With Rising Costs of Real Estate, How Much Does It Cost to Just Build Your Own House?

Owning your own home has always been thought of as the "American dream." But with housing prices skyrocketing and mortgage rates increasing, it is becoming less and less attainable—especially for first-time home buyers. This leads to some people wondering whether it makes more sense to buy an existing home or build their own home. But how much does it cost to build a house in 2023?

There are lots of things to consider when determining the best route to go. Some areas of the U.S. are still hot real estate markets with rising home costs, while others have leveled out a bit. There is also the problem of inventory in a lot of areas. With fewer houses on the market, the only options may be to wait to purchase a house or build your own.

Before automatically jumping to the conclusion that it would be better to build, it's important to look at the actual costs. We'll go over what it costs to build a house and what other factors you need to think about before jumping all in with new home construction.

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Is It Cheaper to Just Build a House?

You would like to think that building your own house is a cheaper way to go. It would seem that you have more control over the amenities and expenses. Plus, there wouldn't be any need for improvements right away since everything would be new and customized to your liking. 

That does seem desirable especially when an existing home could require any amount of remodeling. Unless you purchase a house at a true "fixer-upper" price, the added cost to remodel could throw your budget into a tailspin.

On the other side, building materials aren't cheap. Although inflated costs due to the pandemic shortages have started to come down, material costs are still much higher than they were before the pandemic. According to Construction Dive, it's likely that because of the demand for construction, prices will stay at their current levels through 2025. 

That being said, one other factor to consider is that you may have some negotiating power when it comes to buying an existing home. However, you can't usually negotiate on building materials. You can shop around for the best material prices but other than that, the price listed is what you pay.

Also, don't forget that even if you do decide to build a house, you will still need to purchase a lot or piece of land. Unfortunately, land prices have also skyrocketed in the past couple of years.

All things considered, you would need to weigh all the costs of either option. The best case scenario just might be to find an existing home that didn't need any improvements and that you could negotiate a bit on. That would give the greatest chance of purchasing an existing home for less than building a house just like it. 

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What Is the Most Expensive Part of Building a House?

The most expensive part of building a house, according to Steiner Homes, is the framing. Whether using wood or metal framing, the total cost of framing material and the labor make it the most costly part of construction.

There are a couple of ways to save in this area though. You could build a barndominium, which uses a post frame construction, or some people have even used shipping containers as the shell of a home.

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How Much Does It Cost To Build a House?

The cost to build a house will vary on size, number of bathrooms, types of finishes and area of location. However, generally, you need to include certain materials and expenses in any home construction (listed below). These costs are based on a 2,800-square-foot home in Michigan for 2023. Just the main part of the construction came to $408,000 which is before all of the interior finishes. 

• Land - $73,000
• Permits/Plans/Fees - $14,000
• Excavation - $3,000
• Foundation - $37,000
• Backfilling - $1,000
• Well - $11,000 (not always needed)
• Underground Plumbing - $4,500
• Framing & Building Materials & Labor - $162,000
• Windows & Doors - $31,000
• Roof Shingles & Labor - $19,000
• Exterior Brick & Labor - $25,000
• Concrete Floors - $19,500 (option not common)
• Patio - $5,500
• Gravel Driveway - $2,000

This list of options and costs is to just give you a rough idea of what to expect. Prices vary widely depending on how basic or luxurious you want to go. Keep all of these categories in mind when you are coming up with an estimate for your own home.

If you are contracting everything out yourself, be sure to get at least three quotes from different subcontractors. Otherwise, if you are using a builder, the builder will have the cost breakdown of building costs with a range of allowances for finishing touches.

Additional Average Costs For Interior Finishes

According to Cost Niche, interior finishes add another sizable chunk of cash to the total cost. They estimate that the average cost to build a house in Michigan is $100-200 per square foot, which is a pretty large range. This breakdown of interior finish prices includes average ranges in Michigan and can go much higher.

Here is a list of what you should include in your estimate:

• Drywall - $10,000 - $30,000
• HVAC - $1,500 - $13,000
• Electrical - $20,000 - $30,000
• Plumbing Fixtures - $7,000 - $15,000
• Interior Paint - $4,000 - $11,000
• Flooring - $5,000 - $15,000
• Trim/Interior Doors - $5,000 - $20,000
• Appliances - $3,000 - $15,000
• Countertops - $2,000 - $4,500
• Fireplace - $1,000- $10,000
• Lighting - $2,000 - $12,000
• Insulation - $3,000 - $7,000
• Landscaping - $5,000 - $20,000

Obviously, you do have some control over the cost of building your own house by the finishes that you choose. And since the geographical location where you want to build does have a big impact on pricing, you will want to consider that as well. 

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