Just for fun, let’s say you buy a new home. The purchase price is $226,680. Now, let’s explore how much you paid for what. Keep in mind, however, that the numbers are from the National Association of Home Builders and are based on nation-wide averages.
Of course, you paid for the lot. In our example, the raw land cost $30,082. But the builder can’t build on a raw lot. Just the cost of processing the necessary approvals adds $1,799 to the price of the land. Then trees have to be removed, the lot leveled and other site preparation completed; that’s where another $4,075 went.
Are we ready to build? Not yet. You still need paving ($4,859); water and sewer lines ($4,593) and perhaps some erosion and sediment control ($1,076). And, of course, you need an environmental assessment ($748).
Other costs associated with site preparation include the water-electrical hookup ($1,260), financing ($2,129), tree preservation and planting ($762), wetland preservation ($235), bonding and escrow fees ($349) plus $1,549 in other fees and costs.
Now you’ve invested $53,516, and you are ready to begin construction. In case you are keeping tabs, you’ve spent 23.6 percent of your budget so far.
Of the total purchase price, 54.8 percent or $124,276 is the total construction cost.
Of course, you need a building permit ($1,108), and you may have to pay impact fees ($1,182). Let’s not forget the water and sewer inspection ($1,207). Steel for the foundation will run about $1,406. That takes care of most of the small stuff. Now we’re ready to spend some real money.
Excavation, foundation and backfilling will run you an average of $11,952 (9.6 percent of total construction costs).
The biggest expense in your new home construction is for framing, trusses and sheathing. These will set you back some $25,052 or 20.2 percent of the total. Budget nearly 6 percent ($7,318) for plumbing. Drywall will run an average of $6,807.
Cabinets and countertops are another $6,167. Tile and carpeting averages $5,971. Siding adds $5,350 while heating and air conditioning average $5,110.
Other construction cost averages look like this:
Windows — $4,769
Exterior door — $1,415
Interior doors and hardware — $2,322
Stairs — $558
Roof shingles — $3,226
Gutters and downspouts — $785
Electrical wiring — $4,669
Lighting fixtures — $1,292
Insulation — $1,793
Painting — $4,734
Appliances — $1,675
Trim materials — $3,861
Landscaping — $2,250
Wood deck or patio — $821
Asphalt driveway — $1,873
Other costs — $9,603
Can you move in now? Not quite. There are financing costs ($4,266); overhead and general expenses of $12,955; marketing expenses ($3,180); and the sales commission ($7,650).
Last, but not least, the builder’s profit has to be paid. The national average is 9.2 percent of the total purchase price. In this example, that’s $20,837.
Now you can move in and enjoy your new home. And don’t fret the cost; after all, you have 30 years to pay for it.
Real Estate Center Online News, September 2003.
