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It’s a common debate: is it cheaper to buy or build a house? The answer, like most things in life, is complicated.
There are pros and cons to both buying and building, and the answer depends on your specific situation. Here’s a look at some of the factors you’ll need to consider when making this decision.
How much does it cost to build a house?
To get a baseline idea of what it may cost to buy a home, you can expect to pay between $100 and $155 per square foot.
You can expect to pay between $251,000 and $390,000 to build a home of average size — 2,512 square feet (according to 2022 quarterly stats from the Census Bureau).
Where you live and what current supply and labor costs are can also affect how much you’ll spend. For example, spending $250 per square foot would bring the total cost of building your home closer to $600,000.
Average cost of building a home in 2022
The material cost of building a home in 2022 is $331,896. This is the price of a 2,594 square foot home, based on a study by the National Association of Home Builders, which we’ve adjusted to account for inflation.
Here is a more detailed breakdown of average costs that go into building a house:
Materials and construction costs
Site work: $20,500
Exterior finishes: $36,643
Exterior wall: $21,614
Windows and doors: $13,143
Interior finishes: $84,200
Cabinets and counters: $15,150
Systems (plumbing, electric, HVAC): $48,856
Outdoor (driveway, deck, patio, landscaping): $22,506
Keep in mind that there are a lot of factors that can decrease — or increase — the costs of building your house when it comes to the materials. For example, vinyl siding will cost less than stucco or brick; laminate floors will cost less than wood; and any high-end interior finishes will cost you extra.
Pros of building your own home
There are several pros to building your own home as opposed to buying one that was constructed to someone else’s specifications.
You can customize the house to your exact desires. You can ensure the primary bedroom has that giant jetted tub you always dreamed of, or that your living room has the reading nook you want. Whatever you desire, you can ensure your custom-built home has it.
They can cost less to live in. New construction tends to be more energy-efficient, and you won’t be heating or cooling any unnecessary or unused spaces.
They can cost less to maintain because everything is new. All new fixtures and appliances means you have a while before anything needs repair, and they’ll be under warranty for a while if something does go wrong.
You’re not paying for any features or amenities some other homeowner wanted. Every amenity or feature is one that you carefully selected and prioritized, and therefore is worth your investment while you live there.
There’s no competition from other buyers to get the house you want. Building your own home means there is no risk you’ll be outbid by another buyer.
It’s new, and you’re the first to own it! Who doesn’t love the fact everything is pristine and perfect?
Cons of building your own home
Waiting for your dream home to be built often takes more time than buying one that’s already built, especially if there are any supply chain delays or a long waiting period to get on the necessary contractor’s schedule.
It is more expensive than buying an existing home. Buying an existing home will nearly always be cheaper than building a new home.
You’ll have to handle every little expense, and it can get pricey fast. Some of the factors you’ll need to consider are land costs, foundations, permitting, systems (HVAC, plumbing, electrical), appliances, finishing, roofing, fixtures, and so much more.
Owner-builder loans generally involve more paperwork to apply for and can have higher fees. Because you aren’t a trusted builder, you’re going to have to jump through more hoops in order to prove the construction will be successful and to make the risk the lender is taking worthwhile.
You’ll also be responsible for making every decision, which can add up to an extra mental load when you’re busy with work and family. You’ll need to be able to troubleshoot issues as they arise and deal with any contractor miscommunications or issues.
Trends might fade more quickly than you think, leaving you with a dated house that is hard to sell.
You’ll be responsible for designing and planting all the landscaping or hiring someone to do it. If you love trees or flowering plants that take a few years to mature, you’ll have to wait for them to do so.
It’s tough to say which is cheaper in the long run – buying or building a house.
On one hand, you have the convenience of an existing home that’s already been built and may come with certain features you’re looking for. On the other hand, you can customize your dream home exactly how you want it, but there are more costs associated with building it yourself.
In the end, it really depends on your individual needs and preferences as to what will be cheaper for you.