Have you ever wondered, how much does it cost to build a house? It can be a pricey venture, but the satisfaction that comes with building a house from the ground up can be worth it. Understanding the costs involved will help you decide if building a home is right for you.
According to Altus Group’s 2021 Canadian Cost Guide, you can expect to pay the following, per square foot in Canada’s major cities (not including the cost to acquire land).
While it’s a good idea to understand how much things will cost per square foot, you need to know how your costs break down. The following are the major factors that affect the cost of building a home.
Purchasing land is arguably the highest cost. If you’re buying a lot that already has a home on it, you’ll need to pay for the destruction of the old house before you start building. If you’re considering a vacant lot, you need to see if it’s flat or sloping as this could affect your overall costs. You might even need to pay to remove boulders and trees before you start construction.
Where you plan to build also greatly impacts price. Higher labour and material costs in major centres mean you will always pay more to build in big cities than in the suburbs or rural areas. The province you build in is also a factor. For example, building in metropolitan areas of Ontario or British Columbia will cost more than in Atlantic Canada.
The type and size of the home you plan to build will determine the price. Building a two-story home will cost more than a single story since additional materials are required. If you plan on having many bedrooms and bathrooms, you’ll need to pay more too. Don’t forget about the exterior. If you want a pool, deck and landscaping, you’re going to need to spend.
When building a home, you’re going to be dealing with multiple professionals. That could include architects, plumbers, electricians, general contractors and roofers. Naturally, the amount they charge for labour will vary.
Every material you choose has a cost. If you’re looking for luxury and top-end finishes, you can expect to pay more. For example, a brick exterior is more expensive than vinyl siding.
Building a home requires you to pass regulations that are set by the government. Your plans will need to be reviewed, and you’ll need to get a permit before you begin building. Once you start, there will likely be additional inspections to ensure everything is up to code.
How to save money when building a house
Despite all the costs involved with building a home, it is possible to reduce your expenses if you consider the following:
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You’re going to need a way to pay for your new home. Most financial institutions offer new construction loans or construction mortgages. They’re similar to traditional mortgages but usually have a higher interest rate.
» FIND OUT: How much mortgage you can afford
Assuming the land is clear and ready to be built on, it takes about 10 to 16 months to construct a new home. Of course, there can be delays for various reasons such as weather, materials, availability of contractors, and financing.
There’s no denying it, building a new house can cost a lot of money and take a long time. If you’re willing to go through the process from start to end, building a house is an incredible feeling.
Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.