Cost of Building a Custom Home

What is the cost of building a custom home? This is a common – and important – question that homeowners ask when considering building a custom home. There is no simple answer – the answer is always going to be, it depends. As you go through the process of building a custom home, there are over 200 decisions to make – each of which will ultimately affect the cost of the home. In order to better understand what variables affect the cost of building a custom home, we are going to investigate the four primary categories of cost:

  • Site
  • Scope/Size
  • Structure Complexity
  • Specifications

Site

In addition to the sales price of the site, there are numerous other aspects of the site that will affect the cost of building your home. Each site is unique, with its own benefits and challenges. Following is our list of top items to take into account when selecting a site for your new home. Each can have an effect on the cost of building.

  • Topography: steep sites often require extensive and expensive excavation and fill. Dirt is cheap, moving it is expensive.
  • Geology, soil conditions and vegetation. For example, expansive soils or rock formations beneath the surface will increase your building costs.
  • Utilities: the availability of services to a site is an important consideration, as it is expensive to bring or upgrade water, sewer, power and other utilities, as well as roads and sidewalks, to a piece of property.
  • Length and grade of driveway.
  • Design challenges due to lot shape, zoning, easements, setbacks and building restrictions.
  • Cost of fees for permits.
  • Is your lot in a community with design guidelines? This means your home will be reviewed by a Design Committee to ensure it meets minimum standards for design, materials, etc.
  • Storm water detention and drainage on or off site.
  • Other considerations can include (but are not limited to): flood plain, climate, snow load, noise mitigation, wild fire mitigation, etc.
The site of this Tuscan style custom home presented many unique challenges and strongly influenced the design.

It was clear from the first site visit that the ridges and ravines would play an integral role in this home’s design and the two would need to control each other and work together. The uphill orientation laid the foundation for the 9,000 square feet on 9 different levels.

Scope/Size

The size of your home has a direct impact on the over-all cost to build it. Generally speaking, increasing the size of a project will increase the total project cost (but not necessarily result in an increase in cost per square foot).

For example, if you are building a 4,000 square foot home and your cost is $350 per square foot, your cost will be $1.4M. If, during the design process, you decide to add an additional 500 square feet to your home, it will increase your total cost by $175,000.

It is important to remember that size isn’t everything. Specifications, which we discuss below, have a significant impact on your cost per square foot. A smaller home built to luxury standards could easily cost more than a larger home built with only the basics.

Structure Complexity

Picture a simple 2 story craftsman style home. Now picture an elaborately designed old world European home with volume spaces and arches in the interior, and a multitude of gables and chimneys on the exterior. Common sense tells us the craftsman will be cheaper to build, but why? A complex house is always more expensive to build than a simple house.

This is partly a function of the shape of the house and the relationship of the amount of roof and the amount of foundation to the area of the home.

  • Homes with long rectangular plans mean more walls for the same square footage.
  • Ranch plans are more expensive than 2 story homes because they require more foundation and more walls for the same square footage.
  • Angles are more expensive than square corners; curves more expensive than straight.
  • Every corner and elevation change increases the cost of the foundation.
  • Creative designs that require extraordinary structural members to span long distances become very expensive.
  • The height of walls needed to create large volume spaces are costly due to safety concerns and difficulty of installation.

Large swings in price can occur depending on a home’s structure and complexity. This is often where value engineering is required in order to keep a project within budget.

Square corners and straight lines are easier and less expensive to build than angles and curves.

Specifications

Specifications can be broken down into three main categories: structural, finishes and systems. This is another area where large swings in price can occur.

Structural

Structural considerations include the quality and size of materials as specified by the engineer to build the shell of the home.  Large and custom structural materials are more expensive. Materials for building a net-zero or energy efficient home cost more now, but can save you money in the long run.

Finishes

All other things being equal, the total cost of a home built with luxury finishes versus a home built with basic finishes can vary enormously. Finishes are items that are visible and important to the eye – the ‘touch, see, feel’ – elements of a custom home. Cabinetry is a great example: a whole house package of cabinetry can cost anywhere from $20K for the basics to over $100K for top of the line custom cabinetry. There are so many items that fall into this category that it can be easy to lose control of the total cost. Even a small increase in the cost of each item can impact the bottom line. Examples include:

  • Windows
  • Cabinetry
  • Millwork: trim and moldings.
  • Surfaces: this includes items such as flooring, countertops, backsplashes, bath surrounds, exterior walls, roofing, decks, patios, drywall, glass/mirrors, etc. Examples include:
    • Exterior walls: brick and thin stone add 30% over the cost of stucco.
    • A level 5 drywall surface can cost 40% more than a level 2.
    • Quality solid surface counter can be installed for $20 per square foot. An Iron Red granite or other premium material can set you back $100+ per square foot.
  • Fixtures: lighting, plumbing, etc.
  • Appliances
The finishes selected have a significant effect on the overall price of building a custom home.

The finishes selected have a significant effect on the overall price of building a custom home.

Systems

Systems are not something you can touch and see every day, but they have a huge impact on the comfort and functionality of your home. Systems include HVAC (heating, ventilation and cooling), thermal wall systems, home technology, geo thermal, etc.

Conclusion

As you can see, the cost of building a custom home varies enormously based on numerous factors. This is one of the reasons we advocate being upfront about your budget and forming a team from the beginning. There is nothing worse than falling in love with a design, only to find out later that you cannot afford it. By involving the architect, builder and interior designer from the start, your team can work together to build your dream home while staying within your budget.

Read More

Understanding Architectural Fees for Custom Homes

How Does the Architectural Design Process Work?

Understanding Construction Loans