What factors affect the cost of building a house? ~ Designer Homes

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What factors affect the cost of building a house?

Do you want to know how much your home is worth?

If so, then you’re in the right place. Here at Designer Homes FM, we are here to help you understand what factors affect the cost of housing and why they matter. Whether it be for a new build or renovation project, we can provide all of the information that you need to make an informed decision about your next move.

By understanding these key factors, not only will you have more knowledge about the process, but also be able to make better decisions when it comes time for negotiations with builders and developers. This means that both parties will benefit from having this conversation at an early stage in proceedings, as opposed to later on down the line where things could get messy! So don’t delay – let us help today!

Contact us at 701-492-5057, or email us at info@designerhomesfm.com so that we may answer any questions you may have.

What Affects the Increase in Housing Costs Today?

Between materials such as lumber, paint, and concrete, the actual cost of building a home has skyrocketed. In some cases, the prices have soared only due to recent events.

While people wish only a few things could be pinpointed when it comes to the growth in housing costs, there are many factors: from record-low mortgage rates, to people moving from the city into suburbs within their own state or out-of-state, to the shortage in supplies, as well as the constraints on housing supply. The most important factor to consider in the cost of housing is that there is, unfortunately, too much demand for developers and homebuilders to handle. This leads to increased pressure to raise their prices and having many “touch conversations” with their clients, thus being in a complicated position in the relationship between housing demand and construction costs. 


What Are the Biggest Factors Attributed to the Increase in Housing Costs?

As previously mentioned, it is not one thing, or even a few things, when it comes to custom home building. Some factors include, but are not limited to:

  • Choice of Homebuilder
  • Compliances with the Government
  • Condition of the building site
  • Credit History
  • Current supply of housing
  • Finishes and Features
  • Home Design and Wasted Space
  • Labor Costs
  • Materials
  • Monthly Housing Costs
  • Operational efficiency
  • Project Schedule
  • Size of Home and Per-Square-Foot Costs

And many others. Let’s look at each of these before you make the big leap forward and start looking for that plot of land!

Choice of Homebuilder

A homebuilder’s job isn’t just about designing and building a beautiful house. It also involves following detailed blueprints and a fine-tuned construction process, making sure that everything is done perfectly according to specifications. All for the sake of protecting your brand name in case something goes wrong with construction or design flaws from improper attention. In truth, professional builders take pride in their superior skills which lead to them having a meticulous eye. This protects you against any potential problems regarding quality control at lower price points, because those mistakes won’t get past experts who know what they are doing, thus avoiding any indirect costs! Make sure to do your research before choosing your custom home builder. Even one mistake could cost you extra time and money!

Compliances with the Government

Depending on where you want your house to be built, you and your home builder will have to comply with various requirements and a range of policies by the federal government. These could be things like: building codes, land use planning and approval processes, acquiring a building permit, abiding by various zoning laws, government fees, dealing with a referendum process or a potential impact fee, and many others. Make sure to do your research on your area and consult with your home builder and other appropriate sources when it comes to government fees , zoning laws, any potential tax credits, construction programs (especially if you are part of the lower-income households and education levels), access to market rate, and everything else in this matter.

Condition of the Building Site

The cost of housing depends on the condition and location of your construction site. Though you may be able to find a piece of vacant land, environmental impacts like wetland conditions, whether or not the surrounding land is an endangered species habitat, conflicting utilities (e.g., electricity), buried storage tanks, and poor soil quality can cause costs to increase or decrease depending upon what’s needed for that particular project. Additionally you’ll have overhead lines, which affect prices as well. River/stream crossings also influence pricing because traffic must stop during work hours while these are being constructed. Ground water, or really, any body of water could become an issue if there isn’t enough room between houses installed within range distance from each other. In this case, excavation will need more than just one day dedicated solely towards removing this pesky liquid mess before moving onto installing plumbing fixtures.

