How Much Does It Cost to Build a House?
The average cost to build a 2000 square foot house in the U.S. is about $300,000, but with multiple variables, the price of the home could range from $150,000 to $450,000 because of the square footage and the cost per square foot. The variables depend on the budget, the location of the property, the method of building, and the materials needed to customize the house into the home of your dreams. For many who aspire to build their homes from scratch, a significant amount of considerations need to be made before even getting started.
Calculating the Costs Before You Start
Before investing your money into building a home, you need to know what your budget can allow, what your property can work with, and what regulations your local and state governments have for building your home.
Purchasing the Property – If you haven’t purchased a property yet, then you need to find a real estate agent to negotiate and find the piece of land you want. Good agents will keep track of the latest areas that have the most benefits, such as open space, nearest attractions, and current selling prices of neighboring homes. Finding a piece of property that can help you build appreciation value overtime will tremendously increase your chances of a sale in the future, but if you plan on living on your land permanently, then working with your real estate agent to find a property will suit you the most.
Give yourself a Time-Frame – Building a home from scratch can take longer than purchasing a built home if you don’t plan right. While the process of purchasing a home can be daunting due to all of the contracts and waiting periods, custom-built homes can take up to a year or more to complete. If your current living situation isn’t all that cozy, then the wait can be excruciatingly uncomfortable and stressful.
Understand your paperwork – Look at the contracts you sign and understand that potential extra costs can arise right from the beginning if you aren’t aware. Builder contracts tend to take advantage of the customization plans you intend on having for the home and can charge extra for those benefits. Builders also can misinterpret your ideas and situate specific designs of the house in places you never intended. If disagreements arise, in worse case scenarios, then court situations could arise, taking out more time, stress, and money than necessary.
Know your local regulations – Choosing the property can be an enjoyable experience; you’ve found the perfect location to begin your dream life. If you’re new to the location and plan on building, then head over to your local government office or read up about city laws and regulations regarding zoning and building regulations. For instance, if zoning laws require you not to burn items in your backyard, then having a stone, encircled fireplace outside might not be the best addition to your home.
Make a Budget – If you know you have the income to support building a home, then plan out everything you intend on purchasing a year or two ahead of time. Because of how much homes cost in today’s real estate market, establishing a budget can make all the difference and give you a realistic outlook on what you need to supply to your builders. Having a successful job and a high annual salary will provide you with the opportunity to save up money for this dream. Most people don’t have huge budgets readily available. Loans, on the other hand, can help establish a quick budget based on your credit card history, your assets, and personal income information towards your customized home. At Neal Business Funding, we can help you achieve your dream home by providing the money you need.
Planning your Home-Building Project
So, what do you need to consider when you’re worried about how much does it cost to build a house? To help prepare for your home-building extravaganza, we’ve outlined some necessary costs that go into making a house so you can plan what you need with your budget and work with your builders through all the stages of the process.
The Costs Broken Down
Site Work: $9,000 + $5,000
Purchasing the property requires you to have site work done, such as inspections, permits, and building plans so you and your contractors can prepare for the construction of the home. The most expensive costs will be the sewer and water inspections, typically ranging around $5,000. For building permits, those will cost about $4,000 to obtain, already cutting about $9,000 from your budget.
Designing the layout of the home will take about $3,000 if you work with a high-end architect or engineer, and the government will require an impact fee of $2,000 to pay for public road services and water treatments.
Foundation work will require excavating the ground to make it level. Depending on what’s below the soil, excavation costs can go up, especially if what’s below requires extra labor than initially planned. The foundation will need heavy-duty equipment and professional operators to assure that the land is level for work. The foundation will require lumbar and concrete, and depending on the construction plans, such as stilts or a basement, then the foundation could cost more. Thus, the foundation typically costs about $25,000 on average.
As one highest cost of the home, the frames will make the bones of your house stand and typically take a lot of lumber to complete. Any trusses will cost extra, and additional sheathing will bump the budget up, even more, making it cost up to a total of the costs reign in up to $45,000.
Exterior Finishes: $15,000 + $17,000
The exterior walls are just as expensive as the foundation, as it covers the perimeter of your home and requires a lot of materials. The walls help to support the roof and structure of the house and prevent outside weather from getting inside. The walls themselves will cost around $15,000, and any exterior finishes will cost extra, about $17,000, to install openings throughout the home and finish on the roof.
Major Systems Installation: $32,000
Systems such as electricity, plumbing, and HVAC will cost just as much as the exterior finishes. These parts of the home are essential to making your home a comfortable, operable place to live. The best ways to avoid the high costs can be would be to prevent outdoor plumbing, choosing your materials wisely, and choosing contractors that can give you the most out of your budget. These costs also don’t include fixtures such as toilets, lights, and sinks.
Interior Finishes: $87,000
Interior finishes are often the most fun, but most expensive, parts of making a house a home. They add your style, your comfort, and your aesthetic to your home and help make your dreams come to life. However, while you’ll be making many of your memories inside, you should choose what materials and items you want in your homes, such as stainless steel sinks, granite counters, and hardwood floors.
