Construction Costs of Building a Home

Geography

• Geographic locations will significantly alter the cost of home construction. Some areas are abundant with resources and thus home prices are lower. Areas where resources are scarce are able to charge a large premium on these costs. For example, Northern California home construction costs are typically the highest in the nation. Much of this is derived from the small blue collar labor workforce in the region. Contractors and subcontractor unions charge a premium for their services, which in turn raises home construction costs.

Misconceptions

• Many people view the cost of home construction as unpredictable and random. With any reputable contractor, this is simply not the case. Home construction typically utilizes common wood construction techniques that serve as a standardization for the industry. Because of this, you can easily estimate the cost of a home in a particular geographic region. The Associated General Contractors of America publishes costs per square foot for home construction in all regions. Access this information through their website listed in the Resources section. You can use this cost per square foot to determine your predicted cost based on the size of home desired. For example in California, the average cost per square foot of new construction is $75; based on this value, a 2,000-square-foot home would approximately cost $150,000 to build.

Considerations

• One element that will affect the cost of home construction in your geographic region is the quality of finishes selected for your home. If a home is designed with high-end finishes, the construction cost will predictably be more. For example, a home with marble counters and mahogany paneling (two very costly materials) will cost more than the average home constructed in the area.

Warning

• One instance of home construction costs not being predictable is when the owner constantly requests changes to the original design. If a contractor is forced to re-work construction and order new materials for a home's construction, then typically the costs will be magnified. The best method to maintain an estimated cost is to minimize design change as much as possible once construction has commenced.

Expert Insight

• Home construction costs are a fairly straight-forward for experts. However, for those people unfamiliar with the construction industry, they can be an enigma. Make sure to form a strong relationship with your contractor before hiring for the project. You will need to rely on her expertise to achieve a desired result and cost. Additionally, take time to research home construction costs in your immediate area. You can accomplish this by contacting local contractors and asking them for the square foot costs of recent home projects.