Demand for new and pre-owned homes has skyrocketed over the last year -- hitting a fifteen year high in late 2020. With remote work suddenly a possibility for millions of Americans, families have shifted gears -- moving away from high-density cities into the suburbs and rural areas. Furthermore, interest rates are incredibly low right now, making buying or building even more attractive to prospective homeowners. Unfortunately, worldwide COVID-19 restrictions on shipping and labor reduced the amount of building materials available on the market. This has resulted in sky-high costs for lumber and steel, thus compounding overall costs for home building. In conversation with host Ari Shapiro in the 30 March 2021 All Things Considered broadcast for NPR, Frank Morris notes that “since this time last year, the price of lumber has roughly tripled, and it's still going up.” Worse still, Morris tells Shapiro that “the shortages are tacking months onto the time it takes to build a house [in addition to] driving up costs.” According to Will Ruder, “for every $1,000 price increase, nationwide, more than 150,000 potential buyers are being priced out of the market.” This reality has left many homeowners suddenly unable to build the dream home they had planned and budgeted for. As such, these prospective homeowners have begun searching for cost-efficient ways to cut a few budgetary corners without sacrificing the quality of their home. From shopping locally for materials to buying plans online, follow below for ten ways to build a house on a tight budget.
If possible, homeowners building on a budget should purchase local, salvaged and recycled building materials. Buying local materials saves money on transnational or international freight and shipping. Purchasing recycled materials or picking up salvaged materials can either offer the homeowner a huge discount or provide them with free supplies. In her article “Build on a Budget: Ideas That May Save You Money” for The Spruce, Jackie Craven writes that “recycled construction materials are earth-friendly and can also help take the bite out of building costs.”
Craven recommends homeowners look for “recycled steel, pressed straw paneling, and sawdust and cement composites.” Other elements can also be reclaimed from salvage warehouses, including “reclaimed doors, windows, lumber, light fixtures, plumbing fixtures, fireplace mantels, and assorted architectural details.” Shopping or salvaging locally will also protect the timeline for your project, reducing delays due to shipping or fulfillment issues.
Homeowners often assume that buying a prefab home kit is purchasing a cheap tiny house. However, there are plenty of high-quality prefab kits on the market today that result in stunning new homes with footprints over 1,000 square feet. Because prefab kits are partially assembled in an off-site facility -- e.g. a warehouse owned by the manufacturing company --, weather is not a concern. As such, delays in your pre-planned timeline are rare, saving money and lots of stress. After the kit is partially assembled in the company’s warehouse, parts are shipped to the build site alongside detailed instructions.
Many prefab home kits -- like the Duo from Avrame -- can be assembled in large part by a team of unskilled workers -- e.g. the homeowner and a few friends. However, the larger you go with your build, the more likely a professional contractor and build team will be needed. While an easy-assembly kit can reduce the cost of a build by thousands -- if not tens of thousands -- of dollars, homeowners should keep in mind that most kits include only the exterior, shell and interior walls. As such, the homeowner must source all interior elements -- e.g. showers, kitchen cabinets and tiling -- separately. The same goes for an electrician and plumber.
When building your home on a budget, consider “hiring” friends and family to help with initial steps like pouring the foundation and assembling the frame and exterior. In her article “DIY Home Building: 4 Ways to Build a House Yourself” for Homelight, Jody Ellis writes that “a DIY home means you can build within your budget, customize the house to fit your lifestyle, and have the satisfaction of knowing that you put in the work yourself.” In many ways, working with family and friends makes the space more personal and the final result more rewarding. Just be sure not to tackle parts of the build that could be dangerous for you or your family. For instance, Ellis writes that if “you aren’t experienced with things like plumbing or electrical,” you should hire subcontractors rather than struggling through complex installs on your own. Saving money while building your new home should never come at the cost of health and safety.
As mentioned above, DIY home builds can be incredibly rewarding. However, trying to build the entire structure on one’s own can be dangerous and might cost the homeowner more in the long run. Hiring an experienced builder, well-regarded contractor and efficient subcontractors can actually save the homeowner more money than a DIY build. This is because professional builders often work directly with vendors and manufacturers, reducing materials and install costs. They also have more influence and leverage should an appliance or material arrive damaged or broken.
Because practiced home builders often work with the same vendor repeatedly, it is in the best interest of the vendor to respond promptly to any quality control issues. When working with a homeowner who will only purchase from the vendor or manufacturer once, the company is less incentivized to help. Hiring a designer might also cut costs as they have the experience and education to determine the best, most efficient placement for each element of the home.
In her article “How to Build a House Cheaply: 7 Sneaky Ways to Save on Home Construction” for Realtor.com, Margaret Heidenry emphasizes the cost-saving benefits of choosing energy-efficient materials and appliances for your home. Heidenry writes that “while energy-efficient features may cost more than not adding them at all, [homeowners should] consider the long-term savings once your home is built.” She explains that “many energy-efficient home features come with tax credits, rebates, and other savings.” In fact, according to the Department of Energy, “56% of the typical U.S. home expenses reside in heating and cooling,” but choosing the proper insulation, windows and appliances can reduce these expenses significantly.