Credit History

Not insuring, or even under-insuring your new custom home is one of the biggest mistakes homeowners can make. When it comes to insuring not only the construction of your home, but then eventually the home itself, insurance companies will use their own factors when determining your insurance cost for your homeowners policy, including your monthly income and your credit score. If you were to have poor credit, the insurance companies could determine you a liability, leading to you paying as much as 127% more than someone with excellent credit. On the other hand, if you had excellent credit, the insurance would be more lenient, and you’d pay less in premiums. So make sure to stay on top of your credit history and consult with the right professionals so that you can flip any poor credit and get that great credit score and insurance rate!

Current Supply of Housing

As previously mentioned, home builders are in the middle of a complicated relationship between housing demand and home prices due to the rising cost in materials and historically-low mortgage rates. Though the economy is slowly coming back, these main contributing factors have put a dire strain on these people to increase their costs of doing business, thus leading to having tough conversations with their clients, especially if their clients have hit their price ceiling.

Finishes and Features

The next area that affects cost are the square footage costs. Some costs vary with square footage, while others are single-item expenses such as a fireplace or appliance installation in your kitchen. Other factors include design considerations like brick exterior, which will not only increase the total construction time for homes built from this type of material, but also result in higher prices!

Home Design and Wasted Space

The construction cost is usually divided into three parts: design, material and labor. The first thing you need to consider when looking at a new house will be its design. This defines what kind of materials are needed for each section as well as how much time it takes to build.

The best way to cut down on the cost of your home is by using wasted space. This means that instead of having a long hallway or room dedicated just for traffic flow, you can combine both functions into one area with more flexibility. You’ll also find yourself reducing other unnecessary costs such as an overfilled bathroom, which might have been two separate bathrooms, but now is only a half because they’re combined!

Labor Costs

With the price of materials increasing, so will the costs of labor. The average cost of a home is rising as high as $500,000. It goes without saying, but, usually, labor costs will be lower if you try to build your home in a rural area, as compared to the higher cost of living in an urban area.


Due to recent events, the price of materials like lumber, paint, and concrete has increased significantly, from an increase of 68% to 262% in price, even going higher than $155 per square foot on materials like marble, hardwoods, and stained metals.

Monthly Housing Costs

Upon the completion of your home, you’ll deal with the assortment of monthly housing costs like your mortgage payments, utilities, hazard or flood insurance, fuel costs, etc.

Operational Efficiency

Operational efficiency can be a make or break item when it comes to building your house. A builder who takes the time up front and solves design problems on paper, rather than relying heavily upon field personnel, will save you more money than imaginable, which is why they should always do their homework on design and construction cost before starting their work!

Project Schedule

House construction costs are determined in part by the time that contractors have to work on a project. When there is an unexpected delay, this increases indirect expenses for materials and labor which can lead up toward more expensive final product prices.

Size of Home and Per-Square-Foot Costs

The size of the home being built can directly affect the price to build it. In today’s market, people should expect to pay between $100-$155+ per square foot, even on materials that are affected by square-foot pricing such as: paint, roofing, framing, most electrical, slab, and drywall.

*Disclaimer: along with the previously mentioned factors, some others to consider are:

  • Land prices
  • Land Size
  • Individual Commute Times for you and your builders
  • Demographic Factors

If this information is a lot to take in, don’t worry. Designer Homes FM has you covered. If ever you have any questions about the factors attributed to the construction cost of your custom home, the current supply of housing, any associated costs (Ex. soft costs), tax credits, or anything else, or if you’d like to get to know more about our services and are ready to make that leap of faith, please don’t hesitate to contact us!

Contact us at 701-492-5057, or email us at info@designerhomesfm.com to submit your questions or let us help you get started today![/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_btn title=”View available lots awaiting your Dream Home!” color=”danger” align=”center” link=”url:%2Four-communities%2F|title:Our%20Communities||”][vc_btn title=”Back” color=”inverse” align=”center” link=”url:%2Fblog%2F|title:Designer%20Homes%20Blog||”][/vc_column][/vc_row]