I remember when I was young and my dad had mentioned that someone he knew had purchased a million dollar home, I thought it must be a palace! He described it as a grand castle-like mansion which overlooked the river and had an 10 foot cream coloured stone fence all the way around it.
What was once a million dollar home with half a dozen rooms, a guest suite, wine cellar, crown molding, gold-plated finishings, and secret rooms, would now cost millions in the current market. Over time, building and land costs have steadily increased.
The Canadian economy hit a downturn in 2008, and with that, it would have made sense that building materials and land costs should have come down too.
Unfortunately, that is not the case. Many potential clients come to us with budgets that fall far below the actual cost of what they want in a home simply because they are not familiar with the cost of building a new home.
Land, building materials, skilled labour, appliances, and all the extras that make a home unique may cost more than you think.
The Cost of Building a New Home
Purchasing a Lot
Land just outside of Sherwood Park and Edmonton is highly sought-after and buyers can expect to see prices for a half acre lot in prestigious new communities (such as The Grange Country Estates, Sherwood Park Golf and Country Club Estates and Meadowhawk Estates) in the $350,000s and up. However, the supply and demand of your neighborhood will also determine its value.
If the lot is treed or is an infill where the home (and/or outbuilding) needs to be removed, cost will be incurred for tree removal and grading or for building/structure removal and bringing services up to today’s standards.
When the soil is not stable, you could potentially need piles to support the foundation.
If the lot lies in a low area, you may need to bring in soil to bring up the grade level of the lot and make the land ideal for building on.
You may also need to have your lot connected to municipal services for water, sewer, and electricity if it isn’t already. This can cost $20,000 to over $40,000.
The Price of Building Materials
Rises in the price of building materials have also increased the cost of building a new home Recently, building materials, such as lumber, reached top pricing (July 2018) and have only come down slightly since then.
New tariffs have been placed on aluminium, which is normally imported from the United States, and the ongoing tariffs on drywall have also increased building costs. Our drywall supplier noted that over the last two years, drywall has increased 20-25% due to tariffs. Before that time period, drywall costs were increased only once a year. Now, we are seeing increases every six months.
With the implementation of the New National Building Code and the New Energy Code, there are new cost increases associated with building new homes. Extra materials, steps, and processes are mandatory and will add costs to the project. For example, ensuring your home is air tight and has increased insulation. Prior to the Code changes, the R Value for ceiling insulation used to be R40 and has now been increased to R50.
Exteriors, Finishes, and Landscaping
Community Architectural Guidelines may dictate landscaping factors such as fence options, driveway material, amount and type of plants allowed, and more. You may end up paying more because you are required to pave your driveway or match your fence to your neighbours.
Architectural Guidelines in the subdivision dictate the exterior materials of the homes in your neighborhood. The guidelines can specify roof materials, quantity of stone, garage sizes, home style to name a few. You may need to spend more on exterior finishes in order to meet these requirements.
Did you know increasing your roof pitch can increase your home costs? A higher roof pitch increases materials used, length of time to complete the job, and also requires extra safety precautions due to the steepness of the roof.
Items such as custom cabinetry and finishing materials will give your home its unique style; however, it will also increase costs.
With custom home building, you have the option to add extra features such as a pergola or a raised garden with built-in irrigation. If you choose to forgo the pergola-in-a-box option from Costco, you could be looking at a large bill for stone columns that support exposed beams overhead. Retaining walls that require engineering can make a large dent in the budget as well.
A stone walkway versus a gravel trail, grass versus artificial turf, small trees versus larger trees (that need to be planted with a tree spade) are a few other items that can affect the price of your custom home.
Walkout Style will Cost More
A walkout increases costs in several areas. The lot is usually considered a prime lot and is therefore more expensive. The house will also need extra windows, doors, and framing for the walkout portion. Landscaping for a walkout can also increase your budget as the slope of the lot usually calls for stairs or special retaining walls.
Not All Homes are Built Equal
Because the cost of building a new home has changed over the years, it is important to do your homework when looking for a new home. Not all homes are built equal. Be sure you are comparing apples to apples. Have a realistic budget for what you want, for both the lot/land and your home.
Many home buyers have a clear idea of what they want to spend on their home; the conflict is that the budget is not in line with the home they have in mind. We are fortunate to have so many options. You can see clearly what is possible on websites such as Houzz. The challenge is knowing whether those options are feasible for you.
Save yourself the “sticker shock” by looking at homes in your budget range. By looking at true comparables on the current market, you will have a much better understanding of what your budget will buy.