# COST CONFUSION

Eager for an easy to understand tool to get a feel for the cost to build or remodel a home people ask, “How much does it cost per square foot?”  The numbers that get thrown around are as likely to confuse as to usefully inform us about project costs. It’s almost like asking how much does dinner cost per pound!

### WHICH SQUARE FOOT?

To determine the cost per square foot requires a cost associated with a given area. That works pretty well for a single item: we can take the cost of \$8000 to install finished hardwood flooring for an area of 1,000 SF to determine a cost of \$8/SF and apply it to twice the area and be fairly confident of what to expect.

But if we take something as potentially complex as a house with a range of features and finishes, levels of detail, craft, and quality the cost for a given area can range widely. And what is that area? Does it include the garage, a screen porch or deck, finished vs. unfinished basement space, etc?

Consider building a 2500SF house with 1000SF of finished basement, 500SF garage, 200SF Screen Porch, and 400SF of walks, walls, and patio area. If the total cost is \$860K we might say the 2500SF house costs \$344/SF to build, even though the cost to build each of the elements of the house have very different \$/SF to actually construct.

 Area \$/SF Total House 2500 \$ 250 \$      625,000 Finished Basement 1000 \$ 150 \$      150,000 Garage 500 \$ 100 \$        50,000 Porch 200 \$ 125 \$        25,000 Walks, Walls, Patio 400 \$   25 \$        10,000 Total Cost \$      860,000 House Area Alone 2500 \$ 344 /SF

The lesson here is to be clear about what costs are being divided by what area when using cost per square foot as a unit of analysis. In our New Home Pro Forma worksheet we favor treating the different project areas according to their unique differences in cost per square foot to construct.

### NOT EVERY SQUARE FOOT IS THE SAME

It makes sense that the finished and conditioned areas cost more than the simpler areas. But within each of these areas there are important variables that can shift those costs up or down. Think of them as dials on our control panel that we tune according to choices we make about what we intend to build.

## AREA

Obviously the most immediate factor is size. It makes sense that if we build smaller it will likely cost less. Less area means less materials constructed in less time. But area alone is not a linear dial. Essential features like kitchens, baths, and stairs likely cost about the same in a variety of house sizes.

## COMPLEXITY

A 2500SF home can be built in a simple shape with basic finishes. But a home of the same size can be built with lots of detail, projecting shapes, and a wide variety of craft features and finishes. Dividing the cost of these very differently constructed homes will yield very different costs per square foot.

## FEATURES, CRAFT, & QUALITY

When we see images of homes that attract us they probably include features that shift our cost per square foot up. Stone facades, metal roofs, dramatic staircases, towering spaces are all architecturally exciting. Recognize that they influence cost. Many or these features are also exquisitely crafted. That craft is likely labor intensive and requires high value expertise. We also know that for every product we must select there are probably good, better, and best choices with related price points. Every quality selection we make adjusts that dial.

## THE EXTENSIONS

The house is our central unit of measure. It is the area that is lived in, heated and cooled, and thermally enclosed and it comes with the highest energy demands for providing comfort and utility. Naturally, it has the highest \$/SF to build. The extensions to the house each have a lower cost, especially since the don’t require elaborate mechanical systems or features like cabinetry. The same factors still apply for each. A garage can fit two cars or offer additional space for a workbench, bike, kayak, and garden tool storage. A simple wood deck costs less than a screen porch with its roof and screen panels. A basic walkway costs less than a path with retaining walls and steps. A landscape plan can be as simple as a lawn area with simple planting beds or a carefully orchestrated assembly of trees, shrubs, perennials in settings with boulders or even water features. As we adjust each of those dials we influence the cost.

## DON’T TOUCH THAT DIAL

You only have one opportunity to bake in the features that result in a home that will be more comfortable, healthy, durable, and energy secure than any place you have ever lived. These features include:

• more insulation and some additional framing for that
• details that assure reliable air tightness
• minimized thermal bridges (elements that conduct heat through the structure)
• high performance triple glazed windows sized and located to capture more energy than they lose (net gain glazing)
• constant filtered fresh air with minimal heat loss (balanced heat recovery ventilation)
• mini split heating and cooling (simple and efficient)
• heat pump water heater (highly efficient water heater)
• solar panels to harvest all the energy needed to serve all the homes operational energy needs

Of the approximately 500 line item costs in a home construction budget, less than 10 are spent on these features. They add about 5% to the cost to build. Analysis suggests they pay for themselves in less than ten years and lock in a permanent net zero operational energy cost.

You cannot add these features later. They all work together and need to be designed to perform that way. They need to be baked in. Don’t touch that dial!

## USE COST PER SF APPROPRIATELY

Knowing what it is likely to cost to build and what the factors are that effect that cost is essential information. Our New Home Pro Forma Worksheet is intended to help provide that framework. It is no substitute for the methodical process of developing the design for your house on your land with the features you desire and producing a “reality check” budget based on the work that will require. But it is a useful place to start, even as we acknowledge the variables that we’ll need to dial in to set our expectations appropriately.