In the past, building was almost always more expensive than buying. But is that still the case now that the real estate market has heated up in popular states like Florida?
Here’s everything you need to know about building and buying in the Sunshine State:
Whether you choose to build or buy, the location, size, and finishes of the house are going to impact the price.
Location is one of the most important factors that impact housing costs. You can expect to see more expensive houses in areas with high costs of living.
Large cities typically have high costs of living since more population drives higher demand which translates into higher prices. For example, the cost of living index score for Miami and Fort Lauderdale is 109 and 113, respectively.
However, large cities aren’t necessarily the only places with high costs of living. In Florida, smaller coastal towns may also have higher costs of living. Take Naples, for example, which is one of the most expensive places to live in the state with a cost of living index score of 174 — 74% higher than the national average and 75% higher than the state average.
Size is another key factor that determines housing costs. You generally wouldn’t expect to pay more for a 1,500 square foot house than a 2,500 square foot house in the same neighborhood. As a result, housing prices are often broken down into prices per square foot by dividing the total price by the total square footage.
Finishes also determine housing costs. You can expect to pay more for a pre-existing house that’s been newly renovated than you would pay for a house that hasn’t been renovated in 20 years.
The same rule also applies to new houses. A custom-built house with upgrades and high-end features and appliances would cost more than a basic builder-grade home.
In Florida, new construction homes tend to cost between $240,000 and $350,000 with an average price of $295,000. However, these prices are largely dependent upon location and can be higher or lower in different areas. For example, Miami's average new build cost is $558,333, Tampa is $421,250, and Orlando is $177,500.
To determine the cost of building your own home, you need to consider the three components of land, materials, and labor.
Before you begin building your house, you will need to purchase land to build it on. If you decide to work directly with builders to build a home in a new construction community, you will be able to choose a plot of land-based on size and features, for example, a water view.
If you decide to custom-build your home on your own, you will have to purchase the land separately. This land may then need to be prepared for construction, which can be costly.
The average price for a single-family single-family residential lot in Florida is around $60,000. In Orange County, the average price is around $78,385; in Pasco County, it’s around $73,399. In Sarasota County, it’s around $72,715.
Once you’ve secured your lot, you’re ready to begin building your home. But first, you’ll need construction materials to transform an empty lot into a move-in-ready home. Generally speaking, you can expect to spend about 50% of your total homebuilding costs on materials alone. In Florida, this averages out to be around $147,500.
Here are some average costs for materials to give you a better idea of what to expect during the home building process:
Unless you’re building your home completely on your own, you need to consider labor costs, which typically account for about 40% of your total homebuilding costs. In Florida, this averages out to be around $118,000.
Here are some average costs for labor to give you a better idea of your homebuilding costs:
Suppose you’re building a completely custom home instead of working with a builder and choosing a pre-existing home plan. In that case, you can expect to incur other labor and professional costs, including:
As you now know, housing costs are dependent upon location, size, and finishes.
Since location is arguably the most important determining factor, let’s cover the average house price for some of Florida’s best cities:
As you can see, it’s impossible to determine if it would be cheaper to build a house instead of buying one without more information on the location, size, and desired finishes of the home. At the same time, it’s important to note that building a house can, in fact, be cheaper than buying an existing home.
Here are some tips to help you minimize your home building costs and maximize your home buying budget:
While cost is an important factor when you’re deciding between building and buying, it’s certainly not the only one.
In 2022, it’s definitely possible to save money by purchasing a new build over an existing home. But no matter which option you choose, Vaster is here to help you make it happen with quick and accessible financing.
For example, if you’re purchasing a plot of land to custom-build your dream home from scratch, Vaster provides financing for vacant land. Alternatively, if you’re purchasing an existing home that will require renovations, Vaster can also help with that.
Reach out to our lending experts for more information, or click here to get started today.
Sources:
The Cost of Living in Florida | Moving.com
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