With the increasing costs of materials and labor, new construction home prices are rising substantially. People wanting to build or buy a new construction home are having severe sticker shock. And some are even giving up on the idea of building a new home.
To help you combat these increases, we are going to look at options to save money on your home build. Whether you’re building a custom or production home, there are ways to cut costs.
Bonus: At the end of this article, I added a money saving tip and a sign-up to receive receive more tips being released soon, which wasn’t in the original article.
Strategy to Save Money when Building a Home
Before we get into the ways to cut costs on your home build, we need to discuss the strategy in making these decisions. Without the right strategy you might save yourself a bunch of money in the beginning, but did you really accomplish your end goal? Did you save money in the long run, if that matters to you? Are you happy with your choices, if you had to make compromises?
Now, as part of the strategy, you need to evaluate several factors. Here’s a list of things to consider. Determine what is really important in a home to you, what is important for resale value, the cost to build that home, the amount over budget, what are the alternatives, what is the cost to change items later, and if you go with the alternative and then change it out later is that practical or realistic changes.
And consider this- if you need to make significant cuts to features of the home that you really wanted or that will cost too much later to change, is that worth it to you? At some point, we usually all hit a point where it doesn’t make sense anymore to do something. The sacrifice is too much. So, you need to know what point that is for yourself.
For example, if your dream home must have 20 foot vaulted ceilings, but it costs you $75,000 over budget, what will you do? Will you sacrifice the vaulted ceiling, but always wishing you had them? This is a structural item that can’t really be changed later, at least not practically speaking. The point is that if you need to save money and cut costs- be honest with yourself, and take the time and effort required to make a wise decision that works for you and that you can live with.
Tips to Save Money in Custom Home Building
Now the first few tips we are going to give, have nothing to do with cutting out something. It’s about being a wise shopper. These first few tips work mainly for those building a custom, because you have a lot of control over your build and you’re able to purchase items when and how you want to. Whereas, if you’re buying a home from a production builder, you are at the mercy of what they offer.
A Custom Home Build Gives You Time to Shop for Deals
What’s the first tip? Building a custom home takes many months, if not years, so why not buy items when you see a good deal? Make sure to work together with your builder on this, because he will need to know what you’re doing. Otherwise it could be confusing, as to who is buying what. And you don’t want to have any unnecessary disagreements.
So, when building a custom home, always be looking for deals on lighting and plumbing fixtures, flooring, paint, and hardware. Really, anything that is considered a finish item, you should be looking out for deals.
Watch Lumber Prices and Lumber Futures Price to Save Money
Our next tip involves the hot topic of Lumber. Lumber is having massive price increases and price fluctuation these days and new construction home buyers are feeling it. But there are few tactics that can help combat this problem.
First, if the price is down, find a way to lock in the price. This might mean purchasing the lumber before you need it, but it could save you 10’s of thousands.
The second way is to look at the lumber futures. This is a good indicator of what lumber prices will do in the near future. Are they trending down? Maybe wait to see if the price comes down with the lumber supplier. Are they trending up? Maybe you should buy now.
The third tactic is to consider lower quality lumber. This is an area I really don’t like to compromise on, because it can affect the finish quality of the house and it makes the job a lot harder for the framers. But if you find a supplier who will take back all the junk lumber, it could save you some money.
Buy A New Construction Home from a Production Builder Instead of Building a Custom Home
The next tip is for those who want to build a custom but have found out it’s not possible. Of course, one option is to wait and save money or hope prices come down. Another option is to buy a new construction home from a production builder. Production builders deal in volume, so they can get homes completed cheaper. You might have to make some sacrifices by not getting exactly what you want, but it’s a good alternative to get you a nice new home.
Cost Saving Tips for All Builds – Custom and Production Home Build
The rest of tips we’ll consider will work for either type of home build- custom or production. Keep in mind, this list is not all inclusive, but covers most of the standard ways to save money on a home build. And, depending on the builder and options available, you may have more or less options available to you. Also, remember, with a production builder, you can simply go with their base model, without any upgrades or options. It’s a no frills house, but gets you in a new home.
Alright, let’s go over some ways to save you some money in your home build.
Save Money with a Low Mortgage Rate
One of the biggest ways to save money on your home, once again, has nothing to do with cutting out an item, which is good news. It’s getting a great mortgage rate. If you’re getting a loan on your house, you can save 10’s of thousands of dollars over years by shopping around for the best mortgage rate. Getting 1% less may not sound like much percentage wise, but it can have a big savings on a home loan. And, if your credit is keeping you from getting a great rate, work on getting your credit score higher. The effort you put into getting a great rate will pay off for you in the end.
