If you are building a home, you know about cost per square foot. Maybe you even know what your own cost per square foot is on your home.
It’s a common measurement when you are building because it gives you a baseline and helps you compare your build to the “average” in your area.
When someone is building your house for you, your cost per square foot could be anywhere between $120 to $500+ per square foot. (Note: This number can truly be all over the board. It’s all dependent on the cost of living in your area, the quality of materials, blah, blah, blah.)
I understand WHY people use this measurement. Because it’s easy and you can compare yourself with other homes in your area.
But I’m not a fan. And we really haven’t used it when we built our home.
That means I’m giving you permission to ignore it, too. (I’m generous like that.) Here’s why:
You don’t buy your home by the square foot.
The biggest reason we skip cost per square foot is because you don’t buy your home by the square foot. You buy it all.
And I think measuring your “success” in budgeting by cost per square foot only encourages most people to spend more on the house as a whole (total building cost).
It’s sort of like going to Target and only focusing on what you saved on Cartwheel. Like, that 5 percent off on berries doesn’t make up for the other $150 I spent on pillows.
But I digress.
Let’s look at an actual example:
- If your cost per square foot is only $90 (go, you!) and you are building a 5,000 square foot house, you need to be prepared to spend $450,000. (I’m hyperventilating just thinking about this.)
- If your cost per square foot is $110 and you are building a 1,500 square foot house, you will pay $165,000. (Much more affordable for a normal family, am I right?)
The cost per square foot simply can’t tell the entire story.
If you only focus here, you simply aren’t getting a good overall picture. And you may be more likely to go overboard – building a house you really can’t (or don’t want to) afford.
Or even worse – going through the process of designing your dream home, only to realize you can’t afford it.
(I hate that this happens more often than most ever realize.)
Cost per square foot rewards quantity over quality.
Building a larger house can give you great economies of scale. Because as your home gets bigger, your overall costs don’t increase at the same rate.
For example – when you have a small home, you have many of the same fixed costs as a large house. You still have to dig and pour the foundation, you still have to install a heating/cooling system, you still have to buy windows.
I know you’ll say, “But Kim, there will be less windows and doors and concrete in a smaller home …”
And that may be true. But those costs don’t necessarily increase as quickly as your square footage does. And a modest size home still has to pay for these big expenses, too.
My second beef with cost per square foot is that it rewards lower quality materials – if you buy the cheapest windows, doors, fill-in-the-blank, your cost per square foot may very well go down.
But that’s not a great method to building a home that will last over time.
I believe in investing in the things you don’t want to change. Those things cost more. But they mean that your costs will be less over time – due to energy efficiency and the fact that you may not need to replace them as soon as lower quality materials.
So how should I plan my house building budget?
There’s certainly a time and place for cost per square foot. It can be a good place to begin to know how much the house of your dreams would cost.
But you simply cannot stop there. And you can’t only look at cost per square foot when you are planning your build.
Building a home doesn’t have to be beyond your budget. We are proof that building a home can be affordable and manageable for a family’s budget. This doesn’t have to sink you. We were able to do it without signing our lives away to a mortgage (Hallelujah!).
But, doing this meant we had to be more interested in what we could actually spend overall. And it meant we had to put blinders on and build the best house for us.
In our case, we chose to build a house that was quite a bit smaller than the “normal” American new-build. This saved (literally) hundreds of thousands of dollars, and the home still provides more than enough space for our family because we planned the space carefully to work best for our family.
Other ways to save a great deal of money on the overall cost are serving as the general contractor or even doing some (or all) of the projects yourself.
These things aren’t always easy or fast. But the financial rewards are more than worth it.
But I want a bigger house.
I know that building a smaller home isn’t really normal. And I’m not saying everyone needs a smaller house.
I think you should do you.
If your family needs more space, I think you should do what works best for your family – obviously. This is a judgement-free zone.
But I get questions about building a house all the time. And the questions almost always center around saving money. You want to save money. I want to save money. We all want to save money.
If you want to save big money and still build a home you love, I urge you to take a look at the size of home your family actually needs – not what society or Real Housewives or magazines tell you that you need and deserve. Your true needs should intersect with what you can afford.
That may mean you still need a larger home. And cool – you do you.
But, you may be able to find or design a home plan that gives your family just the amount of space you need – and none of the space you don’t. That could mean a considerable savings.
And bonus: less to clean!
The bottom line – you can look beyond cost per square foot to build a home with a total cost that works for you. And you can do it on your terms.
I know it’s possible because we did it.
What is your biggest hang-up when it comes to budgeting to build your home?
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