Cabinets and Counter-tops $12,000
Doors, Trims and Mirrors $12,000
Drywall Installation $13,000
Plumbing Fixtures $3,000
Total for Interior Finishes: $73,000
Outside items, such as landscaping, driveway, and other structures like porches, patios or decks, and clean up costs, can cost up to $14,000.
Other Construction Costs: $5,000
Miscellaneous items are the emergency money for any additional costs that you haven’t accounted for, but might potentially encounter.
After the long wait for your home, you’ll need to plan for the sales price to make this home yours. Why should you worry about the sales price? The builders and vendors have to determine the amount of your home, so not only can you own the house, but they can get profit out of the sale. The finished lot costs around $90,000, along with the profits your builders and vendors will receive, about $48,000. Other budgets you should consider also include overhead expenses, $25,000, sales commissions, $20,000, financing at $8,000, and marketing at $5,000. All of these costs end up on your end of the expenses, and if it weren’t for these services, you wouldn’t be able to make the house yours.
How Much Does It Cost to Build a TINY House?
For those who desire to live in tiny spaces and don’t mind a minimalist lifestyle, small homes build solidly on a foundation typically cost about $10,000 to $30,000. However, for those set to have a permanent residence, zoning and building regulations will require accessory dwelling units on your single-family lot, which turn your property into a tiny house community. States, such as California, Florida, New York, and Oregon, support small house communities and don’t have many building restrictions. However, in most other states, they have the minimum requirement of 1,000 square feet or more for construction. On the other, if you don’t plan on staying in one place, RVs and trailers won’t require you to adhere to zoning and construction codes, making your tiny home dream possible with travel benefits.
Is it Cheaper to Purchase or Build a House?
As mentioned before, the typical cost of building a house range from $290,000 to 460,000. All of the calculations mentioned are for houses that have a total of $436,000. However, the actual costs depend entirely on square footage to determine whether purchasing a home is better than building it. For instance, a 1,500 square foot lot at $436,000 will make the costs of the house at about $290 per square foot. A 1,500 square foot house doesn’t offer much room to grow, and won’t provide much in terms of growth. However, for a 4500 square foot lot, the cost per square foot decreased to about $97.
If you’re purchasing a home that’s already built, then you won’t have to worry about the costs of custom building your home. However, with buying a home, you have to worry about the location. If you have a 4500 square foot home in, for instance, New Orleans, a city that’s highly occupied by tourism and limited space, then the costs of purchasing the home will increase substantially, some houses averaging around $3 million to $4 million just for the size and location alone. However, countryside homes with wide-open spaces or homes in less populated cities will offer 4500 square foot homes at around $350,000 to $450,000.
So, it depends on the location to truly determine the costs, because all the prices are based on square footage. If you plan on building a mansion in a highly-populated area, then your costs are going to go up. However, countryside living with vast acres will give you the space you need to grow, if you like that lifestyle that is.
Determining whether the costs of building a home or purchasing a home will make a difference also entirely depends on how you live. If you have a family to support, looking for an excellent school system, and low crime rates, then the countryside or small towns located in your city of work will have what you need and will cost cheaper. If you’re single or have a family that thrives in centers of activity, then big metropolis cities will benefit you, but will also require more, especially if you plan on building a home in a city. Thus, purchasing a home or making home costs about the same when compared with the equal measures of square footage. Hence why square footage and location matter because home buying is a personalized experience all based on what you can afford.
Working with Subcontractors
Collaborating with contractors can be a pain, especially when you have to manage the process manually. If you lose your focus, you could potentially end up paying for it out of pocket. However, while many contractors have a public policy to work efficiently with their customers, knowing how to take the reigns on your project will make all the difference and will produce better results.
Record your Progress – Write down your ideas, note questions you have for your contractor, and record price and delivery dates for your site work will ultimately make the process a lot smoother for both you and your contractor. Keeping track of your expenses and what you need to know from your contractor can relieve the lack of control over your project and give you the reigns to handle your dream home project.
Pay Only For Completed Work – If you have hired a right contractor, then you should have established a set of payments when aspects of the job are completed. During the negotiation process, make sure that you don’t put down more than 10% during the initial stages of your contract. If your contractors need supplies, they can rely on credit for those needs, and those expenses don’t need to come out of your pocket.
Communicate Well – Contractors need proper communication to make sure that they’re doing their job right. Periodically check their work throughout the project, and make a note of any changes that need to be made during the initial stages of the process. Be onsite with them, call and text them, establish meeting dates, and compare appliance numbers against your receipts to make sure they’ve completed their job in the way you envision it. Expect no less than high quality from their work, because you’re the client.
Building a House on Your Own
The journey to build your own house is not one that everyone is cut out for. That said, I believe if you have some general construction knowledge you can accomplish this if you are willing to put in the work. What you will gain by doing this and not hiring a general contractor, is about a 15-20% savings on the total cost of the house if you sub out most of the work and expect even more savings if you do work yourself.
There are many guides on the internet on how to do this and I suggest if this is your first house you plan to build then you will want to devour as much information as you can before starting. I personally have built my own house with the help of a few subcontractors, and I can tell you the amount of pride obtained is priceless.