Are you asking yourself “How much does it cost to build a house in 2021?”
Well, building a house has become an expensive endeavor, especially with lumber and other raw materials at all-time highs. But, even with the cost to build and buy a house continuing to go up, sales haven’t slowed down.
Here’s what you can expect to pay on average if you choose to build a house in today’s market.
How Much Does it Cost to Build a House?
There’s a lot that goes into building a home that you might not realize. Materials, labor costs, and the land itself are the key factors that will determine how much it will cost you to build your dream house. Obviously, each of these factors can cost different amounts depending on where you’re building, what time of the year it is, and what the overall market looks like. Another cost that should be considered is the plans and architectural designs that are developed for the home. Without the plans and designs, your builder won’t know how to start on the project or build it correctly.
Here’s a quick breakdown of the different items that you’ll need to pay for to start building your home. Each of these items is an estimate of what it will cost to build the entire home. These numbers will fluctuate but consider it a good starting place.
- Land: 50k – 1m+
- Site work and land preparation: <10k
- Floorplan and design: <10k
- Foundation work: 15k – 40k
- Framing: 50k – 75k
- Exterior finishes: 50k – 100k
- Major systems (HVAC, Electrical, Plumbing): 30k – 70k
- Interior finishes: 100k – 300k
If you do the math for each of these items then you’ll come out anywhere from just over 300k to well over 1 million. Of course, larger homes with more eccentric lots and designs can cost much more to build due to the luxury/unique material costs, increased labor costs, and the design fees.
One of the biggest variables when it comes to home building costs are raw materials such as lumber, copper, and the products that are made from them.
Lumber has become extremely expensive over the past several years especially during the COVID-19 pandemic. The all-time high and peak of lumber prices, which was seen just this last spring of 2021, was $1515 per 1000 feet of boards at wholesale. Since then the market has backed off slightly and lumber prices have fallen or corrected by nearly 51%.
As you can see on the chart, lumber prices have held a pretty average cost of around $450 – $500 in cash value. But during the pandemic, there were many factors that drove the prices higher including fewer workers and higher demand. Thankfully many industry experts are expecting the lumber prices to continue falling and likely reaffirming a new average cost in the near future.
Wildfires Could Be a Problem
One variable in the price of lumber as we head into the rest of 2021 and the upcoming year of 2022 is wildfires. Most of North America is experiencing one of the worst droughts that it has in 500 years. This leaves the potential for some very severe wildfires to burn up some wood supply.
Minnesota Home Building Costs vs. National Average
If you’re wanting to build a home in the great state of Minnesota, then knowing how much it will cost here against the national average means a lot to you. Luckily you’ll be happy to find that Minnesota sits right near the national average cost to build.
On average, homeowners are spending $100 – $150 per square foot to build throughout the country, and in Minnesota, the numbers are almost identical. While some homeowners may choose to spend upwards of $300 for every square foot, it’s not uncommon to spend significantly less than that.
Buying a Home vs. Building From Scratch
Before you build a new house, you’ll likely look into buying an existing home that’s already built. While there are pros and cons to each, the cost difference isn’t always very much. Sometimes the cost to build a new home is very competitive when compared to the cost to buy a home with similar square footage. Considering the housing market in 2021, we have seen home costs skyrocket due to the increased demand. With the market, lumber costs, and increased construction costs, building a home, buying a new house, or buying an existing house are all falling in the same general ballpark.
Another option to consider would be to modify your own house. While it could still be pricey with the increased material costs, renovating could be a good alternative if you are looking to improve your home while maintaining lower project costs.
Pros and Cons of Buying a Home
Right off the bat, the biggest downside to buying a home and not building it yourself is that you don’t have the ability to customize the home to fit your unique style and needs. But, that doesn’t mean that you won’t be able to find a home that’s very close to what you’re wanting and looking for! Here are a few more things to consider:
- Already built – no need to wait for contractors and construction.
- Cheaper rates on appliances – you won’t be buying new so everything will seem a bit cheaper.
- Investing and building equity – you might not be building it yourself but you’re still getting all the benefits of a long-term investment.
- Improving credit – buying a house is great for your credit and can help you build more credit as you work your way up to being able to build your own home.
- Maintenance and repairs – homes that have been around the block or at least been sitting on the same block for several years are going to need some maintenance and repairs from time to time.
- Unable to customize – unfortunately, you won’t be able to customize a home that’s already built. But you can, undergo a remodel or renovate the home.
- Updates may be needed – updates to simple things like a roof, bathroom, or flooring in a home can be expensive. Make sure you know what you’re getting yourself into.
- Less efficient – older homes will almost always be considerably less efficient than new homes. Over time materials and building, practices get better and better, making older homes more costly.
Pros and Cons of Building from Scratch
Combatting the #1 con of buying a home that’s already built is the #1 pro of building a house from scratch. Everyone loves that they’re able to fully customize the home to their unique style and needs. This is especially true when you’re working with a customize design-build company like Sustainable 9. Here are other items to consider:
- Lower competition – the real estate for used homes is hot, but you don’t need to worry about that when you’re building.
- Lower maintenance – new homes will feature all new appliances, HVAC, and more. Newer technology means fewer fixes needed over time.
- Low energy cost – newer homes are often built to be much more efficient. This helps you save money in the long run.
- You’re the first owner – that’s right, no one else has ever lived in the home. Just you and your family along with all the future memories you’ll make.
- Long wait times – it can take up to a year sometimes to build and finish large homes.
- Prices aren’t negotiable – you won’t be able to get a builder to budge much on price. If you want a high-quality home you’ll have to pay for it.
- Noisy and dirty – new builds are dirty and noisy. There’s just not much else to say about that, but thankfully things will quiet down and clean up after the first few months.
- Hidden costs – many builders will do their best to stick to a stated amount in a contract, but there are several hidden costs that can pop up or be unexpected. Anything from blinds to landscaping are costs that homeowners don’t always think about.
Finding the Right Design-Build Company for Your Project
If you’re looking for a design-build company that will take care of your every need and help make the process as easy and simple as possible, Sustainable 9 is ready to help. We’ve been designing custom homes for years, emphasizing energy efficiency while keeping costs down by utilizing an in-house team. All of the homes that we build are green certified and pass extensive testing to ensure that you’re getting the best possible home.
If you’re interested in learning how much it will cost to build your dream home, give S9 a call today! We’ll be happy to answer any questions you may have about the process. Be sure to also check out some of the projects we’ve completed as a place to get some inspiration.