I think the best way to approach this question—“What’s the cost per square foot to build a house?”—is through an analogy. And really, when you apply the line of thinking behind this question to any other product, you start to realize how ridiculous it really is. Let’s say that you want to buy a custom computer—and you’re going to have Local Computer Guys build it for you.
You drive down to Local Computer Guys, you tell them you want a custom computer, and they’re in—they can’t wait to build you something that blows you away.
So you ask (what seems like) a straightforward question:
“What’s the price per square inch for this thing?”
Local Computer Guys just stare at you. They say, “Well… that’s not how this works. You’re paying for the components of the computer!”
“It has nothing to do with the amount of space in the machine!” they tell you in a huff, “It’s all about the cost of the pieces! Three high-end processors are going to cost you quite a bit more ‘per square inch’ than three low-end processors.”
“Once you choose the components, then I can give you a price per square inch, I guess… but it’s kind of meaningless.”
The Cost Per Square Foot Is Vastly Different Between a Mercedes and a Kia, But That’s Because the Quality Is so Different
When customers ask me, “Hey, what’s the cost per square foot to build a house with you guys?” I cringe.
I cringe because I have no idea if I’m building them a mercedes or a kia. I have no idea if we’re talking a $5 million dream home or a $500,000 summer house. I have no idea what the interior, exterior, and guts of the house need to look like.
I have no idea how much the components are going to cost, which means I can’t give a good estimate.
The measurement is useless. It becomes even more useless when you start using it to compare custom home builders to each other.
Sure, I can give you a lowball price per square foot to build a house, and you can take that to another builder and see if they can beat it, but that number is totally without meaning. You have no idea where the amount is coming from.
If a builder is giving you a low figure, I’d have to wonder where they’re cutting costs. Are you still going to get the beautiful tile and the exquisite light fixtures that you’ve had your heart set on?
If so, and the cost per square foot from this other builder magically stays low, that probably means that the foundational materials of the house, the unseen structures inside your house, like drywall, plumbing, electrical wiring, insulation, and HVAC structures, are being skimped on.
Sure, you’ll get the glitzy, glamorous, flashy parts of the house at a lower cost… but if your house is falling apart two years later, if you have to rip all that glitz and glam out because your house is flooded or your electricity is going out, then it’s probably not worth the low upfront cost.
This measurement is more appropriate for cookie-cutter houses (and this is probably where it comes from, honestly). When comparing these identical houses built by huge builders, houses that don’t vary much between one builder and the next, it might make sense to discuss this metric (even then, I’d be inclined to disagree with its use).
But, if you’re buying a custom home, the measurement really stops being useful (if it ever was).
Don’t Worry too Much About the Cost per Square Foot to Build a House—It Means Nothing Until You’ve Chosen the Materials
Even when the finishing materials of your house, the stuff you’re going to see on a day-to-day basis, are the exact same as another builder, there can still be cost differences—because you’re not taking into account the quality of the stuff behind the walls, the guts of your house that make the difference between being a happy home owner and having to pay out the wazoo and rip your house apart every six months because of a poor-quality build.
When I work with my clients, I start from the beginning—I ask them “What are we building here? Tell me what you have in mind.”
It’s not until we’ve fleshed out a design and discussed materials that we can discuss price and financing options.
I can’t tell you how much it will cost to build something until I know what I’m building.
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