“What Does It Take To Build A Custom Home?”

Graham Smith partner at Altius Architecture

By: Graham Smith

The first question most clients ask, is: “How much does it cost to build a custom home?”

I reply with another question: “Well, what does it cost to buy a car?”

After this I generally receive a glazed look.

So I explain:

I am answering your question, it’s just not a simple and quick answer. It might seem to you like I’ve just missed the exit on the highway, but I’m actually taking us on a metaphorical short-cut.

Buckle your seat belt, and I’ll try not to get us lost.

There are similarities between the cost of a car and the cost of a custom home. Most people, by the time they come for a meeting with an architect (that’s me), have already purchased their first car. They might not have built a custom home. 

The first thing to consider: we are not talking about a Ford Fiesta Hatchback, or a Honda Civic—not a mass produced, same-as-every-one-else’s, four-wheels-that-get-you-around-town vehicle. The cost of building a custom home is a bit more that the cost of a cookie-cutter, sub-division, run-of-the-mill home. It is a low-production vehicle, instead of a high-production vehicle. A custom home is more similar to a the VWTouareg or a PorscheCayenne. 

Once you decide to drive a low-production vehicle instead of a high-production vehicle (instead of a standard home, choosing a custom home) off the lot… you are faced with a surprising number of choices.

And this is our second point of consideration. The basic structure of a custom custom home is better built and designed than your average stick-built home, and typically more expensive—we’ve covered that. But on top of the basic structure, you are faced with hundreds of options. What does that mean? It means quality, style, and performance. (Or, the unfortunate opposite of those—but we’ll be pessimists on that subject in another article. In this article let’s be optimists. Let’s pretend you chose a well-established architect with a history of quality and beautiful buildings to build your home.)

In our car example, the VWTouareg and PorscheCayenne share a common platform. In other words, their chassis and basic components are, for the most part, identical. They have a well-designed and highly-engineered platform, more so than, say, the ladder frame of your average pick-up truck. But then on top of that, you have some very different pieces put together to make two very different cars—with two different price tags.

Though built on the same platform, a VW Touareg sells for $52k-$68k, and a Porsche Cayenne from $75k-$215k. With the same basic size and form, the price spread is 400%. What accounts for the difference in price?

There are several reasons, and those reasons are similar to the difference in home prices. At first they might seem difficult to navigate. In the end, when we hit the clutch, we shift into:

  • Style, performance and quality: the full package.
  • Fixtures, Finishes & Equipment: in other words, the functional and aesthetic options.
  • Luxury: the delights and extravagances.
  • Exclusivity & brand: the cachet.

These are the pieces that go together to make up something close to the final price tag after a same-platform (and same price) start.

Anyone who has ever purchased a vehicle knows that the options drive the price of the vehicle up. The VW has only a few options that are bundled together into packages aimed at performance and style, while Porsche offers seemingly endless options with overtones of luxury and exclusivity. From the baseVW Touareg to the fully optioned Porsche Cayenne GTS there is huge price difference ranging from $52k-$215k, and you could quite literally purchase four base VW Touaregs for the price of one fully equipped Porche Cayenne Turbo. Custom homes of similar size and form can be built for vastly different prices depending on how they are spec’d and optioned out. We architects refer to this as FF&E: or Fixtures, Finishes & Equipment.

And here, in part three, we have hit on the biggest single factor that increases the cost of a custom design home (we’ll talk later about controlling the budget). Homes typically have hundreds of different items that fall under FF&E. In other words—so you’ve chosen your Porsche. Now you want to trick it out. (Or, heck, if you really want to trick out your old Honda Civic for illicit street racing and evading the helicopters of the York Regional Police—come talk to me.)

What are your options?

Whether is it the $1000 GE fridge versus the $10,000 Sub Zero fridge, or the $3/sf laminate flooring versus the $15/sf oiled engineered hardwood, or a Passive House engineered building envelope versus a giant wall of glass—every construction budget has hundreds of line items, and each line item has a cost. For each of these the client and architect make choices that can heavily impact the budget, without surprisingly increasing or decreasing the size of the home at all. 

Beyond the structure, or basic platform (the chassis in our vehicle example) Fixtures, Finishes & Equipment takes over the budget. It's not a simple process to build a good home, nor are there many in the business of residential construction that have every angle covered. I tell my clients that I can build the same fundamental design for as much as a 400% budget spread, from a bare bones $250/sf to highly customized $1000/sf.

So in the end what does it cost to build a custom home? There isn't one short easy answer. The bottom line is that custom homes cost different amounts, just like cars. The sky isn't the limit, dear client. The price can go to the stars and beyond. The answer depends on the client’s appetites, aspirations, and means, as well as the scale, scope and complexity of the project. But perhaps most importantly—an  experienced architect knows what things really cost and a good construction team doesn’t overshoot the budget objectives.

In other words, the short answer is, that there is a separate answer for every separate house. But I know that might seem overwhelming, and in all likelihood is not the answer you came to an experienced professional looking for. 

So, in conclusion, I offer you my advice: 

Start with a good architect and construction team that will work together to achieve your objectives. Someone who’s succeeded in building quality and beautiful custom homes a hundred times before, someone who has the experience to know what things cost, and the sophisticated and highly evolved communication tools to show you how your budget changes as your choice list builds to the grand finale.

The quality of the project team is essential. Cathy, and I, and the team at Altius Architecture, Inc., have evolved our approach to integrated design and construction management over two decades. Whether your garage needs to hold a VW Touareg, or a Porsche Cayenne (or your tricked out Honda Civic), or an old rust bucket, we can help. We have 20 years of experience building custom homes, and we build them well. 

The truth is, we don't have a standard answer to how much it costs to build a custom home (that would be like giving the same set of directions to every client on the road to all their separate houses—pure insanity), instead we work with you to determine an achievable and desirable budget and ensure that you know what the are going to spend, before you’ve spent it. You name the price. You decide on the options. You drive the car off the lot.

At Altius, we make sure your “car” has everything you wanted, at the price you wanted, with no disturbing surprises, so you can enjoy a smooth and enjoyable drive to your dream house destination.