by Paul Biebel, President Biebel Builders, Inc & Prudent Living, Inc
In thirty years of building homes, the most common question I’ve heard from prospective clients is: “How much will it cost per square foot?”
The answer to that question is: “Well…cough…sputter…gag…that depends….”
If you ever hear another answer from a prospective builder, it’s a lie. How do I know? Well, because an accurate answer depends not only on the cost of building the physical house, but before that, four other cost variables must be addressed:
1. land acquisition;
2. plan development;
3. soft costs ( local and state permit and impact fees, engineering, appraisals, loan application and closing costs, legal, etc.);
4. site and lot improvement. If you spent $500,000 to buy the land, the cost per square foot of your 3,000 square foot home is $166.67 before you even choose a building site, apply for permits, etc. In order to accurately estimate your costs (in addition to the four variables already mentioned), we would follow these steps:
Step #1 – Establish parameters through client-builder dialogue
These days, most prospective homeowners have done some helpful homework before we meet. For example, they already know how much they want to borrow and how much they intend to spend. They have also compiled design sketches and pictures from magazines indicating what most accurately represents how they want their home to look. With these in hand, we can avoid wasteful design exercises with models and themes. For example, if someone tells me that they want everything to be accessible on the main floor, I know they are thinking about a large first floor footprint with a smaller upstairs for guests. It could be a two story colonial with a master bedroom el or a cape. On the other hand, if they tell me they like contemporary themes or just love the adirondack look, that also helps me to better understand the custom look they want.
When someone takes the time to sketch how they want their rooms configured and how they imagine their yard and entry approach, I can more clearly understand their thinking and I’m off to the races with the floor plans! I’ve designed several hundred homes over the last two decades, so once I get to know my clients I can usually pull out a variety of previous designs from our archives and offer a slideshow of photos from our portfolio of homes. This helps get us to within 10 percent or so of where the final costs may land and that’s usually enough to reveal if their budget can sustain the size of the house they want to build – certainly a lot to achieve in a first meeting!
Step #2 – Identify and label all spaces
All floor plans have various kinds of spaces and some of them are more expensive to build per square foot than others. In step #1, we’ll calculate the square foot of “living space” first. As we identify what’s “living space” and what isn’t, you’ll realize that areas like patios, exterior decks and porches, unfinished basements, crawlspaces, under-eave storage, breezeways and garages, woodsheds, attics and similar un-lived in spaces, are separated from our calculations of living space. We address the cost of other “non-living” spaces in a separate column.
Sometimes a premium multiplier is added to calculate living space. For example, if certain areas within the “living space” have high cathedral ceilings, we use a multiplier of 1.5 times the floor area beneath that space. Once we are done with our labeling of spaces, we are ready to tally up the total square feet of all the “living spaces” and “non-living spaces.” This identifies all the finished and partially finished and unfinished spaces on your floor plan.
Step #3 – Identify non-essential options
In step #2, we identify “non-essential items” within those same spaces and set them aside temporarily. We won’t forget them but set them aside for later discussion. Such “non-essentials” would include things like whirlpools, fireplaces, libraries and built-in specialty cabinets, special paneling, chair rails and wainscots, decorative beams, soffits and ceiling moldings, etc.
These are all nice things that give a house the charm and character that we all know and love, but they unnecessarily inflate the initial square foot estimating of the structure and for the sake of comparison, it’s best to budget separately for them.
Step #4: Develop separate line item budgets for other options
It’s better to treat these options differently. Some of these you may want to keep if you have enough money allocated for them. If so, we will add them back in later; but only after we have determined that our baseline estimate is within your budget.
This is where prudence works for you. Good things happen and bad things are avoided because we are counting the cost together as partners and not as adversaries and we do this before you’ve spent the money. This exercise will allow you to adjust downward on items like an excessive quantity of windows, transoms, doors and side-lights that came with that awesome plan you got from your window and door company. If the budget allows, we can add them back in later. We’ll also identify a cost premium for options on your plan, like nine foot ceilings and hardwood stairs, and let you decide if you want them.
Prudence requires that we dialogue about your preference for different floor coverings, cabinets, lighting, A/V systems, and appliance packages and decorator trims.
During the ’70s, ’80s and early ’90s we used to include only formica counters, vinyl flooring, and carpet in our baseline budgets. If you didn’t live back then, you may be stunned by such a cheap approach but if you did live back then you smile at today’s perspective on what makes a quality house. And, you may ask, doesn’t everyone have granite tops, hardwood floors, and custom tile showers with frameless glass doors? My point is that once you move away from using a vinyl flooring and carpet budget, the flooring budget can easily triple or quadruple.
