How Much Does It Cost To Build A House
Cost To Build A House
Building a new home is an opportunity to meet your exact design and usability requirements. But from-scratch construction can be a daunting task, especially when it comes to price. This in-depth look at the prices associated with home building will help you make the right budgetary decisions.
However, homeowners report the average cost to build a new house comes in at $286,909, which would put a 2,000 square foot home costing about $150 per square foot. This will obviously vary greatly with all the costly variables involved, so the cost could range between $152,724 and $422,025.
Cost Estimates for Building a House
Single-family, or detached, home costs will vary based on the construction of the building, as well as added extras like location, lot size and materials. It’s also important to note that detached homes are standalone structures. Due to their unique construction, the costs associated with standalone homes cannot be applied to duplex or townhome construction. Here’s a look at the costs associated with each kind of single-family home build, including custom, prefab and development.
Custom Homes: $350,000 - $1.5 Million+
Custom construction allows you to create a home that meets your exact aesthetic and functionality needs. The unlimited options associated with custom homes make them costly both in terms of money and time. Additionally, custom builds will require the services of a residential architect. Hiring design professionals can range from five to 15 percent of your construction costs. If you’re hesitant to hire an architect, ask your builder to submit a design. Their costs typically range from $1.50 per square foot to more than $2.50 per square foot.
Estimating the cost of a custom home is difficult because of the wide range of options. Generally, custom homes cost between $100 and $400 per square foot. Location and materials will play a major role in the price of your custom home. Tiny homes are a popular alternative to larger custom homes. These downsized dwellings offer the personalization of custom homes without the price tag.
Modular and Prefabricated Homes: $50,000 - $300,000.
Prefabricated homes are manufactured offsite and assembled on location. While prefab homes may not have the design options of custom homes, they come at a substantially lower cost. Many pre-built homes cost 10 to 20 percent less than custom-built alternatives. Prefabricated homes also break down into two types:
Panel building. Panel construction involves fastening premade walls to the floor of the home. This style of building is ideal for home designs with features that are unavailable in modular construction. Additionally, in many cases, panels are cheaper to transport than modules. Some builders install fixtures like sinks and toilets before installing the walls. This can speed up construction time and lower costs.
Modular building. Modular homes are created in sections and assembled onsite. Modular manufacturing can result in smaller rooms, but many modern modular homes offer additional design options that can open up cramped areas. In most cases, porches and garages are not available on modular homes. Combining modular and panel construction is a popular alternative for those seeking designs not available in modular construction.
Developers and Home Builders: $50,000 – 1.5 Million+
Housing developments offer a high degree of customization, but are limited to a library of floorplans and locations. Production homes are usually part of a master-planned community. While this can offer attractive amenities, it can also mean constant construction around the neighborhood. Additionally, many new-build neighborhoods are farther away from entertainment and cultural centers. Developments are priced for a variety of homeowners, ranging from first-time buyers to retirees seeking luxury homes.
The amount of customization available in a development is considerable. Housing developments are also more affordable than custom homes. In fact, opting for a development can save up to 15 percent on home building costs. In some cases, this can be on par with modular homes, but few developments will drop below that amount. Another option in this category is to work with a company that has a development in progress. This can increase savings, although the amount of changes made must be minimal to take full advantage of the price.
Material and Machine Costs
Your home’s materials are an important part of determining the cost of your construction. The cost of materials will vary widely based on their type and the size of your home. The region of your home can also affect the cost of materials. Your pro should be able to give you an estimate based on your designs. Here’s a quick breakdown of general building material costs:
Machine costs will also vary based on what your hired professional owns and what will have to be rented. The size and location of your home will affect machine costs. Building in rocky or unleveled environments will require specialized machinery, which will increase your costs. Most builders use backhoes equipped with the necessary attachments. The average cost of a backhoe is between $70 and $90 per hour.
Labor Costs
Labor costs vary according to your pro and the size and complexity of your home. Large, custom-built homes will have a higher labor cost than smaller modular homes. It’s important to factor the cost of hiring architects, engineers and surveyors into your budget as well. The cost to hire architects and engineers will also vary based on location.
