If you’re reading this article you may have already started searching for a house but haven’t had any luck. Now you’re thinking, “What if I build my own house?”
The idea & thought of building a house is great, however there are a lot of unexpected expenses associated with it. When I use the term “building a house” I am not referring to buying a new construction house from a builder. I am talking about going through the process with a builder to purchase a vacant piece of land & build a custom built home on it.
What Do I Need to Build a House?
In order to start the building process you will want to be pre approved with a lender for a construction loan. In most cases this will cover the cost of land & construction costs. These loan types typically require up to 20-25% down.
In addition to getting pre approved you will want to start conversations with a local home builder. I would recommend getting referrals from friends or family, or even going to visit parade of homes & asking recommendations there. Remember, working with a home builder is a time consuming & tedious process so make sure to pick someone who is detail oriented & personable.
Cost of Buying a House vs. Building
How does cost differ from buying a house vs. building a new home? To start, it will always be cheaper to buy a used house. Why is that?
Even though used houses still appreciate in value, you will never get a 100% return on your investment from the extra stuff you do to your home. Such as landscaping, pool, concrete, & that sort of misc stuff. Also, used homes are valuable off of comparable sales in the market. Meaning, if the market goes down then the price of the houses go down.
With new homes, they are valued on both construction costs (material & labor) & comparable sales. Home builders take into consideration the price of lumber & concrete when bidding out a house & have to build that cost in when it is in higher demand. As I am writing this article the cost of lumber is significantly higher than it was 5 years ago. Meaning, the cost to build a new homes in significantly higher than 5 years ago.
What is the Average Price Per Sq Ft?
Right now in April of 2020 the average price per sq ft of building a custom new construction home is $170-185 a sq ft. Meaning a 1000 sq ft home will cost you around $170,000-$185,000 in addition to the cost of the land.
Comparing that value to a new-used home, the average price per sq ft for those is $130-$155. And with the new-used home you won’t have to worry about pouring concrete for a driveway, putting in grass, landscaping & much more!
What Option Will You Go With?
I didn’t write this article with the intention of directing you away from building a new house. I wrote it so you would be aware of the cost associated with going either route. Building a new home has many benefits that include everything being brand new, you pick all the material/design, you choose the lot, & so much more.
If you need help finding your next home or have questions about the home building process please fill out the form below or give me a call/text on my cell 920-252-2864