple Listing Service, but this may bear no relationship to the home you want in the neighborhood you want to live in. Before you put too much faith in "average" numbers, keep in mind that the only house that you really care about is the one that you are about to build.

Let's start by considering what square foot costs really are — nothing more than the total cost of a home divided by the total number of square feet in that home. So, a 2,500 square foot home with total costs of $275,000 would cost $110/sq ft to build. Spend another $50,000 on a gourmet kitchen, an elegant master bath, marble tiles in the foyer, a fancy curved stairway, 10 foot ceilings, or any other combination of "above average" features or finishes and the price jumps to $325,000, but the square footage didn't change. So now, that same 2,500 square foot house would cost $130 per square foot to build; an increase of over 18%.

Now consider the structure itself. A simple one story perfect square home will be the least expensive to build. The more you elongate the exterior walls relative to square footage, the more expensive it gets. For example a 50 'x 50’, 2500 sf home with 8’ walls has 1600 gross square feet of exterior wall. If the same 2500 sf home is 70’ x 35’-4 1/2”, it now has 1691 GSF of exterior wall. Make the walls 10’ and the wall area is now 2114, an increase of over 30% in one of the more expensive components in a home. Add extra building corners and complexity of roof and you get the idea. And don’t forget “unfinished” square footage. Is there a garage? How about a large wrap around porch and/or a screened porch? “Unfinished” or walk-in attic space? All of these things have costs that can affect the $/sf.

Just a few of the other variables that come in to play: What are the exterior finishes and level of detail? Brick? Siding? Vinyl soffit or painted wood? What brand and type of exterior windows and doors? How much hardwood? Tile? Plumbing and electrical fixture choices? Trim levels? Solid wood doors? etc, etc.

Unfortunately, the only way to be sure that your homebuilding budget is reasonable, is to identify and price every item that will be used to build your individual home and bid all of the associated subcontracts and labor costs. Of course, in order to do that accurately, you will need to have plans and specifications, and a complete and thorough estimate for your individual project must be done. The obvious problem here is that not many people want to buy multiple house plans and then spend weeks or months pricing them in order to determine which one(s) they can afford to build. So, a more realistic approach to determining how much your new home will cost might be to simply work backwards. Start by determining how much you can afford to spend, then be realistic about the size of the house you need, and finally, decide what and where you can afford to build.

To my knowledge, I am the only builder in this area who charges for my comprehensive construction bids. What you get is a complete and transparent view of the actual costs of a new home in order to make value decisions based on true costs. I work with my clients to find the right balance of wants, needs, and reality in order get a custom home that really fits. This bid cost is credited back towards home if I get the contract to build. What I get is a client who wants to work with me in a competitive market without the shell game. I am glad to meet with prospects and offer opinion and ballpark numbers at no charge in order to “try out” with prospective clients. I really believe I have some of the happiest and most loyal clients in this business, because our relationship starts with blunt honesty and continues that way through the entire process.

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