We have all thought of building our own home from scratch before. It looks like a fairly easy thing to do and if those countless property TV shows are to be believed then we can have our dream home for a fraction of the cost of a stuffy 4-bedroom in the suburbs.
But how much truth is there in this?
Land
The first thing you need to consider is the land on which your home will sit. This varies greatly depending on the state and even the county. The cheapest is Arizona, which costs an average of $4,300 an acre, a fairly respectable price when you consider that 1 acre should do you, even for your dream home. Of course, for this price you’ll be buying land out in the middle of nowhere as opposed to a prime location in the city and anything available near busy town and city centers will likely be considerably more expensive and snapped up fairly quickly.
Construction
If you truly want to build your dream home then you will likely want to opt for a custom construction, which allows you to take part in every step of the process. But this doesn’t come cheap and the prices usually begin at several hundred thousand dollars, going all of the way up to a couple million.
You will pay by the square foot and will also need to get assistance from a builder, who can work to implement all of those little details you want. If you want to go for the cheap option then you can buy a pre-fab home, which can cost anything upwards of $30,000.
Labor
You can pay anywhere from $50 an hour to $700 an hour to hire the experts you need to build the foundations, configure the design and make sure the legal issues have been sorted out. If you’re building from scratch then you will likely pay a lot less per hour for a building company to do the work, but there can be a huge number of hours going into home-builds, so it’ll set you back a sizable amount over time.
If it’s only the legal issues, the land surveys and the engineering you need to sort out, then it could cost you between $5,000 and $30,000. And of course, the more you do yourself with any sort of build, the cheaper it will be. Just make sure you get the right tools and don’t try to cut too many corners. See The Sharp Cut for more info.
The Total
The average cost of building your own home in the United States is around $290,000, a lot more than you might have expected. Of course, it all depends on size, but as mentioned above, a lot of the money goes into buying the land and paying for the work—there are no diminishing returns here.
If you choose a cheap area, build a basic home and don’t hire too many people to help, it can be done for less than $20,000. And on the flip side, a large home built to a high spec in a decent area may cost you less than $1 million, even when similar homes in the area are selling for 3x to 6x more.
