Building Costs in California

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Building cost is an arbitrary number designed to give builders and clients are rough estimate of how much it will cost to build new homes. Many factors can change this figure, including the number of infrastructure improvements, quality of materials used and home values in the local region. Excluding these unknown variables, Californians should expect the average building cost to be around $130 per square foot.

Base Cost

  • The base cost is the average cost for a new home before contractor markup, material quality upgrades or excavation. It's primarily used as a reference number on which general contractors base their bids. It excludes infrastructure like grading and roads, decks and landscaping, and other items. This number only considers the livable (finished) space within a home, so it wouldn't include the garage, for example.

Material Quality Upgrades

  • If the client requests higher grade kitchen appliances, larger crown molding, higher ceilings, rarer woods or extra bells and whistles in or around the house, the building cost will go up. It's important that as changes are made to the original plan regarding materials, the cost estimate is updated to reflect the higher cost per square foot. By keeping track along the way, clients can better predict and manage the final project cost.

General Contractor Markup

  • Each step in the service line has markup. In other words, the manufacturer, retailer, subcontractor and general contract will all need to profit from the materials (and labor) involved in the project. One way to save costs without foregoing a general contractor (not recommended if you desire a smoothly run project) is to order and deliver the materials to the job site yourself. For example, order the light fixtures, lumber, windows, etc. based off the plans. You'll cut some of the markup out of the project without stepping on toes. Generally, markup ranges from 10 to 20 percent of the material or labor cost.

Site Development

  • A new home without landscaping, decking or pathways is a ugly. These outside elements dress the home up and help it blend better with the surrounding land. It's important to take into consideration how much land will need to be graded; the length of the driveway; and the decks, trees, shrubs, and exterior concrete that will be required to complete the project before you begin it. This will help you build a home that fits into your budget (often your loan amount) and ensure you don't end up with a "sore-thumb" of a house.

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