Dear Future Homeowner,
The first thing on everyone’s mind when thinking about building a new home is obvious: how much will it cost?
The truth is, I just don’t know the answer to that. There are so many factors to take into consideration. It’s nearly impossible to give a prospective homeowner a definitive answer early in the process. I get that this can be frustrating.
That’s why I’d like to debunk some common pricing myths that I’ve heard surrounding the home building conversation, and explain what goes into a Barden custom home’s price.
Cost to Build a Custom Home: Perceptions and Their Realities
There are a few things many prospective homeowners often have the wrong idea about when it comes to the costs of building a custom home, including:
- The industry minimum
- Land and site prep
- Your actual budget
- Cost per square foot
1.The Industry Minimum
There is really no such thing as an industry minimum for custom home price. However, there is a point where building too small just doesn’t make sense for the builder or the buyer. Some cost components, such as site work, don’t change in tandem with the square footage of the home. Smaller plans become disproportionately expensive and are offered less commonly as a result.
The cost to build any home is going to fluctuate with market conditions and the cost of labor and materials. Your Barden Independent Dealer or Builder will advise on typical costs and a realistic price point you can expect in your local market.
2. Land and Site Prep
It doesn’t take long to realize there’s a limited supply of buildable land. In addition to the upfront price tag of the property, the cost to develop it for building is often underestimated. The cost of the lot and the necessary improvements should be professionally estimated and included in your overall budget right from the beginning. This includes site work needed to prep for the house itself such as:
- Driveway installation
- Clearing trees, bushes, and other vegetation
Your site work estimate should also include anticipated utility work costs, including:
Like searching for an existing home on the market, this step requires patience and the understanding that it may cost more than you hoped to get what you want. The sooner you start seriously looking for land, the sooner you can determine how it fits into your budget. Ultimately your project has to make financial sense to get completed, and the property is a big part of that.
3. Your Actual Budget
I've found that many buyers approach building without a good understanding of their affordability. Until you speak with a new construction lending specialist, it’s difficult to know what you can afford in terms of a monthly payment and how interest rates impact the bill.
Often, buyers find they have more money to work with than they realize. That said, what you’re able to afford also needs to line up with what you’re comfortable affording. What a lender says you can afford vs. what you feel is feasible for your budget may be two different things. Give yourself time to consider what makes sense for your situation and understand how changes in market conditions will impact your bottom line.
4. Cost Per Square Foot
There are just too many variables to quote a universal cost per square foot to build. Every site has unique development costs and every market will have unique conditions affecting the cost of doing business. Smaller homes typically cost more on a square foot basis than larger homes. Similarly, the cost per square foot of a ranch is going to be more than a typical 2-story home.
So how do you get an idea of what it costs to build? As a material supplier, Barden has visibility to the material packages we provide, but there is much more that goes into the total cost of your home. Your Independent Dealer or Builder that has experience in your local market can give you a realistic range of expected costs and help educate you on the unknowns.
Keep in mind that estimates are just that. The cost of labor and building materials are going to fluctuate-sometimes just a little, other times more significantly. Including a contingency reserve in your budget can keep your project moving forward in the event pricing adjusts before you’re ready to pull the trigger.
Real estate has its ups and downs. It’s driven by a variety of factors:
- The economy
- Market demand
- Interest rates
- Commodity prices
In 2020 and into 20201, low interest rates increased real estate affordability, making it a great time to get into a new home. On the other hand, inventory constraints lead to a higher cost to build than when materials were more abundant.
So do you build now or wait? My most practical advice: Consider your comfort level with the situation.
There will be lots of factors that impact our affordability, and I’ve seen many buyers lose their window of opportunity by waiting for something to happen. Trying to time and coordinate swings in the real estate market with real life needs isn’t easy. In my opinion, if your project works for you today then do it. Waiting doesn’t always work in your favor.
The Barden Difference in Controlling Custom Home Costs
Balancing wants and needs is key to the custom home building process. That’s why working with a Barden Independent Dealer or Builder needs to be viewed as a partnership.
Communicating your vision and being realistic with your budget, goals, and time frame is the only way your project will be a success. It’s the dealer/builder’s job to educate the customer and set realistic expectations about the possibilities, which is why you will always be asked what your budget is!
Designing a home for your needs that aligns with your budget is what Barden does best, but it’s the support and experience of our dealers and builders that will make your new home materialize.
I’m always happy to chat about the building solutions Barden provides and connect you to the local professional that can best help you with your new home construction plans! Reach out today to put your dream in motion!
(716) 995-6500 x110