There are many other things like saunas, steam baths, double vanities, and large master bathrooms with walk-in “California” closets on your upgrade list. While these upgrades are really fun to install and we love doing them, if a client wants my lowest cost/square foot price, these kind of upgrades must be excluded during the first round of square/foot pricing.
Even cabinets can stress your budget if you let them. In the late 1970s, in Vermont and New Hampshire, the average amount spent on cabinets and countertops in a modest 1,800 – 2,000sq/ft cape-style or colonial house was less than $3,000.00. Formica tops were standard while granite and solid surface tops were rare. In 2014, our starter homes rarely spend less than $12,000.00 for cabinets and counter tops. The average amount spent on cabinets and countertops in mid-size homes (3,000 – 4,000 sq/ft) is $15,000 – $20,000.00. The thing to keep in mind is that these expenditures don’t add a single square foot to the size of the house being built.
Step #5 – Don’t let “surprise” categories derail you
Surprise categories lurk everywhere when you plan to build. Some people want a mancave while others are big into whole house a/v systems. Still others love their exercise gym, sauna, and hot tub.
A particular category that surprises many prospective homeowners is the complexity of electrical wiring that goes into a house these days. I have yet to meet a client who is content with a basic “code compliant” electrical package, and this can substantially increase the cost per square foot. The menu of electrical options is very long and the fixture list for lighting includes locations for recessed, mood, accent, security, motion, low voltage, under cabinet, stair tread and safety, etc. Light fixtures themselves can be very expensive and difficult to assemble. But the temptation to add lights and outlets is difficult for most homeowners to resist.
My personal favorites are closet lights that activate when you open the door. I’m just a sucker for them. In many recent homes we have been asked to install wall sconces, closet lights, pathway and landscape lights, stair tread lights, recessed lights, night-lights, coded garage door openers, multiple microwaves and dishwashers, heated towel bars and sunlamps, entertainment systems, wireless Internet and docking stations, monitoring and alarm systems, and fully automatic generator packages. Dimmers are often preferred over standard switches and designer trim and rockers are replacing standard coverplates, switches, and outlets. Hallways and door locations can create travel conditions that require extra switches and lights because wherever a door is added, there’s also the need to control a light. I see even more choices coming, especially in the arena of alternative energy, heat pumps, and L.E.D. technology. And that’s just for electrical.
There are almost as many plumbing and heating choices to make, including full house vacuum systems, air conditioning, air exchangers, humidifiers, de-humidifiers, smoke filtration systems for smokers, radon protection, designer plumbing and heating fixtures, and radiant heat. The advent of radiant heat has also brought snow-melt systems for roofs, driveways and walkways, and heated towel racks.
And…did I mention all the “future” ideas that make sense to provide for during initial construction – like a barn or cute gardening shed in the back yard. Or maybe there’s a future outdoor pool or hot-tub that we should plan for and install related pipes, conduits, wires, and circuits? Do you dream of having a couple of horses someday? They will need shelter. While many of these projects may make sense to do during construction and they can add a great deal to your budget, none of them adds a single square foot to the size of your house.
Step #6 – Insist on quality, but consider quality alternatives
We insist on a high performance energy menu, good quality windows and exterior doors, and a floor system that is glued and screwed down, not just stapled. We don’t build houses that have squeaky floors. These treatments are always included in our base price, but many builders won’t spend a nickel on such things (if the nickel is coming out of their pocket).
Research will show you that vinyl siding is a very cost-effective consideration when considering products for your home. It’s inexpensive to purchase, easy to install, requires no painting, and is easy to powerwash. I realize it isn’t always everyone’s preferred choice, but interestingly, more and more doctors and other professionals stress the value of a maintenance-free home, and this sometimes means getting away from wood and wood products where possible.
A good vinyl system is worth considering for other reasons. First, it expedites the framing and roofing labor, since no exterior trim needs to be applied prior to application of roofing. This is a major slam-dunk for creating an efficient rhythm, saving both time and labor. However, if the owner just doesn’t want vinyl and desires wood trims and sidings, we’re very happy to provide them. It just takes longer and costs a lot more to install without making the house any bigger. As vintage Vermont carpenters, we are always excited to work with wood. However, we are dealing more and more with non-wood products designed to withstand the elements and hold up longer than wood.
How much will it cost per square foot to build your new house? Well, we’ve successfully built a few houses for under $50/square foot and some that cost more than $350/square foot, but the majority of our 3,000 square foot houses end up costing between $120 – $150 per square foot, and they aren’t junk! They include healthy kitchen and bath packages, hardwood flooring, and high performance windows. Even though we are very cost-conscious with every home we design and build, and are carefully sensitive to everyone’s budget all along the way, we prefer to be thought of as “cost effective, and absolutely never cheap!”