If you are looking for a way to drive yourself absolutely crazy, grab a blank piece of paper and try writing down all the things you would pay for if you wanted to build a new home. You could probably come up with 1000+ items without even trying. When the pros budget for new homes, they start with a list of primary cost categories.
Cost categories are similar to items in your personal budget. The pros tell their customers to plan on so much money for each category. Amounts vary based on what the client wants, and some categories cost more than others. Here are the top eight for new home construction:
According to Park City, Utah’s Sparano + Mooney, land is the primary concern. It is often the costliest as well. Land is most expensive where demand is highest, making Utah one of the more expensive states in which to build. Utah has enjoyed an extraordinarily strong housing market for nearly a decade now.
Note that the land category pertains only to land selection and acquisition. You are looking at the cost of the land plus attorney’s fees, the appraisal, etc.
2. Site Improvement
In order to build a new home on a recently acquired piece of land, the site itself has to be improved. You need water and electric service. You need the land properly graded to ensure drainage. You need a sewer connection or a septic system.
Next up, you need to have an architect design your home. Of course, this is assuming that you are building a custom home from the ground up. If you’re building a tract home, you are probably only going to be offered a few floor plans to choose from. Nonetheless, whatever money the builder spent on architectural services is built into the cost of your home.
Whether you build on a slab or a basement foundation, laying that foundation can cost quite a bit. You could spend tens of thousands of dollars depending on the type of home you’re building.
The framing portion of the home creates both the exterior shell and interior rooms. A home’s frame is essentially its skeleton. It gives the home definition and keeps it standing. Framing is something you never want to skimp on.
The sixth category is the exterior category. Here, you are looking at things like siding, brick work, etc. Landscaping is also included here. Anything that would be considered an exterior finish falls under this category.
A home’s mechanics are those things behind the walls. They include heating, air-conditioning, plumbing, electric, etc. Mechanics are not only key to your comfort, but they are also necessary to get a certificate of occupancy. They also have to be handled according to strict building codes. Many home building projects are held up waiting on inspectors to come check the mechanics.
The final category is interior finishes. It involves a lot more than you might think. In some cases, home builders spend more on interior finishes than on the land. You can spend an awful lot on bathroom fixtures, outfitting your kitchen, putting in floors, etc. This is one area of the budget capable of getting out of control rather quickly.
It goes without saying that building a house isn’t cheap. The more customized the build, the more expensive it gets. Architects and builders utilize cost categories as a means of budgeting. That way, they make sure they have enough money to give customers as much as they can in all eight of them.