Here’s an estimation of the labor costs associated with each part of your home’s construction:
Foundation: $4,000 – $12,000
Excavating, pouring, and back filling make up your foundation costs. Some homes also require retaining walls and additional landscaping to eliminate flooding or other foundation-damaging problems. Additional work can increase this cost.
Framing: $1,500 - $6,500
Your home’s frame will dictate the size and location of rooms and other important features like roofing. Framing costs include the overall home’s frame, as well as trusses and general metal work.
Exterior finishes: $40,000 - $60,000
Exterior finishing includes exterior walls, roofing and adding windows and doors. The number and type of exterior finish, windows and doors will affect this price.
Major systems installation: $30,000 - $50,000
Plumbing, electrical and HVAC comprise most of your major system costs. The size and type of systems can affect the price of these installations.
Interior finishing: upwards of $85,000
Interior finishing adds the comforts of home to your new build. This can include insulation, drywall, interior trim, painting, lighting, appliances, flooring and plumbing fixtures.
Final details
The final steps of your home construction will prepare it for moving. These last-minute updates include landscaping, decks, patios, driveways and clean up.
Additional Factors that Affect Costs
Numerous factors influence the final cost of the home. Here’s a look at additional factors that will increase your cost:
Major Steps in Building a House
Building a home has several steps. Here’s a quick look at the construction process.
Create a Budget
Your budget will limit the size, building type, interior features and customization of the home.
Purchase Property
The location of your home will play a part in determining its costs, as well as additional details like school districts and entertainment options.
Choose a Construction Method
Decide between custom, prefab or a development. Always get multiple estimates, regardless of which construction method you choose. For modular homes, this can often be done online.
Develop Plans or Designs
Many homeowners don’t factor plans into their budgeting. For those building a larger or high-end home, the planning stage can be especially expensive.
Obtain Permits and Inspections
It’s best to let your general contractor or builders pull your paperwork. Permits are a complicated and time-consuming part of building a home. Having the right licensing will ensure your inspections are error-free.
Purchase Construction Insurance
It’s a good idea to purchase construction insurance before ground breaking begins.
Begin Construction
Construction includes a number of steps that range from site preparation and foundation work to installation of carpentry framing. The construction stage will likely include several professionals.
Book a Final Inspection
This step is a last examination of the home to ensure it matches the plans and local building codes. The inspection is necessary to receive permission to occupy the home.
Complete Landscaping
Landscaping is the last step to home construction. This can include laying sod, planting trees and shrubs and even adding decorative walkways. It’s important to plan your landscaping according to your climate.
These steps may vary based on individual decisions, location and circumstances.
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How Much Does It Cost To Build A House
In your white picket fence daydreams, what does the house beyond the fence look like? Maybe it’s a colonial-style home like the one you grew up in, or perhaps it’s a modern design with chrome and silver finishes in every room. It might have three bedrooms with an office to boot, or be a sprawling mega-mansion fit for Hollywood’s elite.
If you’re fortunate, you might be able to find the house you’re looking for in a property search, either online or with a realtor. In other cases, you might decide that building your dream home from scratch is the best move. Though it can be much more time-intensive than purchasing an existing home, you also have the chance to choose everything according to your tastes, from the number of bedrooms to the type of fixtures in the bathroom and on the cabinets.
According to Realtor, around 1 million homeowners were expected to build their own houses in 2016. The average size of a new home built in 2015 was 2,467 square feet, U.S. Census numbers report, though the cost per square foot varied depending on the source. Realtor found the average to be around $103 per square foot, while a separate study from HomeAdvisor reported the average cost at $150 per square foot. Overall, that range equals an average new home cost between $290,000 and $305,000.
Of course, that’s just the average, and building your own home is one of the most variable expenses there is. Every decision you make affects the bottom line you’ll pay, so it’s important to know just how much home prices can change. HomeAdvisor reports that the average range was from $178,010 to $466,493 among HomeAdvisor members, with outliers as low as $23,000 and as high as $826,000. What’s behind those cost variables? We did some digging to find out.
To build a house, make a budget
As with every expense, especially the largest ones, it’s vital to have a working budget so you know how much you can afford. Starting with that number — and sticking to it — will help you determine the property you purchase, how large your house will be, and even which furniture you ultimately choose to fill your new residence.
