The Cost of Building a Home and How You Can Reduce It

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A home is essential to every American family. However, it can be expensive to build one. Thankfully, there are various ways you can reduce the overall price of your home without sacrificing quality too much. Here’s the average cost of building a house and how to save on building it.

The Cost of Building a Home

It is no secret that building a home is expensive. The median price of building a single-family home is $289,415, or $103 per square foot. However, this number will differ depending on the location, lot size, house size, and features included in the house. For example, if you want to build a 2,000-square-foot home with high-end finishes like granite countertops and hardwood floors, you can expect to pay closer to $400,000.

The estimate above does not include the land you need to build a home. The average cost of land is about $12,000 per acre. You might think that cheap, but remember that it can differ widely per state and city. Some cities like New York sells a land parcel for over $690,000! If you own the land, you can factor that cost out of your total budget.

Construction Expenses

The most significant chunk of your home-building budget will be the actual construction. The median price of building is $85 per square foot (if you add the contractor’s pay, that reaches $103 per square foot), but it can differ based on the complexity of the design, quality of materials used, and the amount of labor required.

For example, if you want to build a 2,000-square-foot home with high-end finishes like granite countertops and hardwood floors, you can expect to pay closer to $170 per square foot for construction.

You will also need to factor in other costs like architect fees (between 3% to 10% of the total project cost), permits (about $2,000 on average), and utility hookups (which can cost about $1,500).

Reducing the Cost of Building a Home

Now that you know all the expenses involved in building a home, here are some ways you can reduce the cost:

  • Build a smaller home: A smaller home will cost less to build. For example, if you’re planning on building a 2,000-square-foot home, consider reducing it to 1,500 square feet. You can still have all the features and finishes you want, but it’ll be more affordable.
  • Choose less expensive materials: You can use many different grades of materials for your home. For example, granite countertops and laminate countertops have a significant price difference. If you want to save money, opt for the less expensive materials.
  • Do some of the work yourself: If you’re handy and have some construction experience, you can save money by doing some of the work yourself. Just be sure not to take on more than you can handle, so you don’t end up costing yourself more in the long run.

You can certainly reduce the cost of building a home, but it could take a decent chunk of your project. There is one alternative that you should always consider, and that is buying a home

A real estate broker giving the keys to the home

Buying a Home

Buying a home can be significantly cheaper than building one. This is primarily because you’re already getting a house and land. You don’t have to pay for the land or the contractors to build the house. You only need to pay for the actual house itself and any renovations or upgrades you want to make.

The median price of a single-family home in the United States is around $300,000. That’s already a significant saving compared to building a home, which can cost upwards of $400,000. And if you find a fixer-upper, you can save even more money.

If you add in the low mortgage cost nowadays, you can save a lot more on your home purchase. You can even choose to negotiate the amount if it’s adjustable. It also gives you access to refinancing, which is always a great investment option in the future.

Of course, there are some drawbacks to buying a home instead of building one. For example, you might not be able to find the perfect home that has everything you’re looking for. And if you do find that dream home, it might be out of your budget. There’s also the possibility that the previous owner didn’t take care of the property, which can cost you more in repairs.

It’s up to you to decide whether building or buying a home is right for you. Weigh the pros and cons carefully and make the best decision for your situation.

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