Are Custom Home Builders More Expensive?
We are frequently asked whether building a custom home is expensive, so we decided to address the question. Are custom home builders more expensive? There are several ways to respond to that question, and it all comes down to what the best option is for building a new home based on your needs, wants, and circumstances.
To answer the question thoughtfully, “Are custom home builders more expensive,” we’re going to take the approach of more expensive in comparison to what?
If you’re thinking about building a new home and wonder are custom home builders more expensive, then it may help you to think about what you are looking for in the home. Often, what appears to be more expensive on the surface, is in fact more inclusive of value-packed items. What really matters are your goals and the desired outcome.
You Have Options
You have options available to you when building a home. People most often go in one of two directions: a custom home builder or a production builder. Both types of builders have their benefits, drawbacks, and trade-offs.
Depending on your goals and desired outcome, either type of builder can be a viable option for you. But it’s important to understand the differences between these two options.
A custom home builder will build what you want – uniquely personalized to you – without any preset parameters. On the other hand, a production builder will build a home for you based on fairly rigid, preset parameters within which you get to make some choices to personalize your home to your taste and needs. When wondering are custom home builders more expensive, remember that both options have their place in new construction. As a result, either option can make building a new home an attainable and attractive goal.
There’s a third type of home builder that we’re not addressing in this blog post: a spec builder. A spec builder builds a home based on the speculation that the builder will sell it when it’s completed with very little, if any, customizations. It’s quite possible that any builder can do these three types of building at any given time.
Are custom home builders more expensive? The answer now is that the cost is relative to your goals. A custom home is a home that is unique to your wants, needs, and style. Building a custom home provides you with the most choices and the most flexibility in what your home will look like, how it will function, and how it will achieve your lifestyle goals.
Most custom home projects involve a team of professionals that help balance the project’s goals against constraints, like budget or topography. Architects, civil engineers, landscape architects, structural engineers, and interior designers are all examples of the team members that might be involved in a project. Aligning professionals onto your team is exciting, and it’s fun to see their creative juices flowing into your unique project.
There are some significant benefits to choosing to build a custom home.
- Lifestyle. Most people who build a custom home do so to meet their specific needs and life. A great example is a home built to ensure aging in place is possible, such as the option for one level living, even in a two-story home, by adding an elevator and wide doorways and halls to accommodate assistive mobility devices. Custom building can also accommodate studio space for artists, abundant and creative storage for gearheads, and advanced technology for gamers and home theaters. Lifestyle considerations are limitless in custom building.
- Health and Energy. Beyond just building a home using green construction techniques, people who build a custom home can choose how green they want to make their homes. A green home can significantly improve indoor air quality, reduce energy costs substantially, and minimize the home’s footprint by using sustainable materials and smart design. The homeowner can choose from any number of certifications to obtain, including Greenbuilt NC and LEED certifications.
- Longevity. Product choices in a custom home tend to be more about performance. Custom home builders look at how well a product, material, or system will meet your needs and perform over time – instead of which product or system is the cheapest. The beauty of it is that it’s your choice.
- The land. A custom home design typically means the home will work in tandem with the land to capture all that nature has provided. Instead of fighting the earth to site your home, you’re building with intention when you build a custom home.
- Location. For most people who build a custom home in the Asheville area, they’ve found a perfect piece of land. They want to design a home that fits it perfectly, just as they want the home to fit their lifestyle needs, design preferences, and unique style. That’s what custom home building is all about.
There are some drawbacks to building a custom home. Most notably and for several reasons, it takes longer from start to finish.
Most people start with finding the perfect piece of land, and often they engage a builder to help visualize how a home could be configured to that property. Next, they engage an architect who understands their lifestyle, personal style, and goals for the home. Often the builder can make introductions and help the client to find that perfect fit. Sometimes the client finds their architect first, and that’s okay as well.
Identifying the builder early in the process allows a flow of information back and forth to the client and architect regarding cost and products. If cost is the limiting factor, then the builder can weigh in on ideas to help control cost. Custom builders frequently do preliminary pricing on early versions of the design to help steer the project toward construction more quickly.
Then we move into permitting and building. Construction of a new home is like most things in life. Some days you will be on cloud nine and others, not so much. Construction delays happen, which can be anything from weather and material delays to re-inspections and design changes. Here’s where a custom builder really shines because you have a personal relationship with the builder and their team.
You can count on the fact that your project is important to your custom builder and not just another number. When weighing costs, this is an area that’s hard to factor into the equation. If you know you want to be involved and have input, then you may already be on your way to using a custom builder.
But when it’s done, the custom home is a complete reflection of the homeowner. It’s unique. It endures. And when done well, it seamlessly meets the homeowner’s wants, needs and lifestyle.
As we mentioned earlier, when asked are custom home builders more expensive, our response was compared to what? Compared to a production builder.
According to the National Home Builders Association, a production builder is a home builder who builds communities, like a subdivision. They typically own the land they are building on and usually have a say in how the community is developed, from aesthetic to amenities, such as trails, playgrounds, clubhouses, if any.
Building a home with a production builder tends to be a more rigid process within a limited or preset scope. You have limited choices and less flexibility because the production builder is all about efficiency in the building process. Some of that efficiency includes:
- Bulk buying power. One benefit of limiting your choices is that production builders can order and buy materials in bulk at a lower cost because most materials will be the same from house to house. The trade-off is, for example, when picking your kitchen cabinets, you can only select from a limited number of styles and colors from one vendor instead of exploring all of your options as you would when building a custom home.
