With a competitive real estate market right now and the coronavirus leading people to reconsider what they really need out of their home space, it’s no wonder a lot of people are interested in building a home rather than buying an existing one.
Building a home can be a lengthy and involved process, not to mention that it is often more expensive than buying a house.
Do you plan to build, and you’re wondering what you should expect in terms of the cost?
Let’s take a look at everything you need to know.
Is It Cheaper to Build or Buy a House?
When considering building a house vs. buying, the cost is likely one of the first factors you’ll want to investigate.
According to Home Advisor, the average cost of building a house from start to finish is $303,373, and the expected range is between $158,572 and $478,600. The National Association of Home Builders claims the average cost of building is much higher than this, costing $485,128 for a single-family home.
On the other hand, the median home price in June of 2020 in the US was $295,300. However, it’s important to understand that the coronavirus pandemic’s specific circumstances have led to historically high home prices in 2020. This means that this price might be higher than expected because of the low inventory on the market and low-interest rates.
There is also a middle-ground option: to buy a new, semi-custom house from a developer. This will typically cost about $50,000 more than if you were to buy an existing home that was previously owned.
As you can see, it is typically cheaper to buy a house and to build a house. However, several different factors will impact how expensive it is to build a custom home.
What Is the Cheapest Type of House to Build?
If you have your heart set on building your own home, but your building budget is small, You might be wondering what the cheapest type of house to build is. Let’s take a look at your options.
A tiny house is one of the cheapest types of houses you can buy. However, living in a tiny house requires the willingness to live in a space that is between 100 and 400 square feet. The median cost for building a tiny house is about $60,000, but this can range wildly depending on whether you build it yourself or hire someone and what kind of amenities you include.
Shipping container homes are a growing trend and can cost anywhere between $10,000 and $175,000, depending on how many shipping containers you use.
Building a one-story ranch typically costs between $150 and $180 per square foot. This means if you build a 2,000 square foot house, it will cost you between $300,000 and $360,000.
With tiny houses and shipping container houses, you’ll need to familiarize yourself with the local building codes, zoning, and regulations in your area.
There are some things you can do to help keep the cost of building your own home down. For one, in general, minimizing the size of your foundation in your roof by building up rather than out can help save you money. It is also cheaper to have a concrete slab rather than foundation walls for a basement or crawl space.
You can keep costs down by sticking to four walls and a roof in a simple rectangular shape. When there are protrusions or odd angles on your house, it will add to the cost.
How Much Does It Cost to Build a Home in MA?
While understanding the national averages for building costs, it’s important to know that these prices vary quite a bit between states. So how much to build a house in MA?
According to Home Advisor, it costs between $250,000 and $600,000 to build a house in Massachusetts. As a reference point, the average cost of a house in Massachusetts in 2018 was $385,000. However, the cost of a house in the Boston area will be a lot different from the cost of the same house in a less desirable area of the state.
To finance building a house, many people will use construction loans.
What Is the Most Expensive Part of Building a Home?
Before we get into the most expensive part of building a home, it’s important to note that these costs assume that you have already purchased a plot of land. Land prices can vary greatly between locations, so you will also want to factor this into your budget. Depending on where you are planning on building, the land you buy could be the most expensive part of the process.
When you build a house, there are a lot of different expenses to deal with. By far, the most expensive part of building a house, though, is the cost of the finished lot. This is sometimes lumped into what is referred to as the sales price.
For example, if a custom home is built for $428,000, it will typically cost about $92,000 for the finished lot.
The sales price also includes the real estate agent commissions, the profits to the home builders and vendors, financing charges, overhead, marketing charges, and general expenses. For the same $428,000 home, the sales price’s average cost will be around $190,000.
The next most expensive part of a house is the interior finishes. For a $428,000 home, this will typically run you $60,000. This includes things like cabinets, countertops, drywall, flooring, lighting, insulation, painting, plumbing fixtures, appliances, doors, trims, mirrors, and more.
Framing is the next most expensive step of the building process. For our $428,000 house, you will spend about $41,000 on the framing alone.
After this, exterior finishes will cost you around $33,000. Next are your major systems like HVAC, electrical, and plumbing. This will run you roughly the same as the exterior finishes at about $33,000.
Do you need to sell your existing house? If so, check out the best time of year to sell.
Is Now a Good Time to Build a House?
Whether or not now is a good time for you to build a house will depend a lot on your own specific circumstances. However, with an incredibly competitive housing market and many people realizing the specific needs of their family during the coronavirus’s international crisis, there are some arguments to be made for building your own house.
With so many Americans working from home, many people learn what they really need out of a house. This might make them more particular about their home’s amenities and features than they were when they were commuting and working in an office. At the same time, many buyers are looking for homes and not that much inventory out there.
Can I Build My Own House In Massachusetts?
Yes, you can certainly build your own home in Massachusetts. However, this isn’t the colonial days or the wild west. You cannot simply buy a piece of land, start chopping down trees and build yourself a cabin.
It is a regulated process that requires you to receive proper approvals from your local municipality, and you must abide by all local zoning and building code ordinances.
New to Massachusetts? Here are some helpful winter driving tips.
What Makes a House a Home?
The average American will move more than 11 times in their lifetime. If you have moved several times in your life, there is a high likelihood that you have experienced that some places feel more like home than others.
The perfect home will mean different things to different people. However, for most of us, where we live is the place where we can fully express ourselves. For this reason, it is vital to create a sense of home in any house we live in.
For many people, a sense of home is less about the building itself than the emotional connection and comfort that we can have when we are there. Having a private space that we feel comfortable in is a big part of having a sense of self-expression and well-being.
According to homeowners that were surveyed in the UK, a sense of happiness in the space was the number one quality that made a house a home. That was followed by love, security and safety, the sound of laughter, and meals with family and friends.
Conclusion: Building a House Vs. Buying a Home
The decision to build a home rather than buying one is something that you’ll want to put a lot of consideration into. For many people, it is worth it to be able to create the space of their dreams. For others, though, it might be more practical, affordable, and realistic to simply buy an existing house.
Building a home is typically more expensive than buying a home and will definitely be a major time-investment that you make over a period of time. That being said, if you know that your family needs specific things out of a house and you aren’t finding them available on the market, building a house might be the right choice. When you build your own house, there is something particularly satisfying when you do the final inspection and get a glimpse of the new life you are about to embark on.
Whether you buy or build, you’re going to need insurance that fits your lifestyle. You can get a quote for home insurance today!