The question “How much does it cost to build a home?” is one of the most frequently asked questions we receive from almost everyone that is considering building a new home. Unfortunately, it is also one of the few questions that we cannot answer very precisely. For example, can you say how much it costs to take a vacation or send kids to college? How much should be expected to spend on a new car? What is the average cost of a dinner for two, or a wedding dress, or a fishing boat, or a gallon of gas?
All of the above questions contain so many variables that it is impossible for anyone to answer them accurately without first asking several additional questions and gathering much more information. The same is true when calculating the cost to build a new home of a specific type or size or quality level, at any given time.
IMPORTANT TO KNOW FACT: The method to calculate square foot costs can be misleading. The question that must be asked… is the square footage being used to include just the finished living area, or all of the constructed areas (garages, porches, decks, patios, bonus rooms, etc.)? If the cost per sq. ft. is used to compare one area of the country to another or one builder vs. another, it must be determined what is included and what is not included in the cost and the square footage. Otherwise, the number has no meaning.
Simple cost approach (but least clear)
In its very basic form, square foot home building costs are nothing more than the total cost of a given project divided by the total number of square feet in that project. So, consider a 2,000 square foot home, of living area, with total possible construction costs of $350,000, it would cost $175 per square foot to build. Spend another $50,000 on various items like a gourmet kitchen, an elegant master bath, marble tiles in the foyer, 10 foot ceilings, super energy efficiency HVAC items, or any other combination of “above average” features or finishes and the price easily jumps to $400,000 but the square footage didn’t change. Now, that same 2,000 square foot house would cost $200 per square foot to build; an increase of 20 percent. But, there is much more to know…
If the house in question is a ranch style home, with all of the finished area on one floor, the foundation and roof would both have to be large enough to cover the entire 2,000 square feet of living space. Turn that single level ranch into a two-story colonial and both the foundation and the roof are instantly reduced by 50 percent because the two floors fit into the same foundation and roof spaces and the second floor system became the “roof” for half of the area on the first floor. Increase the roof pitch from 3/12 to 12/12 and the roof area (including framing members, sheathing, shingles) quickly increases by 35 percent. These examples are oversimplified because they don’t consider any other differences like the need to add the cost of stairs and take away the space they occupy, or in the case of a slab-on-grade foundation, the difference between the cost of a concrete slab verses a wooden floor system.
Which square foot cost to use?
If all of the constructed space is used in determining the cost per sq. ft., the result can be dramatically different. Using the example above, let’s assume that the house has a 2 car garage that has 576 sq. ft. and a porch that measures 6’x10’. This means that 2,636 sq. ft. of structure has been built. Now the cost to build is calculated at $133 per square foot.
If we use the same home, the garage is now a 3 car, the porch is a full wrap around, add a screen porch, and a deck, the living area hasn’t changed, but the costs have gone up by possibly another $50,000, making the cost per sq. ft. based on living area $225. However, using the cost per sq. ft. for constructed areas, we now have all of the extras, for a total of an additional 760 sq. ft. making the total constructed space 3,396 sq. ft.. The costs of total constructed space is $132 per sq. ft..
Other variables such as shape, corners, foundation, roof, neighborhood, etc.
Costs of similarly sized homes can also vary considerably due to the shape of the building, the number of corners or offsets in the design, the type of foundation and required local footing depth, the pitch of the roof, and many other design characteristics that are not directly related to the size of the house. Additionally, the site development costs can range significantly. Is the site in a developed neighborhood that has sewer, water and other utilities available, or is it a site that is undeveloped and will require clearing, has a difficult topography, bringing in all of the utilities, driveways, etc.? As can be imagined, costs can vary greatly from one site to another.
Economy of scale.
With all things being equal other than size, all homes will have some relatively constant/similar costs which would include, but not limited to: utilities, site costs, well/septic, a garage, one kitchen, 2-2.5 baths, HVAC system, etc. A luxury 2 story home with 7,000 sq. ft. of living area may have a finished turnkey cost of $175 per sq. ft. and a custom, single story home with 1,500 sq. ft. of living area could have a turnkey cost of $200 +/- per sq.ft..
The cost scenarios represented above show a range of ~$350,000 – $450,000, all having the same 2,000 sq. ft. of living area, but with very different client preferences both for the house and the site.
Riemco average building costs
(Disclaimer: this means nothing unless you read all of the above). Considering that the majority of the homes we build are turnkey, custom, high performance, one of a kind, with varying styles, designs, site conditions, and customer preferences, our clients are spending, on average, in the range of $175 to $235 per sq. ft. of living area including all site costs, garages, porches, decks, and patios.
Building blocks for budgeting.
If we know the basic components (building blocks) such as size, style, # baths, garage size, porches (types), decks, amenity preferences we can determine a preliminary ballpark budget estimate.