Calculating the Cost Of Building a New Home

By June Fletcher
From The Wall Street Journal Online

Question: I want to build a 2,800-square-foot home with four bedrooms, two and one-half baths, a gourmet kitchen, walkout basement with media room and three-car garage in Pennsylvania. How can I estimate the cost to build the house? And what do you think about modular homes?

-- Sheila, Spring City, Pa.

Answer: According to B4UBuild.com, which sells books on the subject of cost estimating, the average cost-per-square-foot to build a home on site is between $95 and $150.

Contractors generally agree that cost-per-square-foot is a terrible way to budget for a home, because there are so many variables involved. Do you insist on top-of-the-line cabinets and appliances for your gourmet kitchen, or will mid-range ones do? Are you planning to side the house with cheap vinyl or expensive stone brick? Is the house going to be one story, or two? (The latter is generally cheaper because the foundation is smaller.) Will you have simple, rectangular rooms that minimize the materials and the labor required for framing, or unusual shapes like octagons with vaulted ceilings? What sort of flooring, bathroom fixtures and heating and cooling system will you have? Is the lot easy to access, relatively flat and easy to dig, or is it rocky, heavily wooded and uneven?

There are a few Web-based calculators that can help you make rough cost calculations. One easy-to-use, free one is Building-Cost.net, which adjusts not only for the quality levels of finishes and fixtures, but also for location, down to the city level. But bear in mind that this and other calculators won't give you an exact estimate, since ultimately that will be determined by the profit margins of the contractor you hire -- information you can't really know in advance.

So if you go the site-built route, I suggest that you start with a dollar amount that you're willing to spend. Interview at least three contractors and check their licenses and references and look at their work.

Once you've found someone you like and trust, the two of you can take your preliminary budget and work backwards, including the must-haves and eliminating the mere wish-I-hads as money allows.

Be sure to keep a cushion of at least 10% to 20% of the total project cost to cover last-minute changes, delays and other problems you can't foresee (for example, the cost of lumber spiking mid-project).

Now to your question about modular homes. Manufacturers of these homes, which are built in a factory in sections, say they are a lot more durable than site-built ones, since they are constructed in controlled conditions. But modular homes still make up only a tiny fraction of new home sales -- only 3.6% of the 1.06 million new homes sold last year, according to the National Modular Housing Council. (Click here for a list of manufacturers.)

That's partly because some consumers remember how uninspired modular homes looked in the 1980s and because some people still confuse them with so-called "manufactured homes," also known as mobile homes or trailers.

But these days, computer-aided design means that almost any house plan you choose can be made into a modular home. I think modular homes are fine and definitely worth considering, as long as you can visit a model or a nearby factory. Don't assume you'll save a few bucks, however. In fact, by the time the house is delivered to your lot and assembled, it may cost as much as a site-built one.

Factory-built homes back in vogue

Many buyers attracted by energy savings, beauty, convenience

By Tom Kelly
Inman News

Remember the tight, cute "kit" cottage you saw at the annual Home Show (one of five clustered in the featured vacation-home area) that would fit just perfectly on the wooded lot you've always wanted in the mountains?

It seems that builders and manufacturers always are urging consumers to dream -- whether it be a stately primary residence or a precut timber home composed of hand-milled Montana logs trucked directly to your site.

More and more dream homes have gone inside -- at least for all or part of the construction phase -- as curious consumers research and locate the new creative designs, energy-efficient features, often lower costs and environmentally controlled production of prefabricated residences. And, the finished product absolutely demolishes the preconceived notion of a "kit."

Modular, manufactured, structural insulated panels and other types of "prefab" housing are reaching a growing segment of new-home buyers yet they are very different in the way they are built. The built-to-be-towed house -- in a custom, preassembled package or enclosed finished unit -- has changed dramatically, and so have its occupants.

For example, modular home builders have begun to target last-time home buyers: customers who know what they want and are willing to pay outside the "affordable" range.

According to Sheri Koones, author of "Prefabulous: The House of Your Dreams Delivered Fresh from the Factory" (Taunton Press, $25), "prefab" has become a generic term that describes any type of construction that is partially or mostly done in the factory. Often the term "prefab" is associated only with manufactured homes or trailers that are built to a HUD code and have a metal chassis. These homes are brought to the house site on their own wheels and are not placed on a foundation.

"Today, there are many prefab houses that are built to adhere to residential building codes and are built with a variety of different methods," Koones said. "Sometimes referred to as 'system built' houses, these include modular, panelized, timber-frame, log, concrete, steel and hybrid techniques. They are customized, beautiful and rival the most elaborate site-built homes."

Manufactured homes and modular homes are two different products built under two different codes. Modular homes typically are custom-built and usually include a concrete foundation. They are not found in mobile-home parks and are governed by the same building codes as conventional stick-built homes. They are assembled in a factory and trucked to the building site. They are usually financed with conventional loan programs.

The big change for the manufactured-home industry occurred in 1976. That's the year HUD enacted standardized building requirements for mobile homes, essentially substituting one national code for numerous state codes.

"Mobile" is a relative term. These days a custom prefab could roll into a home site with 4,000 square feet of living space and include everything except a basement, and even those have been added. The sunken bath, country kitchen and custom fireplace may be on wheels for the trip, but it's very unlikely they will move again.

The size and topography of the lot often dictates the type of prefab system that can be used. And, system typically dictates price.

"There can be a savings in modular, panelized and structural insulated panels, depending on the location and complexity of the house," Koones said. "Other methods may be more costly -- such as timber-frame, log, concrete and steel. Some of these methods, such as concrete and steel, are particularly durable and will be standing for many years. In the long run, these might be considered cost-saving investments."

Andy Constan, a Bainbridge Island, Wash.-based builder with more than a decade of experience in prefab and conventional "stick built" homes, said today's large, custom prefab package can be more predictable for scheduling, but interior finishes can still take more time than expected.

Also, some of these prefab methods reduce the carrying costs because of the energy savings that can be achieved with the method of construction. Structural insulated panels (SIPs), for example, have shown to substantially cut down on the need for heating and cooling.

Scheduling can definitely be a benefit to families on the move, especially during the colder, wetter months of the year. Think about it … materials are stored and brought finished to the site, curtailing weather-related losses and the anxiety brought by the length of time your new home is "open" to the elements. Also, there could be less disruption to the neighborhood because much of the building process is completed in a warehouse.

The possibility of having most of your home built indoors during the rainy months? Sounds like an intriguing concept.

www.LagretRealEstate.com