The answer: It depends.
If you fill up a grocery bag with spinach greens it will probably cost around $10. If you fill the same bag with prime cuts of meat you might have a bag that costs about $100.
So, how much does it cost per square foot to build a house? It is a reasonable question. We really do want to answer it. But the answer isn’t easy and isn’t approached the same way by different builders.
The problem is we all have different ideas about what our homes should be: what they should be made of, how they should be made, what size they should be, and how long they should be expected to last.
When building custom homes everything must be taken into consideration. The average home can have quite literally thousands of different individual pieces. Each of those items has its own cost. None of those pieces are made specifically to work with all the other pieces. To get all the pieces lined up and working with each other includes a lot of labor and expertise.
To make the problem even more difficult, a house is different from a bag of groceries in that all the pieces of a house need to work together, to be integrated and considered as a fully functioning organism when completed. Nothing really needs to work together inside the bag of groceries.
In the end, every builder agrees that cost per square foot can be a dangerous and incredibly maddening way to think about building and renovating custom homes.
Making cost per square foot appraisals for new construction, work that can be accomplished in many different ways with hundreds of options to choose from for everything from insulation, to roofing, to bathroom tile, is largely a guessing game. Even drawing on past experience and industry expertise, there are always many custom variables that will impact costs.
Still, you’ll hear cost per square foot used as a metric because the only alternative is to design a project fully and then value engineer the cost from that design. Those who have the most success using per square foot costs are larger housing developers who build the same house over and over again with very few small customizations. This method works for assigning per square foot costs because each house is the same. Square foot costs are problematic for custom homes which are inherently highly different from one to the next.
Recently, we took a poll among sixteen different northeast construction companies on the cost per square foot for a new, custom high-performance home and the range of costs given was $220 to $500 per square foot. The one who said $500 said it with a straight face and for their particular state and region, it made sense.
This cost per square foot generally does not include the land cost, site work, drinking water/well, septic/waste water treatment, driveways, landscaping, or appliances. It does generally include the foundation and excavation for the house itself. Some builders will include some of these other components in how they calculate their cost per square foot but the point is, how the cost per square foot is calculated varies from builder to builder.
Cost per square foot is impacted to a very large extent by the level of finish, how the house is constructed, the materials used, the land the house is to be built on, and the other many components of design and construction of each sub-assembly of the home. Each component impacts the price per square foot, bringing it up or down.
Overall, costs per square foot should be discussed with great caution, with an understanding of what components are being included in the calculation, and really only when all participating in the discussion are clear about the fuzzy-logic nature of making any conclusions based on per square foot costs.
Choose to work with a builder who shows you they understand the complexities of putting a house together. Be wary of those who tell you what the cost per square foot of your custom house will be before they’ve asked you a lot of questions and you’ve show them what you want your house to look like.