The Cost to Build a Custom Home: An Open Letter

Dear Future Homeowner,

If you're thinking about building a new home, you've probably asked yourself one question more than any other: How much does it cost to build a custom home?

I wish there were a simple answer. The reality is there isn't an average cost to build a custom home because every project is different. Your home's design, your property, local labor costs, material prices, and many other factors all influence the final price. That can make it difficult to estimate your custom home cost early in the process, and I know that uncertainty can be frustrating.

That's why I wanted to write this letter. Below, I'll clear up a few common misconceptions about custom home pricing and walk through the biggest factors that shape the cost to build a custom home.

What Affects the Cost to Build a Custom Home?

There are a few things many prospective homeowners often have the wrong idea about when it comes to what comprises the cost to build a custom home, including:

1. The industry minimum 
2. Land and site prep
3. Your actual budget 
4. Cost per square foot 
5. Timing 

1. The Industry Minimum

There is really no such thing as an industry minimum for a 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, remain the same regardless of the home’s square footage. 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, the cost of labor, materials, and other construction costs such as building permits. 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 for a plot of land, the cost to develop a site 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 the site work needed to prep for the house itself, such as: 

• Leveling 
• Grading
• Driveway installation
• Clearing trees, bushes, and other vegetation

Your site work estimate should also include anticipated utility work costs, including:

• Water
• Sewer
• Gas 
• Electric 

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. But 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.

Resource: Explore other costs you should plan for when building a custom home.

3. Your Actual Budget 

I've found that many buyers approach building without a good understanding of its affordability. But 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 paying for. 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 financing a custom home build. 

Wondering What Financing Options Are Available to You?

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4. Cost Per Square Foot

There are just too many variables to quote a universal custom home 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 per square foot than larger homes. Similarly, the cost per square foot of a ranch is going to be more than a typical two-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 has experience in your local market and can give you a realistic range of expected costs and help educate you on the unknowns.

Keep in mind that estimates are just that -- an educated guess. 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 changes just before your project gets started.

5. Timing

The housing market is always changing, and that can affect the cost of building a custom home. Factors that influence pricing include:

• Interest rates

• Material costs

• Labor availability

• Housing demand

While market conditions may look different than they did a few years ago, one thing hasn't changed: it's difficult to predict exactly where prices will go next. That's why I don't recommend trying to time the market.

So do you break ground now or wait? Or do you take your chances on finding a home you'll love in today's resale market? My advice is simple: make the decision based on your own situation.

I've seen buyers postpone their plans, hoping construction costs would come down. Sometimes they do. Other times, they don't. If your project makes sense today and you're comfortable with your custom home budget, moving forward is often the better choice.

How Barden Helps You Stay on Budget

Balancing wants and needs is one of the most important parts of building a custom home. That's why I believe working with a Barden Independent Dealer or Builder should be viewed as a partnership.

Communicating your vision and being realistic about your budget go hand in hand. It's also your dealer's or builder's job to answer questions, explain your options, and set realistic expectations throughout the process.

Designing a home that reflects your priorities while staying within your custom home budget is what Barden does best. Combined with the experience and support of our Independent Dealers and Builders, you'll have a trusted team to guide you through the custom home building process.

I'm always happy to chat about the building solutions Barden provides and connect you with the local professional who can help with your new home construction plans. Reach out today to put your dream in motion!

Best,

Brandon Trombley

Sales & Marketing

(716) 995.6500 Ext. 200

Have Other Questions About Building a Barden Custom Home? 

Our Custom Home Building Guide covers everything you need to know about choosing a Barden home as your next home. 

This piece was originally published in 2019 and was recently updated to reflect current industry trends.