No matter the size of the dream home you’re building, certain costs will likely stay the same. You can likely expect the shell of your house — which includes the walls, windows, doors, and roofing — to account for a third of your overall construction budget, Realtor reports. Interior finishes like cabinets, flooring, and countertops will probably eat up another third of your budget. Mechanical costs like hiring a plumber and electrician will likely be another 13% of your overall costs.
When building a home from the foundation up, we’re assuming that you’ll use professional contractors and architects to get the job done. That baselines assures that you follow the laws and permits in your area, as well as the codes necessary to ensure a safe and long-lasting home. However, you can choose to save money even at this step. HomeAdvisor points out that you can work with a developer and choose a home design already in their repertoire, which can save up to 15% of your costs versus paying an architect to create a completely custom home.
But that’s only the beginning of the cost variations. Here are other variables to consider.
1. Land and excavation
Building a new home is an opportunity to meet your exact design and usability requirements. But from-scratch construction can be a daunting task, especially when it comes to price. This in-depth look at the prices associated with home building will help you make the right budgetary decisions.
However, homeowners report the average cost to build a new house comes in at $286,909, which would put a 2,000 square foot home costing about $150 per square foot. This will obviously vary greatly with all the costly variables involved, so the cost could range between $152,724 and $422,025.
Cost Estimates for Building a House
Single-family, or detached, home costs will vary based on the construction of the building, as well as added extras like location, lot size and materials. It’s also important to note that detached homes are standalone structures. Due to their unique construction, the costs associated with standalone homes cannot be applied to duplex or townhome construction. Here’s a look at the costs associated with each kind of single-family home build, including custom, prefab and development.
Custom Homes: $350,000 - $1.5 Million+
Custom construction allows you to create a home that meets your exact aesthetic and functionality needs. The unlimited options associated with custom homes make them costly both in terms of money and time. Additionally, custom builds will require the services of a residential architect. Hiring design professionals can range from five to 15 percent of your construction costs. If you’re hesitant to hire an architect, ask your builder to submit a design. Their costs typically range from $1.50 per square foot to more than $2.50 per square foot.
Estimating the cost of a custom home is difficult because of the wide range of options. Generally, custom homes cost between $100 and $400 per square foot. Location and materials will play a major role in the price of your custom home. Tiny homes are a popular alternative to larger custom homes. These downsized dwellings offer the personalization of custom homes without the price tag.
Modular and Prefabricated Homes: $50,000 - $300,000.
Prefabricated homes are manufactured offsite and assembled on location. While prefab homes may not have the design options of custom homes, they come at a substantially lower cost. Many pre-built homes cost 10 to 20 percent less than custom-built alternatives. Prefabricated homes also break down into two types:
Panel building. Panel construction involves fastening premade walls to the floor of the home. This style of building is ideal for home designs with features that are unavailable in modular construction. Additionally, in many cases, panels are cheaper to transport than modules. Some builders install fixtures like sinks and toilets before installing the walls. This can speed up construction time and lower costs.
Modular building. Modular homes are created in sections and assembled onsite. Modular manufacturing can result in smaller rooms, but many modern modular homes offer additional design options that can open up cramped areas. In most cases, porches and garages are not available on modular homes. Combining modular and panel construction is a popular alternative for those seeking designs not available in modular construction.
Developers and Home Builders: $50,000 – 1.5 Million+
Housing developments offer a high degree of customization, but are limited to a library of floorplans and locations. Production homes are usually part of a master-planned community. While this can offer attractive amenities, it can also mean constant construction around the neighborhood. Additionally, many new-build neighborhoods are farther away from entertainment and cultural centers. Developments are priced for a variety of homeowners, ranging from first-time buyers to retirees seeking luxury homes.
The amount of customization available in a development is considerable. Housing developments are also more affordable than custom homes. In fact, opting for a development can save up to 15 percent on home building costs. In some cases, this can be on par with modular homes, but few developments will drop below that amount. Another option in this category is to work with a company that has a development in progress. This can increase savings, although the amount of changes made must be minimal to take full advantage of the price.