Cut Costs with a Simple Floor and Roof Plan
Another big way to cut costs on a new construction home is by keeping a simple floor and roof plan. The more corners, angles, height, open and long spaces, fancy features, and square footage you add to a house the more the price jumps. This also includes the extra expense of porches and garages. Garages are pretty standard today, but do you need the 3 car garage? The idea is to keep what you love and can afford, and cut out the rest.
Inexpensive Flooring Can Save You Thousands
Flooring in a house can range from super cheap to super expensive. It could be $1 a foot or $50 a foot. So, because a house has so many square feet to cover, this could save you a large chunk of money, into the thousands. The only problem is that like many cheap products in life don’t last long or hold, the same is definitely true of cheap flooring. It gets constantly walked on. So, if it’s not made well, it won’t last long and you’ll be replacing it soon. A couple good options to save money but get durability is to go with a quality vinyl floor in your wet areas and quality carpeting in the rest of the house.
Pick Cheaper Cabinets and Countertops
Cabinets and countertops are two more items where you can cut significant costs. The good thing is that many of the cheaper countertops today, actually, look pretty nice and are durable. They’re not granite or quartzite. But, for the price, they’re hard to beat. And, as far as cabinets, there are some nice basic ones that are inexpensive. You may not get cabinets to the ceiling or soft closes, or multiple pull out drawers, but you can get a decent wood cabinet.
Only Have 1 HVAC Unit to Cut The Cost of a Dual Zone
Another expense to save money is with your HVAC. Many homes today have dual zones which means 2 HVACS. Even though the units are smaller for 2 zones, it still usually costs more than having one larger unit. Yes, your house may not be exactly the same temperature throughout or as efficient, but you’ll probably save thousands of dollars by only having one unit.
Save Money in Windows
Windows are another area where you could save some serious money. I’m not suggesting to go with the cheapest, poor quality window out there. But some of the windows today are insanely expensive. If you want black frames or a high end unit, you are going to pay dearly for it. Most of the time a mid-range white vinyl or fiberglass will do the job just fine.
Also, consider eliminating unnecessary windows. They not only add costs to the house, but they are more inefficient than an insulated wall. So, it’s a double savings.
Eliminate the Fireplace from your Home Build
The next cost saver is something a lot of homeowners have but rarely use, a fireplace. It is nice and cozy, but will you really use it? A fireplace is a large, unnecessary expense if it just sits there.
Choose Less Expensive Electrical and Plumbing fixtures
Electrical and plumbing fixtures are our next places to save money. Fancy fixtures can easily cost thousands of dollars, and some of them look amazing. But, my guess is that you can pick ones you like very well without the high price tag. A house is full of fixtures, which adds up fast. So, if you want a nicer piece somewhere, like a focal point, then put one there. Then, save money with the rest of the fixtures.
Install Fiberglass Shower Surrounds
Next, fiberglass tub and shower surrounds are pretty plain, but they sure do get the job done cheaply. Tiling a shower, or anything for that matter, is costly in labor, and the tile itself can be expensive. If you’re not concerned with having a decked out bathroom, save yourself some money with a shower surround.
Save Money on the Outside and Exterior of the New Home
The final area for saving money on your home build is the outside of the house.
The first item is the exterior wall finishes. The cheapest but still very durable and attractive is vinyl siding. Everything else will cost substantially more.
The second expense is doing a back yard patio, instead of a deck. And, actually, this is something you could do yourself later down the road. Putting in your own paver patio is not that difficult and it will save you thousands of dollars over a deck.
The third point is landscaping. Having a professional landscape your yard is not cheap, but it’s something you can probably do, for a fraction of the cost. Buy some plants, grass, and straw and you are on your way to a beautiful yard. Even if you want a little sod, you can have it delivered or pick it up yourself, and then lay it. You’ll have your own little spot of paradise.
Bonus Money Saving Tip
Your builder can be a great asset in helping you save money and to get the most bang for your buck. If you’re doing a custom home build, this is even more true because you can discuss money saving ideas before making or purchasing a set of blue prints. In this way, you’re able to totally customize your plans to your budget. An architect can help with money saving too, but often a builder has a better idea of how to stretch your money.
This is one of the reasons I’m always stressing the importance of learning how to find, interview, and vet a home builder. The better equipped you are at picking and getting a good builder, the better your home build will be.
Look at All Your Cost Saving Options and Make the Right Choice for You
Almost everything in your home build has options. Weigh the pros and cons of each of them- the costs, the practicality of changing it later, and what you can live without and what you can’t. Many times you can still get a house you’re happy with. And if you can’t, maybe you’ll have to wait a bit. Just evaluate your home building scenario and make the decision that’s right for you.