Everyone dreams of owning a house with all the comforts and luxuries possible. Most people use a mortgage to buy a house. The problem is you are buying what someone else has built. It is built as per the needs of somebody else. You may find that the house does not have what you were looking for. This problem can be solved by building your own house. You can build it from scratch and plan it in the way you want. Depending on your budget, you can build the home as per your requirements.
Building a home is a time-consuming process as compared to buying a ready home in the market. It can also be expensive depending on where and how you build. Let’s take a look at what all expenses go into building a home.
The National Association of Home Builders in the US came out with an estimate in 2017 on the costs of building a house. As per the findings of their survey, the average land size used to construct a house was 11,186 square feet. The average cost of building a house was $237,760. On average, the cost per square feet of constructing a house is between $125 to $150 per square foot. This is, of course, an estimate based on a survey. Actual rates would vary depending on various other factors.
The factors that decide how much you need to spend to build a house are:
- Land value: To build a house, you need land. The cost of land depends on its location. It is more in cities and less in suburban and rural areas. Even within cities, the neighborhood affects the price of land. Apart from the cost of land, there are other factors like taxes, closing costs, and so on. This varies from one place to the other. The first requirement to build a house is to buy land. If you already have land, then you can go ahead with the construction.
- House size: The cost of building a house depends on how large a house you want. The overall built-up area of the house determines its cost. Whether you want a one-bedroom house, two-bedroom house, or a bigger one will decide how much you need to spend. Having multiple floors in your house increases the cost.
- Standard or kit: Most homes are standard homes. Building them involves making a plan, which could be done by an architect. Then the construction work happens on-site until completion. A kit home, on the other hand, is built off-site and the materials are transferred to your land and assembled. This makes home construction quicker and cheaper. On average, a two-bedroom kit home can cost anywhere from $55,000 to $125,000. If you are planning to buy a kit home, you need to look into the fine print to know what is included in it.
- Materials: The quality of materials used determines the final price of construction. If you are on a budget, you can look for low cost materials like weatherboard to build you home. If you want quality, you can use bricks and veneer, which obviously would cost more.
- Interiors: The kind of interiors you want and the fittings would determine the final cost of a home. You can go for a budget home with the bare minimum interiors. If you have the money, you can spend lavishly on interiors.
- Manpower cost: You need to pay the workmen who are going to build your house. There would be specialized jobs done by contractors, electricians, plumbers, roofers, interior designers, and architects all of whom would charge for their services.
The NAHB survey provides input on the costs involved in constructing a single-family house. The results of the survey can be helpful in understanding how much you would need to spend on each activity in the home building process.
For this calculation, we are only considering building costs and not looking at the cost of buying the land.
- Site work
This involves carrying out engineering work and using an architect to make a plan. It also involves fees paid to the Government in terms of permits, impact fee, and other inspection fees. You would need to spend 6.7% of the overall expenses for site work ($15,903).
This is the process of excavating the site and laying the foundation for constructing the house. 10.8% of the overall costs should be budgeted for foundation work ($25,671).
This involves making the frame for the roof and trusses and also includes cost of materials. 17.3% of the overall expense would be for framing ($41,123).
- Exterior work
This involves building the exterior wall, windows, doors, and the roof. 13.9% of overall costs are needed for exteriors ($33,066).
- Interior work
Interiors include insulation, lighting, painting, flooring, cabinets, fixtures, fireplaces, etc. It is the major expense in building a house and would take up 28.6% of the overall costs ($67,939).
- Installation of systems
Heating, plumbing, and electrical work (without fixtures) need 13.8% of the budget ($32,746).
- Finishing touches
This involves landscape work, building the deck and patio, laying down the driveway and cleaning work. 7% of overall expenses would go for this activity ($16,591).
- Other expenses
You can budget 2% of the overall expenses for miscellaneous costs ($4,722).
The above figures are average costs based on a study done by the NAHB Economics and Policy Group. The actual costs could vary considerably. It can give you a tentative idea on what it costs to build a house. You would have also understood the various activities that need to be carried out and how much each of these activities would cost you.
With this in mind, you can contact different contractors and get quotes from them. Compare quotes and select the best to help build your dream home.