Part of constructing a new home that you’ll fall in love with is building it in a location that meets all your expectations.
Who wants to come home each day to a beautiful house that’s somewhere you’re not happy with? They say location, location, location for a reason.
In the home-building world, there are two location options for constructing new homes: building on your lot or tract building.
The land you build your home on impacts more than just its physical location. Where you build your home has big implications for almost all elements of its construction -- especially the parts that come long before the foundation is put in.
Building On Your Lot Vs. Tract Building: A Comparison
There are some stark differences -- good and … not so good -- between building on your lot and tract building that directly impact your home’s construction. Let’s dig into both location options and their pros and cons.
Building on Your Lot
Building on your lot isn’t for everyone. It’s a longer process and places more responsibility on your shoulders. And since you absorb 100% of the cost to develop the property, it typically costs more, too.
Building on your lot means that you have to search for a lot, buy the land, and have it prepared for construction. This process takes anywhere from 3 months to over a year to complete.
As the land owner, you’re responsible for having the land surveyed and prepared according to local building codes with an acceptable:
- Perc test & Septic system (if required)
- Well (if required)
- Soil test
- Drainage plan
When it’s time to build, you’re on your contractor’s time. Contractors who build on privately owned lots are usually smaller companies with staffing and skill set limitations.
If your home’s floor plans are unusual or call for a variety of different/unique building materials, there’s a good chance for delays. This adds up to less efficiency, more time, and more money.
If you’re able to work with a larger production builder, you’ll pay top dollar to build on your lot. As I’ve heard it, large production companies charge $325,000 minimum in the Western New York region.
So why on Earth would anyone build on their own land?
The only way to get a true custom home is to build on your own land.
Building on your lot means:
- No deed restrictions
- No rules on what the house needs to look like
- No size limitations
- Typically fewer neighbors
- The ability to acquire more land
The only limits for your new home are building codes, your budget, and the laws of physics.
Pros: Complete design freedom, more owner oversight
Cons: Cost, added responsibility and involvement, longer completion time
Building in a Tract
Before digging into the finer points of building in a tract, let’s first look at what a tract is.
A tract (or tract) is a group of pre-prepared lots complete with infrastructure for the purpose of building residential homes -- a.k.a. a subdivision. Home developers buy a large piece of land and prepare it for construction with one of two intentions:
- To build and sell homes on the land themselves, complete with a model home/sales office.
- To sell individual lots to luxury builders who then sell the land along with the home to customers.
In some rare cases, subdivisions lots are sold on the open market. This happens when a developer has run out of money and/or interest in completing the project.
Back to the matter at hand…
Building in a tract is undoubtedly easier overall. That’s not to say it’s headache free -- no construction is!
Production builders typically provide a list of floor plans that offer some customization elements, as well as a good number of selections for materials and finishes. Through this system, costs are completely controlled and construction is more efficient. However, floor plans and selection choices are limited by what the builder offers in that subdivision. Your homesite choices are dictated by what the builder has made available and lot sizes are driven by the density of the neighborhood. Larger, or more desirable lots commonly have large premiums attached.
Tract-built homes take between 9-12 months to build, though some take half that time. In many cases, production builders offer the lowest new home prices on the market.
A luxury tract builder may offer a true custom home, but the price threshold for this amount of control and customization is high.
True custom tract homes usually can’t be found for much less than $500,000 or under 2,500 sq. ft. While they have a steep price tag, luxury tract homes are built alongside similar houses and may offer larger homesites. This ensures your investment is safe with other comparable homes on the same street and your home value remains high.
Of note, while luxury tract building offers customization, your neighborhood (think: homeowners’ association) may have something to say. Chances are your home will have a deed restriction that spells out size limitations and appearance guidelines. These “rules” are meant to maintain a certain look and feel in the neighborhood.
Pros: Speed, affordability, convenience
Cons: Lack of custom options, high price of entry (luxury builder)
Build on Your Lot Vs. tract Building: Is There a Middle Ground?
When comparing building on your lot to tract building, there are trade-offs. What you gain in freedom by building on your lot you pay for with risk of delays and overall cost. The efficiency of tract building is tempered by design and size limitations of your new neighborhood.
Panelized construction system offers a middle ground. Not only does it let you build a 100% custom home on your lot, independent dealers will work with you to complete the site prep work as quickly -- and headache-free -- as possible. Plus, the panelized system manufacturer can help you explore your budget options.
Learn more about our home construction process and the freedom it provides with our Custom Home Building Guide: