Before you shop new houses or builders by comparing price per square foot, get the inside scoop on what really goes into that number.
The question of price per square foot in building a new home comes up often, and it is easy for a builder to give a manipulative (and even deceptive) answer to lure you in for a sales pitch. Because of this, I wrote this case study comparing 2 homes my company built in 2016 to give you, the potential home building client, insight into the price per square foot game my industry has forced everyone to play.
With this knowledge, you'll be able to ask more penetrating questions of any builder to make sure he's not trying to bait you by giving you an answer he thinks you want to hear.
I picked 2 houses of 2 different sizes and 2 very different configurations, to show the effect of square footage on the price per square foot, as well as the way configuration (meaning the layout of the rooms, cabinets, etc.) affects the price of the whole house, regardless of square feet.
The houses had similar finishes, were built in the same time frame, and are in the same market area. They were both built using the same set of suppliers and contractors, so labor and material unit costs are the same. My company contracted the building of both houses, so the management systems were the same.
Here is a summary of the 2 houses in the case study:
- House #1:
- 2908 square feet of conditioned (living) space
- 3 car garage
- 4 bed
- 2 1/2 bath
- House #2:
- 3670 square feet of conditioned (living) space
- 3 car garage
- 6 bed
- 3 1/2 bath
Below you'll find the overall costs for certain groups of items, and these are actual numbers. To keep it readable and not totally confusing, I combined lots of individual items together, otherwise the table would have over a hundred items. Also, there are many items not included here because they aren't relevant to the overall point and just make it confusing.
|Cost Comparison: Overall Item Cost|
House #1(2908 sf)
|House #2 (3670 sf)|
|Trim, cabinets, paint||$24,875||$31,937|
Again, the above table doesn't include every single item it takes to build a house, but what's included is a good snapshot of the stuff that isn't totally square footage dependent.
Next, let's look at the cost per square foot of each of the above items. In other words, the amount that each item contributed to the cost per square foot:
|Cost Comparison: Item Cost per Square Foot of House|
|House #1 (2908 sf)||
House #2 (3670 sf)
|Trim, cabinets, paint||$8.55||$8.70|
As you can see, everything except trim / cabinets / paint cost more per square foot in House #1 than in House #2. What this demonstrates is the priciple that as the size of the house goes up, the price per square foot goes down. That rule applies for any houses of comparable quality and finish levels.
Also note that the Land Development category cost nearly twice as much in House #1 than House #2 - that's a category that is totally unrelated to the size of the house. Whatever it costs to prep the land (dirt work, well, septic system, hauling off trees and/or debris, etc.), is what it costs. If you have lots of square feet to spread that cost over, then you'll have a lower cost per square foot. It will show up as a number in the cost per square foot calculation, but is irrelevant as a comparison between 2 houses.
So what's the point of all this? To show you how dangerous it is to get suckered in by a discussion of cost (or price) per square foot when you're comparing houses or builders. There are so many factors involved in determining cost to build that it's easy for the seller of any house to game the system by manipulating what is included to either raise or lower the price per square foot.
For a more in-depth look at the floor plan design process, to see how different elements affect cost per square foot, how a house designer thinks, and how to optimize your house plan, download our free guide, 3 Steps to the Perfect Floor Plan