Being a highly cost-effective design-build firm, we spend a significant amount of time and effort on project budgets. We publish the construction costs of most of our projects, discuss pricing in many of our posts, and have even gone to the extent of designing a construction cost cheat sheet. To us, the design and the finances of a project are interconnected. We’ve never cared for the vague and uninformed approach toward construction costs that are all too common in the architecture industry. In fact, it’s common for us to dive into a realistic construction budget discussion as early on as the initial interview for a new project.
We have enough experience behind us now that we’re able to discuss a range of project types in terms of price per square foot. For instance, our residential remodels typically cost $150 to $175 per square foot. This is a quick method to align the design goals with the project budget and set appropriate expectations from the get-go. It allows sensible decisions to be made and it prevents the design from heading in the wrong financial direction. As straight-forward as this math is though, there is an important logic behind it; these square foot costs are averages. You can’t simply select a few defined areas of a home (say the kitchen and the master suite) and multiply the square footage of those areas by $150 to get the total cost of the remodel. One of many potential budget pitfalls is to optimistically apply $150/sf to specific areas, or manipulate the cost per square foot benchmark to meet inappropriate goals. This “cherry-picking” approach to the math doesn’t work for a number of reasons:
1. Asymmetrical Costs. Some areas of a home are much more expensive per square foot because they have a concentration of expensive features (appliances, plumbing fixtures, cabinetry, hardware, etc.) and are more labor intensive to build (involving carpenters, plumbers, electricians, drywallers, tile setters, painters, etc.). For instance, kitchens and bathrooms typically cost much more, and if pressed we’d say around $400 per square foot. This higher cost per square foot is balanced out by spaces like the living room (if pressed, more like $100/sf), bedrooms (if pressed, $75/sf) and the garage ($50/sf), resulting in a much lower cost per square foot over the entire house.
2. Good design is holistic. Rarely is it a good solution to simply update a couple of rooms in a worn-out house. Updating a home should include improvements to not only the doors & windows, surfaces, cabinets, fixtures, and appliance, but also to the lifestyle. The sequence of spaces, the relationship of rooms to each other, and the visual harmony of the design all play a significant role in a home remodel. If a kitchen and an entry way are each updated in an older home, the living room in between the two needs to be thought of as part of the package. The living room doesn’t necessarily require a complete overhaul, but it should at least be considered so that there isn’t a glaring dissonance of new adjacent to old. Successful remodels approach the home as a whole entity, not just a collection of rooms under a roof; the entire experience of the life within it is taken into account.
3. Systems don’t stop at the walls. Most remodels include updates to the plumbing, electrical and heating systems. Unfortunately, if there are galvanized pipes in the kitchen, they likely run all the way to the meter. Same with that knob and tube wiring and cobbled together ductwork that’s been hard at work for over 50 years. It’s possible to be selective in updating these systems but repairing such systems gets very expensive once the remodel is “finished.”
When you apply the principles of good design to a home remodel, the work usually includes more than just the room most in need of updates. The simple fact is that, no matter how cost-effective you are, doing a good job is expensive.
It’s not unusual to speak with potential clients about their remodel plans for their kitchen and master suite that they’d like to accomplish in the $75K range. We wish this were possible. We wish that construction was less expensive, but when you take into account the points above, the construction costs are typically a degree of magnitude greater. It’s always discouraging news and we hate being the rain cloud at the meeting. But we also like doing a good job and we like being honest (it helps us sleep at night). Bad news up front is free, bad news during construction is very expensive.
We think of ourselves as a design and construction team that has both feet on the ground; this involves realistic planning, clear communication, and setting appropriate expectations. Using these tools, we find that thorough and thoughtful remodels can be accomplished. Remodels which update the desired areas of a home, improve the overall lifestyle and make a home functional and inspiring for another 50-plus years. And the process is typically more expensive than people think. (But always cheaper than coming to the realization while hammers are already swinging.)
Keep both feet on the ground and cheers from Team BUILD
I appreciate your approach. Being vague with costs and designing dreams can be fun up front, but painful later. And why should costs be excluded from the challenge of design anyway?
For someone who’s not in the field of design or construction, post like this is very informative. Thank you!
As an on-the-fence home buyer and remodeling project client, there’re other difficult decisions that make us very hesitant to pull the trigger.
1) The allocation of property purchase cost vs. remodeling cost. Given the fixed the total budget X, shall we buy a fixer upper and spent most of our budget on remodeling and fixing, or shall we wait for something that doesn’t require too much work?
2) Potential obstacles in remodeling once we do acquire a property. Does said property have a good potential to work with? Would we run into problem on getting permit? I have tried to read up and to do my homework. But I’m still feel lack of assurance given the financial commitment we are about to make.
So I ask the experts here, do you have any advice to people like us?
As always a great discussion on an ever present topic of interest. As you guys now have a national audience, if not an international one, it is very important to point out that costs are not the same everywhere. Your $150-175/ sq ft in Seattle is my $300-350 in San Francisco, and may be $100 in the mid-west or south.
@Jim, that’s a great point. But what’s the primary reason for such regional difference? Is if mainly labor cost?
One battle i have to fight as an Architect who does not build are clients that contact the builder first. I then have to deal with the fact that the builder says they do the work for what amounts to around 60$/sqft. Clearly a unrealistic budget to do a good job with (even in the midwest), but one i am then stuck with if i take on the project. Of course most residential clients who contact the builder first are not interested in having an Architect involved anyways. But this happens often with commercial clients as well.
