Every week, we get asked about the cost to build. We suspect our honest answers to this question often turn folks away and lose us sales, but we just can’t shake our integrity. In this post, we’ll share tips for how to avoid getting bamboozled and the realities of what you can expect financially.

Why All the Confusion?

Home-building hopefuls often get starry eyed as the result of relying on sources who don’t actually build houses. Let’s take a look at some of the most common sources people turn to for building cost information:

Realtors: If a realtor doesn’t encourage you to talk with a builder to get industry-accurate information on building costs, think twice about what they’re telling you. This is especially true if you aren’t working with a local realtor. For instance, Houzeo, a company that describes themselves as a “tech-centric For Sale By Owner website and real estate platform” claims building a home in WA State costs $171 per square foot. Spoiler alert: That’s wildly inaccurate. If you live here in the Bellingham area, there are a lot of trustworthy realtors who will tell you this same thing and will recommend you speak directly with a builder. If you are looking for a local realtor recommendation, we’re big fans of Brandon Nelson, Tim Cornwell, and the Kenoyers.

Design Firms: It breaks our heart each time a prospective client comes to us bright-eyed and bushy-tailed, plans-in-hand from an architect or designer, only to find out the custom dream home they already invested in emotionally and financially is going to cost double their budget. This can lead to unnecessary spending on redesigns, or, even worse, entirely abandoned projects with thousands of dollars in design fees for a dream unrealized. A professional architect or architectural designer should take your budget into consideration when designing your home and should encourage you, early-on, to talk with a builder. Take that advice. We can recommend a number of local firms who typically do a good job with this, including Greg Robinson, JWR Design, RMC Architects, and Zervas. Of course, our favorite architectural team is right here in-house. Working with our design-build team offers a fast-track to designing appropriately to budget. Our design build-process involves architecture, interior design, and pre-construction planning. You’ll need all three to get an accurate price on your project. Whether you work with us or someone else for architecture, we still offer interior design and pre-construction planning services for all clients. This ensures the final estimated price is as accurate as possible.   

Lenders: If a lender like this one throws around average home sizes of 2,200 square feet and average build costs of $285,956, leading you to do the math and presume you can build your dream for $130/sf, sorry to break it to you, but you’re on a path towards disappointment. Technically, can you build some sort of dwelling for that? Sure… but it may be smaller and more minimal than you’re thinking, and not in a modern, low impact, free-your-soul, Kon Mari, kind of minimal, and it won’t be in the Bellingham area. We suggest you work with a lender who has a local office and that you solicit interest rate info from them and building cost info from the builder you plan to work with.

Government: We regularly work with Whatcom County and local municipalities for planning and permitting. As helpful as these entities often are, we were bummed to recently find information the County posted online suggesting a local building cost of $100/sf. We really have no idea how they got to this number!

Personal History: If you built a home previously in another part of the country or more than a few years ago (or both!), expect costs here and now will be different. It’s no secret land and home purchasing costs vary widely across the nation and have climbed heavily since the huge crash in 2008. Even within the industry, we used to rely heavily on historical data for estimating, but, in response to economic instability in recent years, have had to adjust our methods and put more time into gathering bids during preconstruction planning to feel confident in the pricing info we provide to our clients.  

What Can You Do?

How do you navigate your way through all of that and come out feeling confident?

• Tune out the noise from all those sources. Instead, find a builder who you would feel comfortable working with and get their take on costs. Be wary of any builders who give you hard numbers up-front without considering the specifics of your project.
• Consider going design-build so that you get the perspective of an architectural team, an interior designer, and a construction team at once and not as separate, possibly contradictory, sources of information.
• Make sure you aren’t comparing apples to oranges. It’s not fair to expect to build your custom home for the price of building a home from stock plans in a development or for the same price as buying a spec home. You can’t compare the purchase price of a new base model Hyundai with a high-end Audi or Mercedes. They are different cars at a different price. Homes work this way too.
• Consider finishes and materials selections. If you are invested in the emotional journey of building a custom home, there’s a good chance you’re looking for quality finishes that will bring longevity to your home. You may get wildly different cost per square foot figures from a builder who typically uses low-grade materials and finishes than you will from a builder who, like you, cares about quality. We fall into the latter category and will never recommend a product to you if we don’t think it will last. At the same time, when needing to meet a budget, we will help you identify mid-price, yet quality options in the places that make the most sense for your project.
• Give yourself cushion and have an uh-oh budget in case surprises come up along the way.

What Does it Cost, Really?

As we write this in 2023 in Bellingham, WA, it is with rare exception that we take on a client with a construction budget of less than $400 per square foot. That is our low-end. But, wait? Why is it more than twice that of the figures linked above? Because those articles didn’t come from the people doing the work. If you want a custom, well-built home here in Whatcom County, it simply will cost $400/sf or more to build your home. Anything less and you’re compromising on quality of materials, finishes, and/or the skill or reliability of your builder. It’s also important to remember that garages aren’t free. Though the square footage of a garage is not reflected when we talk about the size of a house, it is important to factor this space in when calculating the budget for a new build.

Every custom home is unique, but just to put things into context, let’s consider the last custom home we built. The home was just under 3,800sf.  Construction materials and subcontractors totaled more than $1.43 million, which means the cost per square foot of materials and subcontractors alone was $376/sf. That doesn’t include our labor for forming the concrete foundation; or installing the siding, doors, windows, cabinets, and trim; or providing site management. It also doesn’t include the necessary sales tax or our need for mark-up to cover overhead and grow our business. It’s important to consider this home does maintain high-end materials and finishes throughout, solar panels, a backup generator, and a large covered concrete deck with steel framing. It was built on a slab-on-grade foundation that, due to site conditions, required over excavation followed by six feet of compacted fill, which added considerable costs. Even without all of those extra costs, there’s no way the build, once factoring in our labor costs and a need for profit, would have cost less than $400/sf. Those $100-$171/sf figures tossed out by the sources listed above just don’t pencil out.

Knowledge is power, and we hope this build cost reality check helps you feel empowered and ready to take a practical approach to your build – one that allows for a positive process with as few financial surprises as possible. We prioritize doing right by our clients and are honest about the true costs of building upfront, even if it means we lose sales to other builders. Good luck in your journey towards your dream home. Contact us if you think we’d be the right sherpa to guide you along the way.