HIA 2022 Award Winning Home Poster (PDF)

Two questions we are frequently asked;

1. What does it cost to build a custom home?
2. Why does a High Performance Custom Home cost more than a subdivision home?

To start, high performance custom homes are unique and easy to distinguish from a subdivision home. There are many variables making it superior: style & complexity, unlimited finish options, quality of materials, higher-end fixtures, super-efficient heating & cooling equipment, superior insulation & air sealing, a higher level of service provided, and highly skilled craftsman. Two homes may be similar in size, but there are vast differences in how each of the homes was built and finished.

It seems most everyone talks about the cost of a home on a cost per square foot calculation. So, before we jump into cost, let us First discuss what is included in cost per square feet and how it is calculated. Secondly, we’ll move on to the differences between custom homes and subdivision homes, and Finally, what is not included in the cost per square foot.

First – Cost per Square Foot (cost/sf)

Ask any farmer what a bushel of wheat costs and he will have an instant answer for you. Similarly, the price of a barrel of oil and an ounce of gold are common knowledge, with costs quoted down to the last cent. But try asking a home builder about the “cost per square foot” to build a home, and you will likely get any number of responses including, lowball guesses, unhelpfully vague price ranges, or even outright irritation from the respondent. Why is new home construction so different? A simple question like this seems fair, so why is it met with disdain by home builders?

The disconnect stems from the fact that in residential construction, there is simply no agreed upon Standard for what constitutes a square foot. No grocer would have trouble telling you what a gallon of milk costs, and what it contains. It is not so easy to decide what is contained in a square foot of home. For example, do builders only include finished square footage in their estimates? Do they count unfinished basements? Does a square foot include the garage and deck? Therein lies the complication: it’s up to each builder to decide for themselves and how they explain this to the inquirer.

For illustration, consider the hypothetical Jones Residence. The Jones family wants a ranch home with 2,000/sf on the main level, an unfinished basement, a two-car garage (700/sf), and a covered front porch (200/sf). Simple enough, right? The savvy Mr. Jones, seeking more than one opinion, meets with two separate builders and asks them, independently, what they would charge him per square foot to build his dream home?

Builder A looks at the project and considers it a 4,000/sf home since, after all, while the basement will be unfinished, it is nonetheless conditioned space and thereby “countable.” He also reasons that all his homes generally have a 200/sf covered front porch with a 700/sf, two-car garage, an integral part of the house. His price? Only $100/sf.

Builder B looks at this very same layout but considers it a 2,000/sf home. He only counts the finished, heated & cooled area of the home – the 2,000/sf on the main level. He reasons that all his homes of this size have an unfinished basement, two-car garage ( approx. 700/sf) and a covered front porch ( approx. 200/sf) as an integral part of the house. He proudly presents his reasonable cost to build the Jones Residence at $200/sf.

That is a difference of $100/foot between the two, and their calculations are 2,000/sf apart…and they are both right. Notice, despite the disparities mentioned above, they’ve both quoted a home that costs about $400,000. Builder B just looks more expensive, on paper.

Stockell Homes, like Builder B, counts the finished, conditioned area of the home.

This scenario plays out in real life all the time. Unfortunately, it often results in a homeowner selecting a builder based on who can provide the “lowest cost per foot” without considering the bigger picture. Each builder, when presented with plans and specifications is able to implement unit costing and vendor quotes to arrive at a total construction cost. At the end the day, the square-foot cost is largely incidental – a house costs what it costs. Please keep in mind, Cost per Square foot is only an Estimate and is based on similar homes recently built. The finishes selected by the client on a new home and the land on which it is built, will change the equation.

To further illustrate the differences, no two builders include the same features or specs in the homes they build. See the chart below for an overview of some of the possible differences.

Secondly – What basic specs are included in the square foot cost?

Our custom homes include the following specs vs subdivision homes or other builder’s homes.

Finally – What is not typically included in the cost per square foot?

• Land, and Site improvements such as: retaining walls, trees planted, shrubs, pools, gazebos, driveways over 75’, water wells, septic systems, Ameren UE running electrical lines farther than one pole distance.
• Detached garages, oversized garages, barns, rear porches, decks, screened porches, large patios, finished basements, extra sidewalks, etc.
• Preconstruction services provided by the builder; assisting in the selection of exterior and interior finishes, estimating and re-estimating to develop a budget that works for the client.
• Architectural and engineering fees.

For those items not typically included in the cost per square foot of the home, we list them separately on our preliminary estimates. For example:

• Home 2,000sf @ $250/sf = $500,000.00 (includes garage and unfinished basement)
• Finished basement 1,000/sf @ $70/sf = $70,000.00
• Detached four-car garage $120,000.00.
• Porches, decks, and so on….

The combined costs of the home and other improvements would be the total construction cost.

