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How Much Does It Cost To Build a Custom Home in Denver?

At Jackson Design Build, you can probably guess what we’re asked most often:

“How much will it cost?”

We’re always transparent about our pricing, and our industry experience, established network of trade partners, and project management expertise give us the ability to control costs and deliver homes within a budget.

But what factors drive the cost of a custom home? Let’s take a closer look.

Estimating Custom Home Costs

Custom homes are not mass-produced, cookie-cutter products. Each custom home contains the unique personality of the buyer. As such, the cost of a custom home varies as much as individual personalities do.

The average price of building a new home in the Denver, Colorado area was over $1,000,000 in 2018. This would be equivalent to a 4,000 square foot home at $250 per square foot.

Factors affecting price include utilities, permit and impact fees, soil conditions, drainage issues, materials used, lot size, home size, number of stories, location, and labor. By breaking down the price of these things, you can arrive at an idea of what you can afford to build, and what may need to be left out.

Land and Construction

Once purchased, a home site often needs to be prepared for building. This process typically includes clearing and excavating the entire site. In Colorado, we have unusual, expansive soil conditions that are not ideal for building. These conditions must often be mitigated.

Depending on the home site, buyers may need to add a retaining wall to eliminate flooding. If the land is on a hillside, it must be graded. Large boulders and other obstructions may need to be removed. Zoning requirements must be addressed.

Another important factor in the cost of a custom home is square footage. Careful planning is essential as it allows buyers to maximize space for the features they want without driving the price too high. The larger the home, the more material and labor will be required, which in turn brings up the overall price. Other items that increase costs include foundation, framing, adding architectural corners, and exterior finishes.

Find a General Contractor

An experienced and trustworthy general contractor like Jackson Design Build is an essential part of building a custom home, saving a great deal of time and costs through years of experience and expertise. A good home builder will help you create the home you envision while staying true to what you can afford. Builders can also share with you the best materials to use and suggest changes to positively impact the price. Machine expenses depend on what the professional you decide to hire owns and what they need to rent.

Your general contractor also serves as a great resource during the building process. You will need to obtain permits and inspections which can be a complicated process. With experience in obtaining permits, your general contractor will spend time pulling paperwork and ensuring the correct permits and inspections are obtained. Your general contractor will also help you schedule inspections when construction is due for review by jurisdiction representatives.

Labor

Labor costs also vary based on the complexity and size of a house. Labor expenses are often associated with architects, engineers and land surveyors. Labor for an architect is often $75-$200/hour, labor for an engineer is typically $100-$200/hour, and a land survey is around $500-$1,000.

Installing Systems

You will need to consider the price of systems such as HVAC, electrical, and plumbing. Pricing of these installations is affected by size and type of system. For example, installation of an energy efficient system begins with the price of solar panels and increases based on size, labor and wiring that connects it to all outlets, fixtures and appliances in the home. Other ways to heat and cool your home are gas, electric, and propane. Other systems you may consider are a home security system or a more comprehensive automated smart home for security, lighting, temperature, music, and more.

Financing

Financing is a key consideration when determining a custom home price. Custom homes that first appear out of reach can become affordable through creative financing. Buyers often finance the building of their home through a construction loan. A construction loan is an interim, short-term loan that covers building expenses associated with the home. The two major types of construction loans are construction-to-permanent loans and construction-only loans.

In a construction-to-permanent loan, the buyer borrows money to pay for the construction expenses of building the home. During construction, the borrower pays only interest. Once the construction is completed and the homeowner moves in, the loan is turned into a permanent mortgage. At that point, the homeowner will begin paying the interest as well as the principal.

In a construction-only loan, the buyer takes out one loan for the construction of the house, and a mortgage loan. This type of loan often requires a smaller down payment. It is often a great option for individuals who are living in a current home they are trying to sell. Once their old home sells, they will have more cash to pay toward the mortgage of their new home. These are both great ways to finance the construction of a home.

Fixtures & Finishes

The fixtures and finishes a homeowner decide to use also factor into the cost of a custom home. The quality of these items often varies based on what a buyer can afford. Fixtures considered premium include marble floors, quartz counter tops, and under-cabinet lighting. If you are a home buyer on a budget, ask your builder about the many alternatives to these expensive fixtures. Today, there are many different materials that are less expensive and obtain the same result as the higher-priced fixtures.

Appliances

When considering appliances for a custom build, be sure to think not only of up-front cost but efficiency. Appliances with higher efficiency are likely to pay for themselves and save money in the long run. There are also options for appliance warranties that may reduce costs over the long run.

Design Features

Design features affect the price of a custom built home. Common design features include landscaping, decks and outdoor living space, outdoor pools, custom staircases, and wet bars. Additional custom features and amenities that add cost include fireplaces, vaulted ceilings, walk-out basements, and eat-in kitchens. Having an idea of what your needs are before building will help you stick to a budget and avoid unnecessary expenses.

Other Factors

Although unique architectural features are common in custom homes, they can be very expensive. The more corners a home has, the more expensive it will be. Roofing and siding are other factors that can drive up price. Installing specialty roofing and siding often results in a steeper price tag during installation, but can pay off in the long run. It is important to do your research and ask your builder to provide you with different options and prices.

Summary

From room sizes to landscaping, building a custom home is an opportunity to create the usability and design features that meet your needs. Custom building a home can be a great alternative to purchasing a new or existing one. The construction process of a custom home can be intimidating, but finding a reliable contractor like Jackson Design Build can simplify the process and homeowners are usually delighted with the final product.

Colorado is one of the most beautiful settings in the world, and the Denver Metro Area offers prime locations to build a custom home. Before beginning, you will want to create a budget, hire a general contractor, develop design plans, obtain permits and inspections and purchase construction insurance.

Once your dream home is complete, it will be time to schedule a final inspection and complete your landscaping. There's no doubt custom homes can be expensive, given the many possibilities available. However, a reliable builder and cost-effective choices allow savvy home buyers to go custom in a way that suits their budget.

To learn more about building a custom home, contact Jackson Design Build today!

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