Let’s define what price per square foot means to most people. “In a home, it is the calculation of square footage above ground.” For example, a two-story home would have two levels calculated, main and upper floor. Bungalows and on-grade homes would only calculate one level unless they have a bonus room, then we would add this as well. Garage, Verandas, Decks, and Basement are not factored into this archaic formula.
Often asked, “what’s the price per square foot to build these days?”… Possibly the most loaded question in the custom building industry. Well, for example, are you looking for a basic entry level car, or a luxurious, fully loaded sports car? I always have a general idea, but it ranges from $250 – $600 per sq ft. This is NOT the answer anyone is looking for.
Years ago I worked for a volume builder that built the same plan over and over. This particular builder was popular for their 900 sq ft split-level walk-out basement that could be suited. Every house we built had very similar attributes. Always a rectangle design with a little jog on the back that created a covered deck area. The roof line was very simple, windows were always the same, and finishings didn’t change from house to house. You get the picture, simple, repetitive, and kind of blah. Therefore, pricing per sq ft of the main floor was used for every sale and it worked every time.
20 years later we are building custom homes that vary from 2,000 – 10,000 sq ft. They have large attached garages, and each one has its own unique design. The pricing formula needed to change with the times to accommodate for our complex design builds. So, instead of using one sq ft number attempting to capture an accurate budget, we calculate 10 key sq ft areas such as main floor, second floor, decks, verandas, basement developed area, non-developed area etc.
To illustrate this approach, let’s consider two 2500-square-foot bungalow plans that underwent budget pricing. By running these plans through the ten-step calculation, one came out to $420 per square foot, while the other tallied $480 per square foot (main floor only). This variance stemmed from factors including garage size, roof pitch, covered and uncovered decks, and a concrete veranda. With a comprehensive analysis of these ten different square foot areas, we can identify where costs are concentrated and explore opportunities for modifications to meet the desired budget.
The key takeaway is that building a custom home requires a tailored pricing approach, one that takes into account specific features, designs, and preferences. Determining the price per square foot in the custom building industry is a multifaceted challenge. While the traditional approach of using a single square footage number may have sufficed in the past, the complexity of modern custom homes demands a more intricate approach. By considering and analyzing various key square foot areas, we gain a clear understanding of cost distribution and can make informed decisions about your budget.
Unlocking the potential of your dream home begins with you understanding the nuances of pricing per square foot. Together we can embark on a highly personalized journey towards your dream home, all while working within your desired budget. For more information, refer to this article where we discuss more about “What does it Cost to Build a Custom Home?”
We can discuss the details and pricing for your dream home!