As the new year progresses, it’s time to create a roadmap to help you achieve your long-term home-building goals. An important first step to creating a realistic roadmap is, of course, research related to pricing. While buyers purchasing pre-owned homes have the luxury of an immediately visible list price, buyers who plan to build their own custom homes need to understand several nuances that affect project costs.
Fortunately, those nuances don’t have to be abstruse. After building and renovating172 homes in Toronto, we have an extensive understanding of the factors that influence the cost of your project. We’ve created this guide to demystify those factors for you, and we have also provided specific cost estimates for your new custom home based on square footage.
Factors that Influence the Cost of Your Custom Home
The most obvious factor that affects the overall cost of your new home is its size. Naturally, houses with more square footage are more expensive than houses with less square footage. The less frequently considered cost factor that still plays an important role is vertical space. As you consider architectural designs for your new home, be aware that ceiling height and interior volume also influence cost, simply because vaulted spaces require more materials and, in some cases, more careful planning.
Likewise, it’s important to note that the uniqueness and complexity of your architectural design will play into the price of your home. If you want to build your home in a classic style, your price will be less expensive. If you want to push the envelope and create a unique or rarely executed architectural design, on the other hand, more resources will be required.
In the same way, the number of luxury finishes you incorporate into your home will influence its cost. If you opt to include luxury finishes on your home’s exterior and in the heart of the home but select simpler options for your basement and bedrooms, for example, your overall cost will be lower. As you plan your home, be sure to prioritize the areas that are the most important to you. Perhaps you’d rather have a wine cellar and an outdoor kitchen than a wet bar in your master bath, for example. You may have the budget to do all three, but knowing ahead of time which areas are the most important to you will help you plan and assess costs.
The Size and Location of the Lot
The size and location of your lot also play into your home cost because they influence the building process itself. More easily accessible homes are less expensive than remote homes that are hard to transport materials to.
The Depth of the Excavation
The deeper the excavation for your basement/foundation, the more expensive your home will be. Again, this is a factor that affects the cost of both the building process and the materials needed for construction.
Cost Estimates Per Square Foot
Let’s take a look at cost estimates per square foot with a built-in range to represent the factors listed above. In the Toronto area, the average cost for custom homes is between $375 and $550 per square foot. So how does that translate to a custom home cost?
If, for example, you decide to build a smaller home measuring 3,300 square feet, your cost might range between $1,237,500 and $1,815,000 depending on architectural uniqueness and complexity, ceiling heights and interior volume, the quality of materials, the number of luxury finishes, the size and location of the lot, and the depth of the basement excavation.
If you prefer a larger home measuring 6,600 square feet, your cost might range between $2,475,000 and $3,630,000. And if you opt for a still larger home measuring 10,000 square feet, your home might range between $3,750,000 and $5,500,000, depending on the factors listed above.
Cost Trends Going Forward
It’s important to note that the cost of building a custom home in Toronto corresponds to the wider housing market. Home selling prices have increased approximately 5% to 10% per year over the past 10 years or so, as have the costs to build custom homes. In other words, as the housing market continues to appreciate, so will the cost of building a custom home. Be sure to take this into account if you are planning your budget for building in 2022 or beyond. On the other hand, if you choose to build sooner than later, your costs will likely be lower.