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The True Cost of Building a Home: Why Price Per Square Foot Doesn’t Work

Posted Oct 19, 2015 by Parkwood Admin


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    “What’s the price per square foot to build a house?”

    This is often the first question people ask when they’re looking to build a new home in Edmonton, because it’s how we’ve all been taught to understand the housing market. But is it really the right question? Real estate can be confusing, especially with so many technical terms being thrown around. Amidst a lot of technical jargon, price per square foot can seem like an easy and concrete way to measure value.

     

    “How do I Calculate the Square Footage Price of a House?”

    Home buyers know they can multiply the total home square footage by the price per square foot to calculate the expected cost. Or conversely, divide the price by the number of square feet to find the cost per square foot. While this is true, is it really an accurate way to determine the home’s value?

    Imagine you’re buying a car. What do you look for? Maybe you need all wheel drive, power steering, and a backup camera, and are willing to pay more for a respected brand. If we follow the price per square foot argument, a Kia Sedona should cost more than a Lamborghini Aventador. There’s obviously a vast difference between these cars, and the same can be said with homes. The contents and quality of the build are what determine true value.

    When looking at the price to build a house, there are costs that are comparable across similar properties, regardless of size, location, or builder. Excavation, pouring the foundation and basement, driveway prep and concrete costs, and basic building materials are fairly consistent. It’s the contents and quality of that new home that really matter. For example, if you compare two homes of the exact same size, but one has an extra bathroom and kitchen, the added fixtures will increase the price per square foot. Larger and additional windows, quality of appliances, and types of exterior finishing materials all affect this cost as well.

     

    Does Size Matter?

    Larger houses sometimes have lower costs per square foot, because those base costs we discussed above are spread out over a larger area. But is bigger always better?

    Ultimately it’s not just about size, but what you do with that space. Two houses with the same square footage could feel radically different once you step inside. Traditional two-story homes might be larger on paper than modern open to below house plans, but feel more closed-in and include floor space that isn’t always needed or useful.

     

    It’s About Value, Not Cost

    As a new home buyer, it’s easy to mistake cost for value.

    At Parkwood Master Builder, we understand this struggle, and aim to provide value by designing so that space is not wasted, thus making the most of every square foot. Real home value is measured through factors like finishes, layout, and customization, and not just the cheapest price.

    Want to learn more? We’d love to chat about building your Edmonton dream home. Contact us today!


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