Material and Machine Costs
Your home’s materials are an important part of determining the cost of your construction. The cost of materials will vary widely based on their type and the size of your home. The region of your home can also affect the cost of materials. Your pro should be able to give you an estimate based on your designs. Here’s a quick breakdown of general building material costs:
Machine costs will also vary based on what your hired professional owns and what will have to be rented. The size and location of your home will affect machine costs. Building in rocky or unleveled environments will require specialized machinery, which will increase your costs. Most builders use backhoes equipped with the necessary attachments. The average cost of a backhoe is between $70 and $90 per hour.
Labor Costs
Labor costs vary according to your pro and the size and complexity of your home. Large, custom-built homes will have a higher labor cost than smaller modular homes. It’s important to factor the cost of hiring architects, engineers and surveyors into your budget as well. The cost to hire architects and engineers will also vary based on location.
- Architects - $60 - $125/ hour
- Engineers - $100 - $150/ hour
- Land Surveyors - $300 to $700
Here’s an estimation of the labor costs associated with each part of your home’s construction:
Foundation: $4,000 – $12,000
Excavating, pouring, and back filling make up your foundation costs. Some homes also require retaining walls and additional landscaping to eliminate flooding or other foundation-damaging problems. Additional work can increase this cost.
Framing: $1,500 - $6,500
Your home’s frame will dictate the size and location of rooms and other important features like roofing. Framing costs include the overall home’s frame, as well as trusses and general metal work.
Exterior finishes: $40,000 - $60,000
Exterior finishing includes exterior walls, roofing and adding windows and doors. The number and type of exterior finish, windows and doors will affect this price.
Major systems installation: $30,000 - $50,000
Plumbing, electrical and HVAC comprise most of your major system costs. The size and type of systems can affect the price of these installations.
Interior finishing: upwards of $85,000
Interior finishing adds the comforts of home to your new build. This can include insulation, drywall, interior trim, painting, lighting, appliances, flooring and plumbing fixtures.
Final details
The final steps of your home construction will prepare it for moving. These last-minute updates include landscaping, decks, patios, driveways and clean up.
Additional Factors that Affect Costs
Numerous factors influence the final cost of the home. Here’s a look at additional factors that will increase your cost:
- Land and Excavation - Prepping the land for construction is an important first step, and can vary in price. In most developments, the land is already prepared for building. If you purchased your own lot, you may have to hire a pro to clear it and excavate.
- Size - A home with greater square footage will cost more than a smaller home.
- Number of Stories Additional stories will require additional construction and design work, which will increase your building costs.
- Shape The more corners a home has the more it will cost. Unusual shapes are more common in custom designs.
- Type of Roof The installation and upkeep costs of specialty roofs will cost more than asphalt options. This is an area where durability should trump other concerns.
- Fixtures/Finishes The grade of fixtures can impact the cost of a home. Granite countertops and marble floor tiles are high-end options that come at a premium price. Most pros can recommend materials and fixtures that will meet your aesthetic and budgetary needs.
- Appliances Refrigerators can range from fifty dollars to several thousand. The same goes for most major appliances in the home. Be sure to factor this cost into your budget before you begin construction.
- Design Features Pools, outdoor kitchens and large decks are common design features. While these can increase the value and enjoyment of your home, they can also impact its construction costs. Design extras can increase your home’s upkeep costs as well.
Major Steps in Building a House
Building a home has several steps. Here’s a quick look at the construction process.
Create a Budget
Your budget will limit the size, building type, interior features and customization of the home.
Purchase Property
The location of your home will play a part in determining its costs, as well as additional details like school districts and entertainment options.
Choose a Construction Method
Decide between custom, prefab or a development. Always get multiple estimates, regardless of which construction method you choose. For modular homes, this can often be done online.
Develop Plans or Designs
Many homeowners don’t factor plans into their budgeting. For those building a larger or high-end home, the planning stage can be especially expensive.
Obtain Permits and Inspections
It’s best to let your general contractor or builders pull your paperwork. Permits are a complicated and time-consuming part of building a home. Having the right licensing will ensure your inspections are error-free.
Purchase Construction Insurance
It’s a good idea to purchase construction insurance before ground breaking begins.