- Predetermined house plans. A production builder has a selection of house plans available for the subdivision from which you can choose. In many instances, the builder has predetermined which house plans are best suited for each lot. Further still, the floor plans are often the same and only the façades, or exteriors of the homes, change between the plans. Doing this allows for maximum efficiency, which can drive down some costs – from ordering materials and bulk buying to increased proficiency and a faster timeline. The trade-off is that your home will lack individuality. It will look similar if not identical to other homes in the subdivision.
- Mass grading. It is often more efficient and cost effective to grade the entire subdivision in one swoop (mass grading) instead of preparing individual building envelops to work in tandem with each lot in the subdivision. Yet the trade-off is that doing so changes the environment, and you have to wait several years for the landscaping, especially the replacement trees, to grow in.
While your choices are limited and your home isn’t unique to you, production builders offer some great benefits for people who want a new home but aren’t sure the custom route is right for them.
- Decisions. Having limited options from which to choose can be desirable for some people who get overwhelmed or have trouble deciding.
- Timeline. Because of the efficiencies built into the construction process, such as predetermined house plans, bulk ordering, always-available subcontractors, and speed gained through repetition, production builders tend to build homes more quickly than a custom home builder.
- Model homes. Most production builders build model homes for each style of home that will be available in the subdivision. You can walk through each style and experience the home, which is different from building a custom home. You must use your imagination and rely on computer generated images to get the feel of a custom home.
Factors that influence cost
Now that we understand the differences between a custom home builder and a production builder, as well as the benefits and trade-offs for each, let’s look at the factors that influence the cost of building a home. The way we see it, it isn’t so much that a custom home builder is more expensive than a production builder, it’s really about what influences the cost of what you’re building.
- Home design. Many people work with an architect to design a custom home that will fit their lifestyle, wants, and needs. People find stock house plans online, and we work with them to customize the plans to achieve their vision for their custom home. Production builders recoup the cost for their predetermined house plans as part of the construction budget.
- Materials. Production builders focus on efficiency, and part of cost efficiency oftentimes means using cheaper materials. Take for example roof shingles. Architectural shingles can last up to 40 years. A metal roof can last twice that or more. Yes, they cost more up front, but generally cost less over time. Asphalt shingles are cheaper up front, but they only last 15 to 20 years and will need to be replaced more frequently. Asphalt shingles do a great job, and they’re often the standard roofing material used on production homes. To change to architectural shingles would likely be considered an upgrade on a production home and cost more.
- Size and square footage. The larger the home, the more materials are needed to build it. It takes longer to build a larger home than a smaller one. More time and more materials mean a higher cost, in general. There are instances where this might not be true, depending upon the style of home, which we’ll go into in a bit.
- Level of finishes. In general, when working with a production builder, you can select your level of finishes from three options: basic, mid-level, and high-end. Basic may include laminate countertops; mid-level may include granite countertops; and high-end finishes might include marble countertops. Yet in a custom home, you get to decide every detail, which gives you substantial control over the cost of finishes.
- Topography. Building in steep areas, on a waterfront, or on an in-fill city lot requires more thought and intention than a production home with a mass graded home site. The foundation for a home built on a steep slope will cost more than the foundation for a home built on a level lot.
- Type of home. Modern contemporary homes are on trend with their walls of glass and open spaces. Plans for these types of homes require more engineering, which often equates to more steel and other structural items that add cost. The type of home and the size of the home are big influences on cost.
- Changes in plans. Sometimes changes in plans have minimal influence on cost, yet depending upon how far the work has progressed, change orders can add up. Take for example electrical outlets in a production home. If you want to add more outlets or change their predetermined location, there will likely be a change order fee associated with changing the plans. If you decide to change the placement or add more after the outlets have been wired, then you’ll be on the hook for additional labor and materials, too. You’d have to pay those costs, too, if you’re building a custom home, yet you would have decided where the outlets go in the first place.
A word about square feet
Whether building a custom home or a production home, you might hear the term cost-per-square-foot. Essentially, that term considers the cost of everything, from material to labor, that goes into the home and creates an average based on total cost divided by the number of square feet. Knowing historical cost per square foot can be helpful for custom builders when giving a prospective client an idea of about how much it will cost to build the home.
Yet, cost-per-square-foot is not a hard and fast estimate. Volatile materials costs that we’ve been experiencing over the past few years can create significant swings in cost-per-square-foot for production builders and custom builders alike. Changes also add to the cost-per-square-foot.
We’ve also noticed that people get hung up on the heated square-footage, thinking that it should cost more than unheated or outdoor spaces. For anyone that has bought an existing home, you likely know the home’s value is generally based on heated square feet, with unfinished or outdoor spaces adding some value, but not as much as heated square feet. Yet when building a home, oftentimes outdoor space and the exterior features are more expensive to build than a lot of interior heated space.
The key point to remember about cost-per-square-foot is that it is relative. Your selections, your materials, your finishes all influence it, as does the volatile prices for materials, labor costs, and more.
Expensive is a matter of perspective
When you decide to build a home, what counts as expensive is really a matter of perspective. Just like buying a home, building a home is a large investment for most people. There must be a balance between what you want in your new construction home – how you want it to look, flow, and perform – and what you’re comfortable spending on a new home.
You get to decide which option, a production builder or a custom home builder, is the most viable option for your needs and your desired goal. A production-built home can feel luxurious, just as a custom-built home can be as practical as they come. There’s nothing like living in a newly built home. From our perspective, whether you go the route of a production builder or a custom home builder, you win.
Ready to get started? Have more questions? Contact us.