Do custom homes cost more than production homes? In general: Yes. The more important question is whether the price of a custom home is worth it? Absolutely. Custom homes allow you to put the investment in your home where you would like it to go. You spend more time in your home than anywhere else. It’s important that your home allows you to live how you wish. Thus, when considering the prices of custom homes, don’t forget to factor in the elements that offer you more control and choice in the building process:
Building on Land You Choose
Unlike most production homes, when you build a custom home, you’re in charge of acquiring or supplying the land. If you don’t already have a lot set aside, buying new land for your home has a huge impact on your total building costs. A vacant lot will usually cost in the hundreds of thousands of dollars. Of course, this varies depending on the neighborhood and the surrounding development.
By contrast, a production home is built on land the builders have set aside for it. You’ll have a choice of a variety of locations, but the locations may be more limited. The advantage here is that the cost of the land is included in the price of the home. Another benefit is that the floor plans are already designed for you. You simply have to choose which one you like.
Designing a Floor Plan
The next element of pricing is the floor plan. You’re in charge of designing the floor plan or having it designed for you, and you may commission a new floor plan or choose to adapt an existing one. An existing floor plan is much less expensive, whereas a new set of plans can range from a few thousand dollars to upwards of $50,000. Even if you purchase an existing design, you’ll still want an architect to review it. And, if you have an architect you trust, you may also decide to place him/her in charge of overseeing different aspects of the project. That can increase your costs, too.
However, many custom home builders have a partnership with an architect. This can help reduce floor plan costs. Many also have lots available that you may find appealing. This can further reduce costs. By finding a custom home builder who has land and an architect you like, you roll these costs into one source. This doesn’t eliminate these costs, but it can help drastically reduce them. (Note: Combining cost factors is one reason why Synergy Homes’ prices for custom homes are so reasonable.)
Tailoring Your Home Building Costs
The cost of building the home itself is hard to pin down without going through those first two steps. In general, assume a home costs between $100 to $200 per square foot. In other words, a 2,500 square foot custom home may cost between $250,000 and $500,000. This will be impacted by the floor plan, quality of your materials, and other elements you choose to customize. Remember that, with a custom home, you’re involved with every step of the planning and development process, so you’ll more closely direct where to splurge or save on the project.
And, yes, labor is factored into the costs above. The rule of thumb is that labor makes up about 40% of that cost, with materials, permits, design and other fees making up the remaining 60%.
As a rule of thumb, a custom home costs in the range of twice as much as a production home. Remember, this incorporates land cost, design and architect cost. Something else to keep in mind is that custom homes may be appraised at a lower figure than their cost. Production homes will generally be appraised much closer to their cost. This means that custom homes will often require a higher down payment.
Saving on Future Costs
One big factor in customization is energy savings. By creating an energy-efficient floor plan and using energy-efficient building materials and smart appliances, you can actually reduce yearly energy costs by hundreds or even thousands. This also helps extend the life of your HVAC and appliances, saving you additional money. One more benefit is that energy-efficient custom homes will build value better over time than others. In other words, customization for energy efficiency can help you save money every year and make the investment in your home more valuable.
Are the Prices of Custom Homes Worth It? It Depends on You
Obviously, the custom home route takes more time and involves more cost. It’s like having a bespoke suit or dress designed just for you vs. buying one off the rack. However, if you know what you’re doing and can afford the extra cost, the bespoke clothing will fit you better. And yet, if you like what’s already on offer and it looks good on you already, the extra cost for something custom may not make sense.
The prices of custom homes can very well be worth it if you know exactly how you’ll take advantage of each step, and how you’ll pay for it. The savings of production homes is very much worth it if you want to put more of that money into other aspects of your life. There’s no right or wrong answer; there’s just what fits you best.
If you’re weighing the pros, cons, and costs of building custom or going with a production home, contact Synergy Homes today. We’re happy to help you evaluate your goals, and we can supply you with different options within your budget.
Editor’s Note: This post was originally published in June 2019 and has been updated for freshness, accuracy, and comprehensiveness.