October 30, 2019

Cost Per Square Foot

The home building industry has trained homeowners to ask the simple question of “how much per square foot does it cost to build a home.” But the answer itself is not so simple. Many builders will say a number to appease the prospective customer without truly gathering enough information to provide an educated response. 

At Wallmark, we have built homes over the last two years between $800,000 to $1,700,000, ranging from the low/mid $200s a foot to the mid/high $300s per foot. To narrow down what your budget and cost per square foot might be, we need to start by understanding the variables that can affect how cost per square foot is calculated.

Home Size:

The definition of cost per square foot is the cost of the build, divided by the square footage of the home. But many variables can sway that number. For instance, if we take $1,000,000.00 and build two differently-sized homes, you will arrive at two different costs per foot. Both homes can be built for the $1,000,000 budget but will have two different cost per square foot values.

The danger here is that you could ask a builder for their cost per square foot, and they might tell you $357.00. This might be accurate for a 2,800 sq.ft. home they built but might not be accurate for a 3,800 sq.ft. home. A 3,800 sq.ft. home at $357.00 per foot would cost $1,356,600. We aren’t saying that either of the numbers above are wrong or right, but that without proper communication, they might not be accurate for the home you are looking to build.

Garage vs. No Garage

Calculating cost per square foot can sometimes come down to one perception vs another. Some builders believe in including the garage square footage into the calculation while others do not. There is no right or wrong; it is just different. Let's look at the 2,800 sq.ft. home example we used above. We'll assume both homes below have a garage, but only one is being calculated into the square footage cost. Adding the garage square footage into the calculation makes the budget look lower, even though they would be the same scope of work.

We are assuming that both scenarios above include the construction of a garage, but when you add in the garage square footage, it drastically changes what the perceived cost per square foot equals. Throw in a laneway home or a coach house and this calculation can become even more skewed.

Project Budget vs. Build Budget (and don’t forget the pesky GST!)

Building a new home has many different steps and costs being calculated into the budget. Again, there is no right or wrong, it is simply one calculation vs. another. Some builders and owners keep design, planning and permit costs out of the construction budget while others include absolutely everything. 

At Wallmark Custom Homes, we always discuss the many different steps and costs that homeowners should expect when building a custom home. A “Project Budget” should identify the 5% GST applicable, the Pre-Construction/Planning Costs required, and the Construction costs related to the new build. 

Here is an example of that 2,800 sq.ft. home in the City of Vancouver with a $1,000,000 budget. Each scenario has the same budget but note how the construction costs change as you add in the Pre-Construction costs and then the GST.

As we reduce the $1,000,000 Project budget by the Pre-Construction amounts and GST, you are ultimately left with a lower construction budget. Your Project cost per square foot stays constant, but your construction budget and per foot cost changes.

Scope of Work and Details

Every builder and every homeowner are unique. The result is that every custom home can be built many different ways. Does the home have a roof top deck and a hot tub? Does it have a basement suite or a laneway home? Does it have radiant heat and air conditioning or forced air heating? And what does the interior design and finishing package look like?

All of these variables and more can change what the cost per square foot and budget of a home equals. When calculating the cost per square foot and ultimately choosing your builder, it is important to have in-depth conversations on what is important to you as the homeowner, and how are you planning on calculating the figures. We also suggest starting with an overall budget you are comfortable spending and working backwards from there. 

We start by listening – 

If you are considering building a new home, the best place to start is by having a conversation. Every phone call and consultation we have starts with you sharing with us your goals and vision for your new home. Where are you planning on building, what size of home are you looking to build, what are some of the important features you are looking to have included in your new home? By painting a picture for us, we can better help you understand what your overall budget might need to be, and the steps and costs required to achieve it.

Contact us today for an initial phone or in person consultation by calling Brad Cowden at 604-803-9273.