House Construction Costs - It’s a Great Time to Build!
Sunday, October 19th, 2008Now is a great time to build! Builders are hungry, prices of many construction materials are low, and the vendors are making deals to get business. If you have the resources, don’t wait. Build now and capture the savings. Right now, Warren Buffett is buying U.S. stocks because he sees them as a low-priced opportunity. Construction costs represent the very same opportunity. You can cash in big time if you act now.
I got a note from a prospective client recently asking for my advice on what construction costs might be for a new house. They were in the early stages of planning and wanted to get an idea of how much their new house might cost. Here is my answer:
I have recently had a house price out at $170 per foot and another as high as $275 per s.f. There are a lot of variable that can affect the cost, as you can imagine. The formula I use is to include all of the “heated” square feet. I do not count the garage and/or porches. This formula is sort of the industry standard. For budgeting purposes, I would suggest using $200 per s.f. as the low end and $250 as the higher end. Of course, it is possible to go considerably higher. The variability of cost is due to different exterior materials, the shape of the house, the appointments within the house, and the site considerations. But above $250 per s.f., the added cost is attributed to particular items, like very expensive cabinetry or particular site conditions, and things like that. It’s hard to get more definitive than that until the house is designed and those numerous variables are known.
My suggestion for calculating your square footage is to list out the rooms and spaces you want, including staircases, closets and hallways, if you can. Then assign target sizes to those spaces. It can help to use your current house and its rooms as guidelines for the target room sizes. Then multiply out the areas of each room, total it up, and then add ten or fifteen percent to the total. That added percentage is to account for the area used up by the walls themselves. Three running feet of a typical interior wall takes up one square foot! And the percentage accounts for inefficiencies in the actual house layout. Not every room will end up exactly at the target size. Then multiply the total by $200 and also by $250. That should give you a high and low number and a feel for where your construction cost will be.
Incidentally, when stating these costs of construction, I am including all of the sitework, like landscaping, driveway, irrigation, etc. These costs estimates also anticipate a three car garage, a front porch, a screened porch, and things like that. The figures also include all permits and inspection fees. They include everything that would be in you contract with the builder.
I will say that right now is a terrific time to build because the marketplace is hungry and prices are good. Lumber is very low, vendors are anxious to make deals, and even the builders are trimming their markup to get projects signed up. I think that in a couple of years we will look back at today and say, “Wasn’t that a great time to build? Everything was such a bargain.” Once the economy improves, the prices will surely go up quickly. Now that oil prices are going back down, some of the materials that went up due to the very high oil prices, like shingles, will likely go down sometime soon because of the slowdown in demand for construction products.
Take advantage of this Golden Opportunity to get your dream house built at a price you will never see again. The woes of Wall Street can be a bonanza for you.
Bill Hirsch