Begin Construction
Construction includes a number of steps that range from site preparation and foundation work to installation of carpentry framing. The construction stage will likely include several professionals.
Book a Final Inspection
This step is a last examination of the home to ensure it matches the plans and local building codes. The inspection is necessary to receive permission to occupy the home.
Complete Landscaping
Landscaping is the last step to home construction. This can include laying sod, planting trees and shrubs and even adding decorative walkways. It’s important to plan your landscaping according to your climate.
These steps may vary based on individual decisions, location and circumstances.
Are You Know?
8 More Fascinating Object Graveyards
9 Awesome Structures Built Around a Tree
10 Most Wonderful Places in The World
How Much Does It Cost To Build A House
In your white picket fence daydreams, what does the house beyond the fence look like? Maybe it’s a colonial-style home like the one you grew up in, or perhaps it’s a modern design with chrome and silver finishes in every room. It might have three bedrooms with an office to boot, or be a sprawling mega-mansion fit for Hollywood’s elite.
If you’re fortunate, you might be able to find the house you’re looking for in a property search, either online or with a realtor. In other cases, you might decide that building your dream home from scratch is the best move. Though it can be much more time-intensive than purchasing an existing home, you also have the chance to choose everything according to your tastes, from the number of bedrooms to the type of fixtures in the bathroom and on the cabinets.
According to Realtor, around 1 million homeowners were expected to build their own houses in 2016. The average size of a new home built in 2015 was 2,467 square feet, U.S. Census numbers report, though the cost per square foot varied depending on the source. Realtor found the average to be around $103 per square foot, while a separate study from HomeAdvisor reported the average cost at $150 per square foot. Overall, that range equals an average new home cost between $290,000 and $305,000.
Of course, that’s just the average, and building your own home is one of the most variable expenses there is. Every decision you make affects the bottom line you’ll pay, so it’s important to know just how much home prices can change. HomeAdvisor reports that the average range was from $178,010 to $466,493 among HomeAdvisor members, with outliers as low as $23,000 and as high as $826,000. What’s behind those cost variables? We did some digging to find out.
To build a house, make a budget
As with every expense, especially the largest ones, it’s vital to have a working budget so you know how much you can afford. Starting with that number — and sticking to it — will help you determine the property you purchase, how large your house will be, and even which furniture you ultimately choose to fill your new residence.
No matter the size of the dream home you’re building, certain costs will likely stay the same. You can likely expect the shell of your house — which includes the walls, windows, doors, and roofing — to account for a third of your overall construction budget, Realtor reports. Interior finishes like cabinets, flooring, and countertops will probably eat up another third of your budget. Mechanical costs like hiring a plumber and electrician will likely be another 13% of your overall costs.
When building a home from the foundation up, we’re assuming that you’ll use professional contractors and architects to get the job done. That baselines assures that you follow the laws and permits in your area, as well as the codes necessary to ensure a safe and long-lasting home. However, you can choose to save money even at this step. HomeAdvisor points out that you can work with a developer and choose a home design already in their repertoire, which can save up to 15% of your costs versus paying an architect to create a completely custom home.
But that’s only the beginning of the cost variations. Here are other variables to consider.
1. Land and excavation
If you’re building your home on your own, you’ll need to start with a plot of land. The cost per acre for an empty plot averages about $3,000 nationwide, Realtor reports. That itself won’t break the bank. However, keep in mind that costs vary immensely depending on your location. If you have your heart set on a premier neighborhood, school district, or city, you might have to pay more for that.
The real variable here, however, is the excavation to make the land building-ready. Bad soil, rocky ground, or other unseen issues can drive up the costs for leveling your property and pouring a proper foundation. If everything works out according to plan, you can still count on paying around $33,500 for the bulldozers to rip up the ground and lay some concrete.
2. Permits, inspections, and fees
Government regulations are abundant in real estate, particularly with new construction projects. In most cases you’ll want an experienced architect or contractor to deal with all the red tape, HomeAdvisor suggests, but you’ll still be on the hook for paying for the permits, the land assessments, and miscellaneous fees that come along with it.
