You want a home to call your own. But, purchasing a house in a fierce real estate market can be difficult. And, it’s natural to wonder how much it costs to build a house. Fortunately, building a house can provide a viable alternative to buying one.
Benefits of Building a House
Key reasons to consider building a home include:
1. You Can Avoid a Real Estate Bidding War.
Forbes reports it costs about $300,000 to build a residence in the United States (not including the cost of land). Comparatively, the average U.S. home price reached $287,148 in May 2021, according to Zillow. This price is also expected to climb as the U.S. real estate market rebounds from the coronavirus (COVID-19) pandemic.
Building a house can cost more expensive than buying a residence. However, building a home ensures you do not have to settle for one deal with the rigors of a competitive real estate market. Rather than bid against other homebuyers, you can erect a residence that matches your specifications.
2. You Can Resist the Urge to Overspend on a Home.
Homebuyers sometimes fall in love at first sight with a house. They can narrow their focus to a home’s superficial elements, which can lead them to do everything in their power to purchase a house. This can lead homebuyers to submit offers to purchase at or above a residence’s initial asking price, even though they may be able to acquire the residence at a lower price.
Those who build a house can forgo the process and costs of buying one altogether. They can review their home construction finances and establish a budget. From here, they can determine how to get the most value out of the home-building funds at their disposal.
Related read: How to Become Financially Independent
3. You Can Customize Your Residence.
The real estate market constantly fluctuates. In many instances, homebuyers can find dozens of great residences that have the features they want. However, if demand outweighs supply, homebuyers may encounter challenges as they try to find their dream house.
By building a house, you can customize your residence and control the costs. If you want a home with a backyard, pool, or other distinct features, you can ensure they are incorporated into your construction plan.
4. You Can Install State-of-the-Art Technology in Your Home.
The Internet of Things (IoT) has changed the way people manage their homes. Research indicates 47% of U.S.-based Millennials have one or more smart home products. In addition, 555 million voice assistant devices are expected to reach U.S. homes by 2024.
Building a house allows you to install low cost smart devices anywhere you choose. You can integrate smart speakers, light bulbs, and other innovative devices into your residence. Plus, you won’t have to worry about setting up these devices on your own.
5. You Can Make Your Home Energy Efficient.
ENERGY STAR-certified products can help homeowners keep their energy bills low and reduce their carbon footprint. Yet, retrofitting a home with ENERGY STAR-certified products can be costly and time-intensive.
With building a new house, you can reduce costs by taking advantage of opportunities to make your residence energy efficient. For instance, you can leverage ENERGY STAR-certified appliances in every room of your home. Furthermore, you may be able to install solar panels and take advantage of federal and state tax credits.
There is a lot to like about constructing a home. To build a residence, it pays to plan ahead.
Related read: Tax Preparation Services Near Me
5 Tips to Build a New Home
Building a new home can be a long, arduous process. Thankfully, there are several things that you can do to streamline this process, such as:
1. Assess Your Finances
Do not jump headfirst into a new home build. Instead, conduct a financial assessment to verify you are ready to construct a residence. This gives you a chance to determine if the costs of building or purchasing a house can deliver the maximum ROI.
During a financial audit, assess your daily, weekly, monthly, and annual spending. You should also review your investments. If you don’t have any, there’s no time like the present to start investing. Look into which investments are right for your age and income brackets and get started. Your profits could help fun even the tiniest parts of your build.
Consider the costs and time frame associated with building or buying a home as well. There can be times when the best option is to enter the real estate market for the first time. Or, you may find that you are in great shape financially and are well-equipped to tackle a home build. Regardless, it is beneficial to perform an in-depth financial audit. Then, you can decide if now is the right time to move forward with a home build or purchase.
Related read: 15 Dividend Kings With 50+ Years Of Dividend Growth
2. Evaluate Your Home Costs
The cost to build a house can add up quickly. Here are costs to consider before your home build gets underway:
- Land: Land costs typically range from $3,000 to $150,000, based on the size and location of where you want to construct your house.
- Site Preparation: It can cost about $1,500 to $5,000 to clean up your land before you begin your home build. Also, site preparation requires you to account for the cost of linking your home to a city water or sewer system or setting up a well.
- Floor Plan: Hiring an architect to create a blueprint for your home usually costs between $2,000 to $8,000.
- Foundation: The average cost to build a foundation is about $8,000. This cost varies based on whether you choose a concrete slab (least-expensive option), crawl space, or basement (most-expensive option).
- Framing: Constructing the frame of a single-story home can cost $20,000 to $50,000.
- Exterior Finishes: It can cost $40,000 to $60,000 to add a roof, siding, and other exterior finishes to your home.
- Systems: The cost to set up air, plumbing, electricity, and other home systems can fall between $30,000 to $75,000.
- Interior Finishes: Paint, flooring, cabinets, and other interior finishes can cost $50,000 to $175,000, depending on how much you want to customize rooms across your residence.
Once you know your home build costs, consider how you will finance your project. At this point, meet with lenders to explore construction loans. You can then select construction financing that allows you to cover all of the costs associated with your home build.
3. Get Multiple Bids
Reach out to myriad home construction professionals. This enables you to meet with different professionals and find out what they have to offer. You can ask questions and gain insights into how these professionals will approach your home build, too.
Price is an important factor to consider as you get bids from home contractors. But, other factors must be considered to achieve the optimal home build results.
Oftentimes, it helps to look at a contractor’s industry experience and skills. You can also request references from contractors to understand how they have handled prior home builds.
4. Establish a Project Plan
Consult with a contractor and other professionals involved in your home construction project. Together, all parties can create a project plan and establish milestones to ensure that your home build stays on track.
Keep the lines of communication open during a home build as well. Roadblocks can arise at any point during home construction. By providing regular updates to one another, all parties involved in home construction can remain on the same page. Best of all, they can avoid miscommunications that can otherwise lead to project mistakes and delays.
5. Try to Remain Calm
Take care of your personal health and wellbeing throughout your home build. Building a house is a major endeavor, and the stress associated with the project can become overwhelming at times. If you can manage your stress throughout your project, you can enjoy the experience.
Here are some safe, healthy, and effective ways to limit stress during your home build:
- Establish realistic expectations. Accept the fact that everyone involved in your home build is doing their best to achieve the best possible result. With realistic expectations for your project, you can take solace in the fact that all parties are working together to accomplish a shared goal.
- Partner with professionals you trust. Learn how home-build professionals cope with challenges. This gives you a good idea about how these professionals will communicate and collaborate with you if challenges crop up during your home build.
- Prioritize self-care. Give yourself extra time to enjoy yourself during your home build. You can go for a walk, spend time with family members and friends, or engage in other activities that make you feel great.
A home build won’t be completed overnight. However, those who practice patience can handle home build challenges with confidence and composure, and do their part to construct their ideal residence.
The Bottom Line on Building a Home
Building a house doesn’t have to cost a fortune and can be a rewarding experience. However, building a residence is not right for everyone.
To decide if you want to build or buy a home, weigh the pros and cons of both options. This can help you understand if constructing a residence or purchasing one aligns with your life goals.
Finally, do not rush to build or buy a home. The real estate market has its ups and downs, but opportunities to construct or purchase residences are readily available year-round. Consider all of your homeownership options, and you can make a decision that serves you well for years to come.