To build or not to build: that is the question on many people’s minds as they decide whether building a custom home is the right option for them or if they are better off renovating their existing home instead. For many people, the answer to this question ultimately comes down to what makes the most sense for them financially. However, comparing the costs of building a custom home and the costs of renovating an existing home is not always that straightforward.
Truthfully, there are many costs to consider when figuring out which option is right for you, so today we are diving into some of the costs for both options and what they could mean for you and your home.
Building your dream home
Building a custom home is a rewarding experience that allows you to design a one-of-a-kind home reflecting your personality and style. Rather than working from a pre-planned layout or cookie-cutter specifications, a custom home is intentionally designed to meet your specific needs and preferences, giving you the opportunity to create a living space tailored to your lifestyle and tastes.
But how much does it actually cost to build a custom home in Calgary? There are many, many things that can impact what the cost of building a new home will be and simple cost per square foot estimates do not tell the whole story. Instead, we recommend taking the following things into consideration when trying to figure out how much building a new home will cost:
- Land & Site Costs – One of the largest variables to consider is the cost of the land and site preparation. Consider the property’s accessibility, utilities, and potential site challenges.
- Architectural & Design Fees – If you’re working with a builder to create custom plans for your new home, their fees will also need to be a part of your budget. Be mindful of what’s included in their services (and what’s not).
- Permits & Inspections – Budget for development and building permits along with any necessary inspections. These costs can vary by location, project size, and complexity.
- Utilities & Infrastructure – Factor in the costs of connecting to utilities such as water, electricity, gas, and sewage (or septic if you are planning to build a custom home on an acreage).
- Construction Costs – This will typically be the most significant portion of your budget. Reach out to local builders who specialize in building custom homes and ask them what cost trends they are seeing for materials, labor, and subcontractors.
- Interior Finishes – Interior finish selections can also widely vary from home to home. Consider what level of finishing for flooring, cabinetry, countertops, appliances, plumbing fixtures, and lighting is required to achieve your vision for your new home and budget accordingly.
- Landscaping – Another important thing to account for in your budget is landscaping, including any driveways, walkways, and/or outdoor amenities you desire, such as a patio, deck, or pool.
- Contingency Fund – Last, but certainly not least, we recommend budgeting for a contingency of at least 10% of your total budget to cover unexpected expenses or changes during construction.
While the cost of building a new home can be higher, by building a custom home, you can choose exactly how to prioritize your budget and avoid paying for features or space you don’t need. For example, you have more flexibility in the property you choose to build on, which means you can decide how much of your overall budget you will allocate to the purchase of the property and how much you will allocate to the construction of your new home.
When you build a custom home, you also have full control over the materials and construction quality of your new home. You can choose to make your home more energy efficient or integrate smart home technology, things that can be more difficult to do once a home is completed. You will also have input into each step of the design and construction process, ensuring that your new home meets your expectations and is built to last.
Planning Your Home Renovation
For many people, renovating can also be a great option. We have heard time and time again the stories of homeowners who love the location, general layout, or other characteristics of a particular home, but would like to renovate it to better suit their lifestyle or preferences.
Renovating a home is an exciting process, but like with building a custom home, it is important to be mindful of the many variables that can determine where the cost of renovating will ultimately wind up. A few of these variables include:
- Scope of Work – An important step in figuring out the cost of your renovation is to clearly define the scope of work. If you plan to renovate only part of your home, define clear starting and stopping points for the renovation and be mindful of how changes to some areas will work with the areas of your home that will stay as-is.
- Exterior – A part of determining the scope of work is evaluating the exterior work to be done. Do the windows need to be replaced? Does the exterior need to be updated? Does the roof need to be redone? All of these items can add substantial cost to your renovation and are important to keep in mind.
- Permits – Also check to see if what you are planning to do will require a permit. If a permit is needed, budget for permit application fees and inspections.
- Products & Materials – The cost of materials used for renovations can widely vary depending on the quality and type of products you are planning to use. When considering the cost of your renovation, consider which products will help you to achieve your desired vision and budget accordingly.
- Construction & Labor Costs – One of the largest costs to account for in your budget is the labor required for your renovation. When it comes to hiring a contractor, cheaper is not always better. It is essential to hire experienced professionals who can do the job correctly, especially when you are planning a large or structurally complex renovation. And hiring the right contractor for your renovation can actually save you time, money and stress in the long run.
- Unforeseen Issues – Older homes may have hidden problems like structural issues, wiring problems, or plumbing leaks. When considering the cost of a renovation, budget for unexpected expenses that may arise during the renovation process. We recommend setting aside a contingency fund of about 10-15% of your budget to cover unexpected expenses.
- Living Expenses – Depending on the size and complexity of the renovation, you may have to move out of the home partially or completely for the renovation to take place. When determining the cost of a renovation, it is important to account for additional living expenses that may be incurred during the renovation.
Renovating can be a more cost-effective option than building a new custom home, especially if the renovations are focused on specific areas or updates. They can also give you the opportunity to phase certain aspects of your renovation and make improvements to your home over time.
Additionally, in a competitive real estate market with limited inventory, it may be challenging to find a new property that checks all the boxes. A renovation can be an excellent alternative to building a new home while still helping to increase the value of your existing home and making it a potentially profitable long-term investment.
But Wait, There’s More!
In addition to these cost considerations, it can also be helpful to think about the following things as you weigh your options.
First things first, know your budget. Start by determining your overall budget for your home, whether you decide to build or renovate. This budget should include all costs associated with your project, from the cost of the property, to design fees, to the cost of construction. How much are you hoping to invest in your home and what can you do with that budget, given current property values?
Next, consider location. Are there vacant properties or older homes to be demolished in your preferred area that would work for your new home? Or is your current home in a location you love, and a comparable property is either too challenging to find or cost-prohibitive to purchase? Building a new home tends to work better in some neighborhoods and renovating an existing home tends to work better in others. It can be helpful to consult a realtor experienced working in the neighborhood you are interested in to see what option will work best for that location.
If you are leaning towards doing a renovation, consider the structural integrity of your home. Is the foundation of your home in good condition or is it nearing the end of its lifespan? If you are unsure of the structural integrity of your home, you may want to consider hiring an engineer to do a review of your foundation and the other structural components of your home.
Another important thing to think about is the timeline for your project. Are you prepared for the year-long (or more) design and build process for a custom home? Or do you need the work to be completed sooner?
Finally, consider the future. How long do you plan to live in your home? Will it be your “forever home” or do you plan to sell in a few years? And how does the investment required to build or renovate support your long-term vision for the future?
So, which option is best for you? In short, there are many, many things to keep in mind when determining whether you should build a new home or renovate an existing home and the answer to this question will be different for each person. However, involving an experienced custom home builder right from the beginning can be helpful as you navigate through these important questions.
Want to learn more about which option may be the right one for you? Braemyn Homes is Calgary’s preferred builder, specializing in custom homes and custom renovations. Our clients can expect the highest standard of excellence delivered with exceptional craftsmanship and superb customer care. Call us at (403) 606-2923 or fill out our contact form to see how we can help you make your dream home happen.