According to the National Association of Home Builders, those regulations can cost about 24% of the overall construction price — an average of $84,671 on homes built in 2016. Regulation fees have always been expensive, but the NAHB points out that they have still increased by almost 30% since 2011, just five years ago. Make sure you get a clear picture of all the associated fees that go along with your new home up front, so you can budget accordingly.
As one final important touch, you’ll want to make sure you’re properly insured for the construction. Most contractors will have some type of insurance, but you’ll want to make sure it’s the appropriate level. You also might want to purchase liability insurance to protect yourself and the progress on your home. Insurance covers the basics you need to know.
3. The size and number of stories
There’s a reason home values are broken down by overall cost, but also the cost per square foot. In most cases, the price of your home will grow or shrink based on how much house you actually want. A bigger home will obviously take more time to build — adding extra paychecks for your contractors. But it also means paying extra for flooring, more for paint, and additional ongoing energy costs to heat and cool a larger space over time.
In addition, adding extra stories automatically means a higher price tag, even if the square footage is similar to a ranch-style home down the street. Even basements and attic spaces can cost more to build, though HomeAdvisor points out that leaving them unfinished (instead of adding drywall or other finishing touches) can save on the initial costs. You can always go back and finish those spaces later, after you’ve had time to save up some extra money.
If you’re building a custom home, keep in mind that odd shapes or obscure designs can set your home apart, but will likely cost more. “For custom builds especially, the more corners a house has, the more it will ultimately cost,” HomeAdvisor experts warn.
4. Fixtures, appliances, and furniture
When it comes to outfitting your home, there are always gradation of quality. If you’re set on choosing only the finest granite countertops, marble floors, and high-quality shower heads, you’re going to be paying a pretty penny. At some point, you might need to compromise on certain fixtures in order to meet your budget. After all, you’ll need to outfit your bathroom with a bathtub and shower, a vanity, and cabinets. Your kitchen will need all new appliances, too.
Bathrooms and kitchens are typically the most expensive rooms to remodel, so it shouldn’t be surprising that they’re the most expensive to build in the first place. As Realtor suggests, you might want to think twice before adding three bathrooms to your blueprint — perhaps two will do, to help you meet your target bottom line. Just remember that it may be harder to sell in the future, if there are only two bedrooms.
5. Ongoing costs
One major financial advantage of building a new home is that the pipes, foundation, and roof will be up to code and brand new. It should be many, many years until you need to invest serious money in repairs or feel the need to undergo any renovation projects. While you’ll still want to keep an emergency fund for unexpected problems, it’s likely you won’t need to use it.
However, there are plenty of other costs associated with a new home that you’ll continue to pay in the years to come. Energy bills and home insurance premiums will be a must, though these bills do tend to be less with new construction. More efficient materials keep energy bills in check, and new homes are a smaller risk to insurance companies in most cases.
However, homeowners with newly-constructed homes can expect to pay more in property taxes than if they had bought an older home down the street. It can be difficult to predict the property taxes ahead of time, but it’s important to incorporate an educated estimate in your overall budget for future years. The local assessor’s office will be able to provide an estimate, Bankrate suggests, but you’ll also need to find out if you’ll owe taxes to multiple entities.
How much does it cost to build a house?
Have you dreamed of building your dream home but thought you couldn’t afford it? The cost to build a home depends upon the size of your home, the cost of the land it occupies, and also how many top-of-the-line features you choose.
- In 2017, the average cost of a new home was $360,900. That’s according to the Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.
- The average size of a new home in December 2016 was 2,661 sq. ft., according to the National Association of Home Builders (NAHB).
- Do the math and you’ll find it costs $136 per square foot to build a home in 2017.
- Keep in mind that’s a national average. The cost in your market will depend on the cost of land, which varies widely from one area to another – and, to a lesser extent, the cost of labor locally.
What’s the Difference in Cost to Build a Production or Custom Home?
A production builder typically builds from a library of floor plan. Homebuyers can select their favorite colors, design styles and options and upgrades in key components of their home that include appliances, cabinets, countertops, faucets and plumbing fixtures, flooring and lighting.
Do you want to design a new home from scratch — or make major changes to an existing floor plan? Do you want to have a nearly endless choice in the materials used to create your home? If the answer to either question is yes, you’re a candidate for a custom home.