To repeat, please keep in mind, Cost per Square foot is only an Estimate and is based on similar homes recently built. The finishes selected by the client on a new home, and the land on which it is built, will change the equation.

Our clients want something exceptional and they are willing to invest more building a quality new custom home because they know it will cost less to heat and cool, the indoor air quality will be better, there will be less maintenance and it will be built to last a lifetime.

We build custom homes of all sizes, and for all wants and needs; for empty nesters wishing to downsize and who want ADA considerations for aging in place, for executives who want a larger home to entertain & impress, and for growing families who just need more bedrooms & bathrooms. The current average cost for a custom home is approximately $350-400/sf. Simple 2-story custom homes may be under $350/sf, while Modern and more complex designs are typically over $350/sf. These square foot costs are a quick way to estimate homes 2,500/sf and larger. Remember, we figure cost per square foot similar to Builder B in the example.

Homes under 2,500/sf become more expensive per square foot as they get smaller. The reasons are the fixed costs. Costs that do not change too much with size. A few of these are excavation, driveways, deep water well or city water hook up, septic system or city sewer, finish grade, seed, or sod.

Let’s use the excavation as an example. The cost of excavating is not a large percentage of cost when we are building a 4,000/sf home. However, it is a big percentage of cost for a home under 2,500/sf. Let’s assume excavation costs $100,000. If we average that cost over 4,000/sf it is $25/sf. If averaged over 2,500/sf, it is $40.00/sf. That is $15.00 more per square feet just for the excavation. If we do the same for all the above fixed costs, it’s easy to see how the cost per square foot increases as the size of the home decreases.

A Look at How Construction Costs Breakdown:

The cost breakdowns below are based on the National Association of Home Builders “Single Family Price and Cost Breakdowns” 2020 National Results.

Resource: NAHB Cost of Constructing a Home

Construction Costs

1. 1Preliminaries (Site work) – 6.7% Architect, Engineer, Permits
2. Foundations & Flat Concrete – 10.8% Excavation, foundation & slabs
3. Framing – 17.3% Materials and labor to build structure.
4. Exterior Finishes – 13.9% Materials and labor to install exterior finishes.
5. Major Systems – 13.8% Heating/cooling/ventilation, Electrical and Plumbing
6. Interior Finishes – 28.5% Materials and labor for interior finishes
7. Site Improvements (Final steps) 7.0% Driveway, sidewalks, retaining walls, sod.
8. Misc. 2.0% Clean up labor, temp facilities.

Construction Costs Total 100%

Additional Cost Breakdown (Builder):

1. Total Construction cost (from above) – 55.6%

2. Site Supervision & Management – 5.1% On-site supervision, safety and education.

3. Overhead – 6.1% Office rent, staff, marketing, insurance, tools & equipment.

4. Builder Profit – 9.9% Funds for reinvestment, growth and investor dividends.

Addition Cost Breakdown (Owner)

1. Lot cost (land) 21.5% Land and development

2. Financing (construction loan) 1.8%

Additional Costs Total 100%

The above cost breakdowns are national averages. These include tract home builders, semi-custom builders, and high-end fully custom home builders. Stockell Homes is a high-end fully custom home builder. We work with the most talented architects and designers in the greater St. Louis area, and together we consistently deliver outstanding projects for our clients.

At Stockell Homes we estimate construction every day and are up to date with current costs for various methods and finishes. We have been building for 35+ years, encountering a myriad of construction methods, old and new. We also remodel, giving us firsthand knowledge of what works well and what fails over time. We are involved in continuing education studying modern building science and are well versed in best building practices. Due to our vast experience and education, we offer “value engineering” to the design team – if we can see a better way to build it and reduce cost, we will, and the savings realized are passed on to our customers! Our relationship with our clients is one of a fiduciary or an advocate. It is our responsibility to build our clients the best home at the best price.

Best Approach

Design and Construction Management are separate to the degree that for each, there is different training, education and experience required to perform these tasks exceptionally well. We strongly advise an Owner-Designer-Builder Approach. It is without a doubt, the best approach to new home construction. It is a collaborative approach bringing together you (the client), your builder and your design team at the very beginning; before drawing has begun and sometimes even before you’ve chosen the land on which to build. It is an approach that first explores your desires, your needs, and your budget. It holds everyone accountable for meeting your design objectives and doing so within the budget you have set.

Whether you are planning the custom home of your dreams, a kitchen remodel, or a room addition, collaboration is key. Collaboration begins with listening. At Stockell, we make it our priority to gain a clear understanding of your vision, your wants, wishes, budget and concerns. Working together with you and the design team, we develop a plan that reflects your vision, addresses your concerns, and respects your budget. Having 35+ years managing and constructing exceptional projects, we bring a depth of knowledge to the table, unsurpassed by our competition. Collaboration makes the process more organized, and more enjoyable. Shouldn’t building your dream home or remodeling your home be enjoyable? We think so.