Custom Designed Homes – could it cost less than existing homes?

front porch

Scott Rogers and I have been having a virtual discussion about the cost savings of an existing home vs a custom-built house. Read HERE and HERE to catch up.

I would like to expand on his last analysis quoted here:

“House 1 – a 4000 SF home for $550K.  Some rooms that you might not end up using much or using well.  Some rooms that are too large.  Some rooms that are too large.  You paid $137.50 / square foot.

House 2 – a 3400 SF home for $550K.  Every room and space in the home is one that you need and will use well.  No rooms are too small.  No rooms are too large.  You paid $161.76 / square foot.

So, yes, with House #2, you are getting less “value” in the conventional sense of the price that you paid per square foot of home that you purchased.  But many would quickly understand that House #2 might actually have much more value in that it would (nearly?) perfectly fit your life, lifestyle and needs.”

If the custom 3,400 sf house is designed to a higher energy performance standard, lets say 30% more energy-efficient than existing code and the 4,000 sf house was built to code standards, lets say 5 years ago. The current code minimum standards are 30% more efficient than the same standards from 5 years ago. The newer custom home will have lower monthly utility costs. To keep it conservative, I will say 40% more efficient. Since the national average monthly home electrical bill in Va according to the EIA is $118 per month, this generic custom designed home would have a monthly savings on utilities of $36.

The footprint of the custom home is 15% smaller, so there is additional savings on utility and maintenance of unneeded space. This is another $12+ savings monthly.

I would also say that a newer home should have lower maintenance costs as the equipment and systems are newer. Lets say in the older home it is more likely that your refrigerator needs to be replaced, or the siding needs painting, or the wood trim needs repaired, or the sink has a leak or the carpet needs to be replaced or you want to do a minor change to the existing design because it is just not right. This could easily save $40+ monthly over the older home.

So the newer home that is custom designed is saving you around $88 per month over the older home. The mortgage payments are the same so you are cash ahead with a custom home that is designed to be energy-efficient and just right for your family.

harrisonburg farmhouse




3 Comments Add yours

  1. Eastman, Skip says:

    Excellent point!


  2. Charles,
    I agree with the statements you use in your analogy comparing costs per square foot. I would like to add what I see as the danger of building or pricing a home per sq. ft. Go ahead and do the exercise at the end of the project just for fun and see where it falls.
    There are way too many variables throughout each phase that impact cost, unless of course you take the house off of its foundation and price from the floor to the roof. Foundation costs can greatly impact cost. Is it ICF, poured walls, block or block walls fully grouted with rebar, pressure treated foundation? What type of waterproofing? What are using for backfill? Are you going to compact the backfill? What type of septic; conventional, engineered, connection fee to city sewer. What about water supply, city water or well? Water treatment system? There is much more that can be added to this list. i.e., excavation. Did you hit rock? How long is your driveway? Is it asphalt or concrete?
    Please continue this discussion so we can get away from square foot pricing!


  3. Kay Smith says:

    very interesting.


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