“How much does it cost to build a house per square foot?”… and Why You Shouldn’t Price A Custom Home This Way.
Budgets matter. One of the questions that potential clients ask the most is, ‘How much will it cost to build (or renovate) my house in dollars per square foot?’.
This sounds like a fair way to establish a budget and compare pricing, right? Not quite. While the $/SF metric is a traditional way to evaluate existing housing stock or compare neighborhood builders with standardized products, it is too blunt a tool for a custom designed and custom built new home. Every part of your design and build is unique to your site and your personal goals for the project and needs to be thoroughly considered. The lack of specificity in the $/SF method will always lead to unrealistic expectations and blown budgets.
At Pillar & Perch, we prioritize thorough communication and transparency with our clients, particularly in the pricing of projects. We believe that the price-by-square-foot model is ultimately a “guesstimate”, and does not give our clients the usable information they need to make decisions with confidence.
TIP: Start any project planning with an honest and open conversation about your total budget. An experienced design/build professional will be able to use that information to work with you to set goals that maximize value.
Our Method: Realistic Goals Inform Design, Then Price the Specifics
At the outset of every project we have in-depth discussions with our clients to understand their budget and project goals. Establishing baseline goals, must-haves and wishlist items is a critical conversation to have at the beginning of design and presents the first opportunity to examine how the planning and budget are aligning. Our experience in designing and building custom homes gives us a deep knowledge base of current construction pricing and trends to lead these discussions strategically.
We check the in-depth planning and design that follows against the initial baseline.
Once you approve all the plans and selections, then we price the complete project. This pricing method provides an accurate cost because it is based on real selections that we have made for every aspect of the project (flooring, lighting, appliances, faucets, cabinets, siding, paint, etc.) Pricing everything out specifically produces a wealth of useful information. If you need to adjust design to maintain goals we have the best information at hand to analyze how changes impact the cost.
TIP: You don’t have a custom suit tailored because it’s the least expensive option, you do it so that you look and feel your best. The custom home advantage is about creating something special for yourself and maximizing the value for the money spent.
What are the Top Factors that Impact the Price?
Location
Depending on the location of your project, prices can vary greatly. The price of your project can vary depending on if you are in a city versus a rural area. For example, think about grocery and housing prices and the variations in different areas. The transport of and access to your materials can also have an impact on the final price. If your property is located an hour into the forest, that could incur extra costs as well. The price will vary if you need to build a new road to get to the plot versus land located in a neighborhood with existing streets.
TIP: If you are purchasing land, see our article on Buying Land to Build a House.
Client’s Preferences
A price based on previous experience is rarely accurate or transferable. The cost is highly dependent on each client and their individual desires. You could take two houses that have the exact same square footage. However, one prices out twice as high as the other because the clients’ preferences vary. One client may prefer contractor grade features and another may prefer more unique aesthetics. Two clients may both say they want a design that looks nice and is affordable. What that actually means, though, can look very different from one person to the next. Different tastes, styles and budgets can greatly impact the final cost of a house.
Design
Taking the same example from above with two houses with the same square footage, one house could include 3 bedrooms, 4 bathrooms and two kitchens while the other has 4 bedrooms, 2.5 bathrooms and 1 kitchen. (Bathrooms and kitchens tend to cost more than bedrooms.) One client may want the highest end appliances and cabinets in their kitchen, while the other wants the baseline. One client could fall in love with a rich-looking marble tile that is $45/sf and want to use it on the floor throughout the house. While the other client prefers something that is only durable enough to withstand their dogs and costs $7/sf.
Economy
Building materials including concrete, steel reinforcing, framing lumber, and sheet goods are commodities. Their prices are subject to market fluctuations that can be influenced by high demand, shortages, and other inflationary factors. Plumbing fixtures, light fixtures, and finish materials like tile are often imported and influenced by the global economy.
Construction labor costs have risen steeply over the past decade. Skilled labor is harder to find, and the cost of living keeps climbing. If you’re paying more at the pump, at the store, and in taxes, you’re not alone. The same economic realities apply to the people building your home.
TIP: The maxim that prices only ever trend upward over time is proven. This means that it will be less expensive to build today than in the future. In any economy, the best projects keep the focus on both value and the bottom line.