Stephanie Booth writes in her article “Energy-Efficient Windows: How Much Will You Really Save?“ for Realtor.com that “the U.S. Department of Energy estimates that you'll save between $126 to $465 a year by replacing single-pane windows in your home.” Properly insulating can save you money on annual expenses as well, explains Erin Scottberg in her article “How Much Could You Save by Insulating Your Home?” for This Old House. Scottberg writes that “the EPA estimates that the average homeowner can save 15% on heating and cooling costs (11% of total energy costs) by adding insulation in attics, crawl spaces, and basement rim joists.”
In her Home Guide article ”How to Design Plumbing” for SF Gate, Laurie Brenner explains how keeping plumbing together can reduce costs over time. She writes that “because water supply is one complete system, it traverses between the rooms that require plumbing.” Homeowners can save a significant amount of money “on materials and make the system more efficient, [by] grouping rooms that require plumbing closer together.” For example, Brenner recommends placing “a laundry room adjacent to or near the kitchen, while placing bathrooms in key locations near bedrooms.” Prospective homeowners stand to pay quite a bit more both for installation and for materials in their new home when they “design rooms that have plumbing fixtures in multiple and opposite locations around the home.”
Even if you choose to buy materials locally instead of purchasing from a company, paying for a plan online that includes an estimated build cost -- either per square foot or per material -- can save time and money. Starting with a pre-designed plan speeds up permitting, as the built area, bedrooms, electrical and plumbing are already laid out. In his article “Best Affordable House Plans Under $250k to Build in 2020” for Advanced House Plans, Keith Thornton writes that many times, “even if you do find the perfect house plan, you have no idea of the actual cost to build it.”
Plans with estimated build cost included are often fairly accurate, but this estimation should be applied to your project solely as a guide -- not as a given. Homeowners should also keep in mind that the plans might not predict total cost in your particular area if permitting, zoning and building costs are much higher than in surrounding areas. In this case, working with a design-build firm like Element Homes might be your best bet. For reasons outlined above, working with a firm of experts means more network connections, availability of wholesaling pricing and better accountability throughout your project. Better yet, your entire home build is executed under a single contract.
Choosing a simple architectural style has a number of cost-saving benefits -- including those associated with assembling the roof, laying the foundation and construction services. Houses built from simple plans like A-frames ensures a much more streamlined process, resulting in an affordable build from foundation to finishes. Building upwards instead of outwards is another way to save money during your home building project. Tony Guerra explains why in his article "Most Affordable Way to Build a House" for SF Gate. Guerra writes that "the cost to build a house can vary tremendously even among houses of the same square footage" because of the infrastructure needed for different house plans. For example -- writes Guerra --, "a 2,000-square-foot single-story rectangular ranch-style home costs more than a-2,000 square-foot two-story square colonial because the colonial's foundation is smaller." Generally, "square-shaped homes are more economical to build than rectangular-shaped homes" because each wall is the same length and there is less variation throughout the house.
Leveling land and hooking up utilities to a remote building site can add significant time and cash expenditures to your home construction project. According to the HomeAdvisor Cost Guide “How Much Does It Cost For Land Excavation & Grading?,” excavating and leveling for a residential project typically “runs between $1,439 and $5,214 with an average of $3,216.” However, this amount could exceed “$200 per cubic yard” if the soil is particularly rocky and dense or the land is steeply graded. Clearing the lot and hooking up utilities can both add extra cost to your project. In her article “Budgeting for a New Home: How Much to Build a House on My Land?” for Homelight, Evette Zalvino writes that “the price of clearing a single acre of land can range from $200 to $6,875.” Zalvino notes that the type of hookup required by your site could pull from the budget too.
Laying a new sewer line for your home build “ranges from $50 to $250 per [linear] foot” while installing “new pipes will cost somewhere between $3 to $20 per foot, with an additional charge for labor…[that] can run between $30 to $247 per foot.” Digging a well, connecting to gas line and joining the electricity grid all add up -- to the tune of an average $10,000 to $30,000. As such, Etienne Caron recommends “building the house close to the road on well-drained land” in his article “How to Build a House Cheaply” for Hunker.com. Caron writes that “you want the shortest distance possible between the nearest utility pole and your house” in order to save money upfront and over time.
In her article “Cheapest Ways To Build A House: 10 Tips For Affordable Home Building” for Quicken Loans, Erica Gellerman notes the importance of getting design plans approved early on. She writes that waiting on permits to go through after contractors have been hired and materials have been ordered “can cost a lot.” Furthermore, Gellerman explains that “any changes that you make to your building plan during the construction process can also add significantly to the total cost of the build [which is] why it’s important to get your plans approved early in the planning process before you start building.” Worse yet, if you fail to have your permits approved before beginning your build, “you risk being charged a hefty fine [or] having to redo some of your already completed work.”
Though DIY construction can reduce the overall cost of your build, going it alone can also add expenditures -- particularly if the homeowner lacks experience or know-how. Hiring a design-build firm like Element Homes -- complete with an architect, construction team and subcontractors -- can protect your investment more effectively than a DIY build can. Working with a plumber and electrician, the architect can determine the best placement for each room while deciding on an overall footprint that works for your family. When homeowners enter into a build alone and unprepared rather than employing the services of a design-build firm, they often encounter challenges they are ill-equipped to address. Design-build firms like Element Homes have years of experience as well as industry access to ensure your build goes off without a hitch -- staying on budget and within your timeline all the way through.
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