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The article states that the actual building costs run an order of magnitude above $75 per sq ft…meaning what, that it’s $750 per sq ft! This can’t be right. Maybe correct this statement.
In speaking with a principal of one of the high-end architecture firms in Seattle they are seeing/doing +$600/ft construction.
Hi Jia:
I’ll offer my perspective on buying a house and remodeling. I am an architect with a background in construction and a DIY fan as well, so take my comments for what they are worth. When we first looked for a house we slowly realized that we could not afford a house that we aspired to. [We live in a town with fairly expensive real estate.] So we knew we would be looking for places that we would work on over the years.
Experience suggests there are four levels of projects:
1. Fix the functional stuff. This would be a house that suits your needs and tastes but needs a new roof or a furnace. These kinds of things should be revealed by a good home inspection and can sometimes be negotiated with the seller.
2. Upgrade the finishes. This is a house whose layout you like, but the finishes are past their useful life. Our first house fell into this category, the master bath tile was in terrible shape and had rotted out the framing around it. The shower was akin to a vertical coffin and we took the opportunity to put in a standard tub/shower as well. These kinds of projects are pretty manageable and often can be done over time while you live in the house.
3. Needs a structural re-model or addition. These are the projects that get scary from a cost perspective as BUILD so eloquently describes above. Our second house fell into this category. Before we bought the house we had a pretty good idea about how we were going to add on to it, and whether our budget would support it. Mostly these projects fall into the category that you will need to live somewhere else while the work is being done, so don’t forget to include that cost in your budget and remember that these projects often tend to run over schedule.
4. The scrape. We live in a town where there are very few buildable vacant lots available, but there are a lot of badly built, worn out houses from the early to mid 60’s. Buying one of these that is a beat up rental can often cost no more than a vacant lot an demo costs are cheap. This way you can build exactly what you want, the construction costs are much easier to predict, but it is the most expensive option.
Try to enjoy the process, it can be really fun but it will always take 3 times as much effort on your part as you think it will going in!
[…] the article here: Why Construction Is Expensive This entry was posted in Projects on October 22, 2012 by […]
Very informative post. The expenses behind good construction and design is never cheap but this is to ensure that you get your money’s worth for the entire construction. Although this may be the case, there are still ways on how to save on construction costs and your contractor or architect can help you with that.
[…] site (site prep, etc.)– but even taking that into account, construction costs seem to be mostly systematically obscured by the architectural world. However amazing the renderings and diagrams of major construction […]
Great post ! One other point to mention would be the extra, up-front cost of energy efficient upgrades but compare them to the long-term savings.
Thanks for the post!
Beautiful article! I’ve been reading through a lot of your blogs and it’s very helpful for a small starting practice like ours.
I believe the numbers on the cheat-sheet are far, far off (way too expensive). Maybe you have to shell out money like that in San Fran or NY City ONLY. My house was built for $115/sq ft in the Pacific Northwest and that included some nice upgrades. 1644 sq ft starter home was the prettiest in the neighborhood. Now I’m going to build a 2000+ sq ft timberframe home for $150 sq/ft with carefully selected upgrades to keep us in budget.
Chris: I would love to hear more details on your $115/SF house: Did that include everything but the property? Permits, fees, utilities, etc? Any sweat equity in there? Are you in a forgiving jurisdiction? I can’t do a minimally code compliant project here in CO for that.
Thanks, David
Hi David,
It was 2001 construction and was part of a development. We chose a floor plan and added 26 upgrades. The house’s base cost was $160K and upgrades were $16K for a total of $176K. The lot (0.12 acres) was included in the overall cost. The lot backs into a green space. It’s for sale now for $249K.
Thanks for the info, part of it must be the economies of scale and part of it is cost escalation despite the recession.
@ Chris -that’s a great cost per square foot. Please send photos, we’d love to see what $115/sf buys.
As I posted in September 2012 the costs of high end custom construction is $600+/ft.
I just finished supplying metal work for a home being built on Lake Washington (Seattle, Wa area) The architect states they are at ~700/ft.
Informative thread. The absolute cheapest construction I have come across in my area is 75/ft. Vinyl floors, carpeting, vinyl siding, no landscaping in the back yard, no fence. So yes,custom const is an order of magnitude higher
Wow! $75/SF? I don’t think that will even build you an all-vinyl house here in CO.
Here is another data point: We renovated and added to our house for roughly $200k. I break that out to be about $200/SF for a 500 SF addition [includes a very nice bathroom and some big triple glazed windows] plus about $62/SF for renovations to the existing 1600 SF which included all new windows and a new bathroom. Standard HVAC systems but high efficiency furnace, HW heater and AC unit. Some passive solar with a stained concrete floor in the sunroom.
Ok. Here’s what 115 sq ft bought in 2001. I did the yard myself.
http://www.zillow.com/homedetails/1636-Bonnie-Ln-Forest-Grove-OR-97116/52697109_zpid/
And by the way, I just accepted an offer for $253K.
My next home is going to be a hybrid timber frame, about 2000 sq ft and budget is $300k.
[…] Butte Garden. Visit their website for information on native Utah plants.) And the reality check? Construction IS expensive, though a potentially great investment if done right that will yield priceless benefits for years […]
There are no two ways about it, construction is very expensive. And it is very true, remodeling goes much farther than the walls. Insightful post, thanks for sharing!