Many people assume they can’t afford to hire an architect or build a custom home. Instead, they settle for purchasing an existing house. The problem is, that house isn’t tailored specifically for their family and their lifestyle. Most buyers end up in homes designed by developers, contractors, or mass produced homes with no designer at all.
The truth is, although there are some additional costs, working with an architect can be affordable and you can often get a better result. In today’s market, in order to have a home customized for your needs, it’s possible that working with an architect can be more affordable than purchasing an existing home on the market. The good news is that a custom architect designed home can also be a great investment that appreciates in value over time ... usually outperforming typical single-family homes.
If you’re considering buying a new home, consider the benefits of tailoring that house specifically for you. Then talk to an architect and discuss the process and costs involved with building new vs purchasing a house already on the market.
If you’ve ever wondered, “Can I afford to build a custom home?” or asked yourself “What would it take for me to be able to hire an architect to design my home?” here are some things to think about.
Land Costs
The biggest hurdle in building a custom home is finding land that fits within your budget, in an area you want to live.
In cities, it is often difficult or expensive to find vacant land in mature and desirable neighborhoods. With some patience, a good realtor, and the web based tools now available (Zillow, Redfin, Google Maps, PortlandMaps.com (or your local GIS website), etc.), this is a challenge that can be overcome. This is also something an architect can assist with as you look for land that is suitable to build on.
If you are looking outside the city or in rural locations, there are many factors to consider before making an offer. Do you have good access to roads and utilities and the surrounding infrastructure? Will the landforms and topography of your site necessitate an unusual amount of earthwork? What are the local or regional land use regulations that might affect the property? These are things that can have a dramatic impact on the cost of construction, and important research an architect can assist with.
We recommend engaging an architect to develop feasibility studies on any property you are considering before you put in an offer.
Construction Costs
Your regional environment, fluctuations in material and labor costs, and the general health of the economy all impact how much you’ll pay to have your home built. The important thing to remember is that your architect’s job is to develop a strategy for maximizing your home even if you have a low budget. It will take creativity and careful planning but even if your construction budget is $200,000 you can get a nice little house.
We’ve designed a lot of 800 square foot ADUs (Accessory Dwelling Units) that have come in between $160,000 to $200,000.
As you can imagine, the larger the home, the more it costs to construct it. If you move up from an ADU to a 2 or 3 bedroom, 1,200 square foot home (or even larger if you have a large family) it’s possible to design a nice house with a construction cost between $250,000 and $350,000.
Of course, if you are looking for something larger, have a complex site, or are looking for a more luxurious project, those costs can go up to whatever you are willing and able to spend. We’re currently working on two modern homes in rural locations. Each has a construction budget between $500,000 and $600,000. They’ll be beautiful projects when they are complete, but they’re beyond the budget of many of our clients.
Design Fees
Architecture fees will vary, but will likely fall in the 8-15% range depending on the firm, the complexity of the project, and the scope of work. Ask your architect if they include structural engineering in their fees or if they break those out in a separate contract. Still, these fees are a relatively small percentage of the full project costs, and your architect can help you strategize for ways to create efficiencies and actually save money overall.
If your land is sloped or presents other complications, other design fees from Civil Engineering, Geotechnical Engineering or Landscape Design may come into play. These are typically additional consultants, but your architect will help select the right firms, negotiate fees for their work and coordinate and manage these team members throughout your project.
Permitting Fees
Permitting fees also vary by jurisdiction, but will probably contribute another 5% to the total budget. You’re dealing with your local government, so the fees won’t be negotiable. They are simply the cost of doing business. However, in some cases local governments will decide to incentivize certain types of development and lower fees like Portland, Oregon has done with Accessory Dwelling Units (ADUs). Your architect will also be able to give you a rough estimate of fees in your area.
Feasibility
When you’re trying to navigate the existing vs new, custom home question, it’s important to keep the total budget in mind.
If you’ve considered a move into an existing home, look at the housing market and the cost of the home at the top of your list. Subtract all the fees above (including the cost of a similar parcel of land) from the asking price of that home. What’s left would be your potential construction costs for a custom home.
Take those numbers to an architect and see if building a custom home, suited to your unique needs would be feasible for the amount you have to work with.
It’s true, affordability can be a challenge. Many of the costs are fixed or don’t have much wiggle room. Materials cost what materials cost. Land costs what land costs. Labor is determined by the market and not by the architect. However, there are still hundreds of decisions that affect the overall project cost.
Often, architects can find creative ways to maximize the return on your investment. Their expertise revolves around finding creative solutions to challenges, and designing beautiful spaces that fit within client’s budgets and responds to their unique needs. When designing and building a custom home, everything comes down to decisions you make. Clients control the budget and program and architects are the experts to help you achieve your goals. Even with tight budgets architects can deliver great homes that will fit you better than existing houses on the market.
The good new is, when you come out the other end, you’ll have a better quality home and a more enjoyable place to live than you would if you purchased a home that was designed for someone else, or not designed at all.