How to Estimate the Cost of Building a House
The best way to calculate the price of building a home is to add:
• Price of the lot
• Cost of landscaping
• If necessary the cost of well and septic
• Average cost per square foot for basic construction with minimal extras times the planned square footage
• Cost for the difference between building code required materials, and materials you want used.
• The cost of any extras or luxuries you wish to include.
The total of these should give you a ball park figure for how much your home will cost.
Cost of Building a House: The Lot
Lot prices vary by size, exclusivity or remoteness of the area, and overall desirability of the lot. There is a saying in real estate that the only three things that matter about a home are location, location and location. This is very true. While everyone’s ideal home site might be different, the more desirable the lot is to at least some fraction of the population, the more expensive it is. Here are just a few popular types.
• Estate or farm on acreage
• Gated Community
• Subdivision Lot
• Suburban Lot
• Small Town Lot in a Good Area
Saving money by selecting a less desirable lot is not often a great idea. When picking a lot make sure it isn’t at risk for flash flood. Choose higher ground. Meet the neighbors before you buy. Find out as much as you can about the neighborhood, the school districts, the crime rate, and local services. Have your home builder view the site before you commit to buying.
Cost of Building a House: Preparing the Lot
Of course a well and septic tank will cost more up front, but there will be no water and sewer bill and the water quality will probably be better. If you plan to live in an area where there is no water and sewer hook up you must pay to drill a deep well, and install a septic tank. In addition, a flat level lot will be cheaper to landscape than a hilly rough or extremely wooded one, yet these lots tend to look better when the house is complete. Your building contractor or real estate agent will be able to answer questions about the expenses of building on one lot vs. another.
Cost of Building a House: Cost per Square Foot, Plus Your Extras
If you wish to live in a large city or exclusive area your home will cost more, not only because of the cost of the lot, but also because contractors in those areas tend to charge more. If you live in the small town South or Midwest, there is very good news for you because the cost per square foot is less there than in most northern states. These states range from $70 – $85 per square foot. California, New Jersey, New York, Vermont, and Connecticut are among the most expensive states in the U.S. for building a home, at just under $130 per square foot.
Many statistics include luxury homes with a lot of extras. Calculating in the price of luxury homes, into the average, makes the real cost per square foot. It is a lot easier to calculate the difference of the extras themselves than to consider it in cost per square foot.
Calculating the cost of the extras separately is fairly simple. By pricing extras separately you are certain that you aren’t calculating the cost of someone else’s hot tub, pool or hand carved stairway, which does not apply to your home. By using this simple formula you can easily calculate the cost of building a house.