Uncovering the Cost to Build a House

Real estate is an amazing industry. The market is perfectly designed to allow for smart, reliable, and comprehensible cost breakdowns that allow buyers and sellers to understand how homes are being valued, and most importantly, why. As discussed in my previous blog, understanding the valuation of vacant, raw land is a much more involved process, but once the process is laid out it is easy to understand why a piece of land has the value it holds.
 
When it comes to building a home from the ground up, however, discovering a price point can be extraordinarily hard to nail down and is particularly hard for first-time buyers. Don’t worry, there is nothing particularly difficult about adding up the costs to build a house. The problem with finding that golden number is that many, if not most, home builders find that that number will shift (usually upward) once construction begins on the home.
 
Why is this? Simply put, there is a never-ending list of things that you can add to your home, even if it’s not custom built. Though we may commit to plans and sign off on tile choices and the size of windows, when presented with more choices, most will opt to make some changes to their original plans.
 
Of course, that’s not something that you would work into finding to a price point to build a house, but it is something to keep in mind when you are creating cost-to-build estimates.
 
So, what’s the average cost to build a house in 2017? According to Homeadvisor.com, the cost to build a 2000-square-foot home is $305,372, or an average price per square foot of $150. Depending on the location, size, and custom features of your home, that number can be much higher.
 
Every home needs to have, at a minimum, the following:
  • A home shell which includes walls, windows, a roof, and doors. This is often the largest cost associated with building a home from the ground up. Most shell construction accounts for roughly one-third of the overall cost to build a home.
  • Finishes for the home’s interior including flooring and cabinetry. Commonly the second highest cost and can come fairly close to the price of shell construction. Together the shell and the interior finishes will make up two-thirds of your home costs.
  • Plumbing and heating. There are many choices for the type of system a person can choose to add to their home including modern, energy-saving varieties which can affect the overall cost of installation and purchase. The average price for heating and plumbing costs is between $35K and $40K.
  • Kitchens and bathrooms. Just as kitchen and bathroom renovations are notoriously expensive in an existing home, the cost to add them to a new construction is also fairly expensive, coming in at around $15K depending on the number of bathrooms in the home and the size of the kitchen.
  • Architectural plans. You can’t very well build a house without blueprints and plans, and those plans will cost an average of $4,500. For custom-built homes, that cost can be several thousands more.
  • Once all those basics are included in your estimation, there will be some additional costs associated with building a home. These costs are generally not factored into the building costs, but they can drastically change your cost estimate. Thing like building permits, a land inspection and/or survey, and public works services are costs that need to be considered.
 
Your choice of land can be a big factor in adding cost to your budget. The cost to grade land, add access, excavate, or level land can add up. This is not an easy number or percentage point to give because it depends on the land selected.
 
If you work with a land specialist to find the right plot of land, you will find that many of these additional factors are already laid out ahead of time, saving you time and energy on uncovering the cost of building the home of your dreams.