Not surprisingly, building a custom home costs more. Custom homebuyers often upgrade to premium appliances and top-of-the-line cabinets, flooring, lighting and plumbing fixtures. The cost to build a custom home typically starts at $200 per square foot. However, count on spending more if your new home will sit on expensive oceanfront land.
A true custom home also generally involves fees for an architect, and often the cost of a construction loan. Both production and custom builders typically pay for building permits, impact fees, site preparation, utility connections, sidewalks and driveways. A production builder usually includes those expenses in the price of a home; a custom builder may itemize them separately.
All things being equal, it commonly costs 20 percent to 30 percent more for a custom home than for a new production home, according to Ed Hudson, director of Marketing Research for the Home Innovation Research Labs, a subsidiary of the National Association of Home Builders (NAHB).
For more information to help you determine if a custom or production builder is right for you, see our article here.
Are New Homes More Expensive Than Resale?
The key to comparing new versus older home prices is to make sure you are comparing apples to apples, cautions Hudson.
“Comparing median prices is fine, but are the homes the same size? Do they have the same features? Newer homes typically are more spacious and have more modern features.”
Today, newly built homes typically include many standard features that are usually not available in older homes — larger closets, bigger master baths, and high-efficiency appliances. The latter cost a bit more up front but typically pay for themselves in energy savings.
A new home with high-efficiency HVAC will live better, deliver higher indoor air quality, and cost less to operate and maintain — but it likely will cost more than a dated home of the same size.
Don’t Forget to Factor in After-Purchase Costs
Buying an older home is a gamble. You never really know what you’re going to get or how long the home’s roofing, appliances, fixtures, pumps, furnace or air conditioner will last. Immediate repairs or renovations may be needed.
“Products in a new home,” Hudson explains, “have less wear on them. An air conditioner typically needs to be replaced every 15 years, a roof every 20 or 30 years. With a new home, you’re buying more time before replacement of mechanicals and other big ticket items.”
When comparing a new home to an older home, it’s also important to look at these costs:
- New homebuyers may wish to add additional landscaping, decks, fences, or window treatments.
- Resale home buyers should assess the remaining lifespan — and the cost to replace — expensive major components such as the roof, air conditioning, furnace or water heaters.
- Buyers of new or resale homes should also factor in the cost of homeowner association fees, taxes and homeowner’s insurance.
- These costs can be escrowed (added to your monthly home payment) or paid separately. In either case, don’t forget to add in these costs when determining your budget.
Is the Home Designed for the Way You Live Today?
New homes tend to offer contemporary design aesthetics, such as open spaces, flex spaces, great rooms that flow into kitchens, volume ceilings, wider hallways, first-floor master suites, larger closets and dramatic architectural articulation that old homes can’t match.
“New homes are more modern,” Hudson notes, “with open layouts that suit current lifestyles. Older homes, for example, tend to have eight-foot ceilings. With a new home, the first-floor ceiling usually is nine feet.”
Built with current technology and modern construction standards, today’s new homes meet the latest health and energy standards. They’re also engineered to perform with key systems designed to work together to increase comfort and decrease energy costs.
Beneath the modern design that catches your eye, there’s also a wealth of building science at work in today’s new homes. Higher-performance windows, insulation, air infiltration and HVAC systems and techniques greatly increase energy efficiency and reduce home operating costs compared to older homes. You’ll also find low-flow plumbing fixtures, high-efficiency lighting products and Energy Star-rated appliances in many new homes.
Steps to Your New Home
Ready to build your dream home? You’ll find inspiring and informative articles, slideshows and videos on the Six Steps to Your New Home here on New Home Source.
Have you already completed one of the steps below? Feel free to skip ahead to the next step — or to the topic you want to learn about next.
- New Home 101 — Discover the benefits and vocabulary of new homes.
- Shopping for a New Home — Online and in the model home.
- Buying and Financing — Buy, finance and insure your new home — including finding the right mortgage for your needs.
- House Style — Discover the secrets of working with a production or custom builder to create your dream home.
- Building Process — Understand the steps your builder will take — and how and when you’ll be involved — to build your home.
- Settling In — The payoff — move in and enjoy the many features of the new home you helped to design — and take advantage of the amenities in your new home community.
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