Whether you’re struggling to buy a home in today’s competitive market or can’t find a house that meets your needs, starting from scratch offers you the opportunity to design your dream home. A case can be made in favor of opting for a new build, but if you’re like many homebuyers, you likely have questions. The most important is, “How much does it cost to build a house in 2023?”
Building a Home in 2023? Here Is What You Can Expect
Buying an already-constructed home is challenging. Finding a house with everything you need in the right location that fits your budget can feel like a never-ending journey. Considering those challenges, it’s no wonder many shoppers decide to build instead of buy. However, building a home can be more expensive than purchasing an existing house.
According to Real Estate Witch, the median cost to create a home from the ground up is approximately $446,000. However, Forbes predicted the average cost to build a house as closer to $300,000, which is a significant difference. Both of these numbers are for the build out only, not the land. Since numerous factors impact how much a house will cost, it’s challenging to give a specific number to curious would-be builders without knowing the details of the build.
How Much Does it Cost to Build a House in 2023?
If you’re trying to estimate an approximate cost for a build but don’t have the specifics decided, looking at average expenses can be helpful. However, consider that suggested costs are estimations, and the actual costs associated with building a home can fluctuate based on seasons and material availability. Some professionals recommend factoring in a 15% increase in expenses to account for additional costs that may arise during the build out.
So how much does it cost to build a house in 2023? Factors such as square footage, number of stories, location, desired features, and local demand for supplies and labor will cause costs to vary from one build to the next. Take a closer look at some of the expenses you can expect when building a house:
Materials
Since the start of the pandemic, builders have seen a spike in the cost of materials. Lumber prices have been erratic, pairing record highs with staggering lows, leaving contractors wondering where things would level out. Currently, lumber prices are declining, although not all building materials have followed suit.
Construction necessities such as concrete, drywall, and metal fasteners are still at an elevated price point, with some categories rising in cost. These materials can also take an above-average length of time to arrive. Retailers cite supply chain issues as the reason for the increased price. Builders should be prepared to see price variations based on region, and if budget and time constraints are a concern, consider adapting their design plans.
Labor
Labor expenses will range depending on your location and the demand for skilled tradespeople in your area. If you’re located in an area with an overabundance of workers but minimal jobs, you should be able to hire a team at a lower rate. Alternatively, in areas with more jobs than workers, you can expect to pay a premium for labor.
Labor will typically be anywhere from 30%-50% of your total project cost. For example, on a build totaling $100,000, you could expect anywhere from $30,000-$50,000 to be spent on labor to pay the construction team to execute your vision.
Paperwork
If only building a house was as simple as picking out a nice piece of land and getting to work. Like most things in life, building a home comes with plenty of red tape to slow down the process. In the case of construction, not only can paperwork slow down the process, but it also adds additional expenses.
Depending on the project’s scope and location, you could pay anywhere from several hundred to several thousand dollars in building permits and fees. However, a word of warning to thrifty builders: if there’s anywhere you’re tempted to cut corners to save some money, don’t do it here. Failing to file the appropriate permits can result in fines and stress far more significant than the cost and aggravation of filing for permits correctly from the start.
Factors Impacting the Cost of Building a House
House Design
Complex home designs require more time to complete, which increases your labor costs. When trying to keep your building costs down, you’ll want to think carefully about the layout of the house you are building.
Since some of the most expensive aspects of the construction process are the roof, rafters, and foundation, houses with relatively simple layouts are less costly to build than sprawling designs that require a large foundation and roof. It’s also worth noting that custom floor plans will cost more to have designed than if you choose to work with a builder who has a set of predesigned plans.
House Size
The square footage of the house being built will impact how much it costs. Homes with a large footprint require more material to build and labor to complete, raising the price. How the square footage is used will impact the price as well.
If additional space means additional rooms, the fixtures the rooms need will increase the total cost of the build. These add-ons won’t make a drastic difference in bedrooms, but adding additional bathrooms can grow expensive quickly, especially if the features involved are luxury items.
House Features
It goes without saying that if you want to outfit your new house with high-end fixtures and features, the price will increase to match. However, that doesn’t mean you should forgo all extras when building a house. If you plan on building the house for resale purposes, you’ll want to weigh the benefit of adding features, such as a stylish kitchen backsplash and smart light fixtures.
While these features may cost more to install upfront, they’re worth adding if they help you get a greater return on your investment. You’ll want to research the extras you are considering adding and ensure they will add enough value to offset their cost.
Should I Build a House in 2023?
Only you know if you are in the right financial situation to begin building a house. However, if you’re confident about your finances and simply trying to predict the housing market, 2023 may be an excellent time to start the building process. Although housing costs have increased over the last decade, data from the National Association of Home Builders suggests that prices should drop to the national average of two to four percent during 2023.
Turning Point Lending Offers Innovative Financial Solutions
If you have your heart set on building a house but need some help getting your finances in order, Turning Point Lending can help. We offer flexible loan programs to get you the funding you need for your projects. Our streamlined application system can allow you to receive total funding within two weeks. You’ll also be able to update your financial information just once annually, allowing you to seek funds for new projects effortlessly.
Don’t let your plans for real estate investment be bogged down by the time-consuming process of pursuing a traditional loan. Work with a lender who values your time and offers creative loan programs to meet your real estate investment needs. Contact Turning Point Lending today.