The Cost of Building a New Custom Home in 2023: Four Factors that Impact
February 28th, 2023
By Sofia Alonso
7 min read
Here at AV Architects + Builders, the most common question we receive from prospective clients is: how much will a new custom home cost?
We then have to deliver the frustrating answer that many builders can relate to: “well, it depends.”
That is why we have developed a process over our decades worth of experience designing and building custom homes in the Northern Virginia area that allows us to have more control over the price prior to going to construction.
That is how we control the cost during design and protect the design during construction.
In this article you will learn about the four main factors that can impact the price of a new custom home and what to look out for when making decisions towards your own custom home project.
If you have thought about building a custom home, you’ve likely realized there are many ways to go about it and many options to choose from.
For a lot of people, the biggest concern when building custom is the cost and specifically, being unable to control it.
It’s true that there are many factors that can impact the cost of a new custom home build project, but that doesn’t mean the price cannot be pre-determined.
What impacts the price of a custom home project?
In order to give an estimate for the cost of a new custom home project, it is important to consider these four main factors:
1. The Site
Since the first step to building a new custom home is securing a lot to build on, the cost of purchasing the lot will be an initial expense.
How much can you expect to pay for a lot? Well, that depends heavily on where your lot is located as different zip codes can have different price ranges.
When building in Northern Virginia for example: the closer your zip code gets to the city, the smaller and the more expensive the lots become.
Another term that many people learn when they begin researching the custom home building process is site costs or land finishings. These are referring to the cost of the work it takes to prepare your lot to be ready to build on.
The status of the site can heavily impact the price of the overall project. The topography of the land can affect the complexity of the design and therefore the cost of the overall project. Is it on a hill? Is it covered in trees? The size and condition of the lot can contribute to the overall site costs required to prepare a piece of land for the new house.
Typically, lots with existing teardown structures on them have lower site costs required compared to vacant land that is undeveloped. Read more about the differences between a teardown lot and vacant land to determine which is right for your project.
Finally, some counties in your area may have requirements like stormwater management and planter boxes to consider.
2. The Shape
Many people don’t know that when building new, the shape of the house can affect the overall cost of the home.
What do we mean by that? For example, when each level of a home is the same size just stacked on top of one another, like a box, it becomes significantly cheaper than a home with an expansive main floor. This is because less footprint (the overall space a house demands on a physical lot) is required to be prepared for the home.
That’s why townhomes are considered so cost efficient to build. Their shape allows them to share one set of stairs, and create a straight shot for mechanical, electrical, and plumbing work, making the labor simpler and cheaper. Additionally, minimal exterior materials and roofing are required to cover a townhome, further contributing to the cost effectiveness of the project.
As custom home builders, we aim to influence our clients’ everyday lives through thoughtful design. At AV Architects + Builders, we encourage our signature Vacation Style Living and that is living in a home that is designed to make you feel like you’re on vacation all year round. Part of that design philosophy encourages use of our 20-60-20 Main Level Living formula. That means 60% of the home and living spaces are located on the main level, with 20% on the upper and lower levels, respectively.
Now, this formula does not apply to everyone and is merely a guideline for design to consider, but it is a guideline that can often become an afterthought when the main concern for the project is the cost.
3. The Style
There is a myth that we sometimes hear that is “building modern style homes is cheaper than traditional style.”
Unfortunately, this is not true. Actually, building a modern style home tends to cost more than building a traditional colonial style home.
Part of this myth comes from the fact that modern homes typically feature fewer walls or doors and have that open-concept floor plan that many people know of. People think that because there are fewer walls and doors in a modern style home, then there is less lumber being used and therefore, it should be cheaper.
But they don’t account for the fact that even if less lumber is being used, steel and glass are often required to create the expansive spaces and open floor plan you see in modern style homes and those materials can be quite costly.
The Vista House Photographed by ©️ Maxwell MacKenzie
4. The Finishes
The material selections and finishes are the final pieces of the puzzle to complete the picture of the cost of your custom new home. The biggest takeaway from this should be: finishes can vary greatly.
That means the spectrum is wide and large for how much you could spend on finishes in your custom home.
For example, you could buy a toilet from a major retailer like Home Depot for about $150. Or you could select a specific toilet model that has a bidet, is heated, plays music, and flushes itself for about $1,500.
Additionally, dishwashers can come in $300 models, but they can also come in $1,000 models. And of course both models work, but not the same. The more expensive one might be quieter, last longer, or have custom shelves.
The same thought process can be applied to every material in the house.
Windows can come in vinyl, aluminum, mahogany, and more. You may have the same amount of windows and they might be the same size and shape, but they can have a significant price difference depending on the material.
The Inside Out Home Photographed by ©️ Maxwell MacKenzie
What does it really cost to build a custom home?
Now that we have reviewed the four factors that can impact the cost of a new custom home, you are better prepared to understand what impacts the cost and make the best choice for your project goals.
A fully custom home builder can range from $350 to $450/Sq.Ft., and that does not include the cost of purchasing the lot or the site costs to prepare the land to build.
That means that a 5,000 Sq. Ft. custom home would cost $1,750,000 to design and build (5,000 x 350 = 1,750,000).
We typically see site costs and land finishings in the Northern Virginia area range from $100,000 to $300,000.
The cost of land in Northern Virginia can vary greatly, but mostly gets more expensive the closer you get to Washington D.C. and becomes cheaper the deeper into Virginia you go.
From Leesburg to Arlington, it can range from $500,000 to $1,250,000 for a lot.
Many people who are initially intrigued by the idea of designing and building a custom home come to realize that a semi-custom or production level home might be a better fit for their wants and needs. It is important to do research on the custom home building process in order to know which type of home might be best for you.
To learn more about the custom home building process, check out the Learning Center on our website.
Published on February 28th, 2023