Average home building cost per square foot can be a very confusing concept. Houses vary in price for a number of reasons, including their design, labor costs in the area, different types, grades and qualities of materials, and most of all extras and finishes. We will be taking apart costs per square foot on each item. Here are some average prices to consider. Remember that prices vary by area, and individual contractor. These are for ball park estimates to illustrate why cost per square foot varies.
Breaking Down the Average Home Building Cost per Square Foot
Average Home Building Cost per Square Foot: Land Preparation & Foundations
Grading and Lot Preparation- about $3000 varies by location and according to the land features.
• Basement – $25 to $35 per square foot depending on local prices, soil and climate.
• Crawl Space – $15 to $20 per square foot
• Slab – around $10 per square foot (plus you won’t need floor joists or a sub-floor)
* Remember that a basement actually gives you more square footage. In other words, you have to have a foundation, so it might as well be a basement if the climate is suitable for one. The cost for the basement is only $10 or $15 more for a basement than a crawl space, so you are essentially getting your basement footage for $10 or $15 per square foot. Also remember that the square footage on the second floor of course doesn’t require a foundation. Only the footprint of the home requires a foundation.
** The choice of basement, crawl space or slab is based on climate as well as preference. In areas with a high water table, you could be looking at perpetual flooding with a basement, and slab would have it’s pitfalls in an actual flood zone. Basements are necessary where the climate is very cold, because the foundation must be kept below the frost line. In areas with clay soil, that are prone to termites, crawl spaces are preferable.
Average Home Building Cost per Square Foot: Wells and Septic Tanks
A Well and Septic could cost between $10,000 and $20,000 depending on location.
Average Home Building Cost per Square Foot: Cost of Building Materials
Cost of structural building materials $20 to $30 per square foot, whether stick built, Concrete Insulated Panels, (CIP) Structural Insulated Panels, (SIP) or lowest of all, log kits and log panels.
Average Home Building Cost per Square Foot: Finishing is Variable
Cost of floor coverings, wall coverings, woodwork, cabinetry, appliances stairways, fireplaces and plumbing fixtures, are variable according to quality. Prices of all these things vary considerably. This is a large part of the difference between the cost per square foot of homes.
Average Home Building Cost per Square Foot: Labor
The cost of labor is approximately equal to all of the above. Generally it costs just as much to hire workers to install all these materials as it does to purchase them. The correlation is uncanny, considering it is a matter of man hours, and there are different levels of skill involved, but overall one third of the cost of construction is materials, one third is labor, and one third is contractor profit and overhead.
Average Home Building Cost per Square Foot: Contractor Profits and Overhead
One third of your cost goes to your general contractor to help cover his overhead. It’s not as unreasonable as it sounds. Your contractor is not getting rich. He’s just paying the bills for equipment, office space and a modest salary, but it still ads up to one third of your cost.
Average Home Building Cost per Square Foot: The Lot
The lot is extra, so whatever your land costs is added to this price. Lots vary considerably in price, from a few thousand dollars, up to over $100,000 depending on size and location.
Average Home Building Cost per Square Foot: Loan Costs and Interest
Interest, though often forgotten, is the single largest cost in constructing a home. Even at the current low interest rates, you’ll pay over 190 percent of your loan amount on a 30-year loan. That means that if you borrow $200,000 now, you will pay $380,000 in payments. To save on interest rates, consider a 15 year loan. The same $200,000 could be borrowed for 15 years. at a lower interest rate, you will pay only about $266,000 for the same loan. You’d save $114,000.
Remember, you can save on costs, by having only the shell built for you, and doing some of the work yourself, or by purchasing a kit which takes a shorter time to assemble, and by choosing less expensive interior finishing touches. You can also save by building a smaller home. By choosing a shorter term loan, you can save about $100k. By considering your design and doing some of the work yourself, you can build your home for less than the average building cost per square foot.