With home affordability the worst it’s been since 1984 and existing housing inventory at record lows, you might wonder if it’s better to build a house than buy an old one.
If you do, you’re not alone. In May, U.S. home construction surged by the most in over three decades. The lack of home inventory has led to a construction boom.
However, building a new house can get expensive. Labor, materials, and other costs can add up fast.
So here are seven tips to build on a budget:
1. Simplify the home design
You can lower the cost of building by sticking to a simple home design. The simpler the floor plan, the less costly. Think of basic shapes like squares. Squares are generally cheaper than other shapes (including rectangles) because they have less variation. This means the materials are typically easier to come by and put together.
Also, building up is generally more cost-effective because it limits the size of the foundation. So if you don’t mind two or three stories, that may be the way to go.
Some home designs known for their low-cost profile include A-frames and barndominiums (industrial-style buildings converted into residential spaces).
2. Consider a prefab kit
“Prefab” is short for “pre-fabricated” and refers to homes whose parts are built inside a factory and then shipped to the build site where they are assembled like legos.
Choosing a prefab kit can lower construction time since the construction process is streamlined and indoors, where it is unaffected by poor weather. Prefab kits also usually save you on construction costs since much of the work is performed by robots and the final assembly is relatively straightforward.
3. Become a general contractor
Another way to save on construction costs is to become your own general contractor. They’re the ones responsible for overseeing the construction project from start to finish. You’ll still need to hire subcontractors to perform various tasks like electrical wiring, foundation laying, woodwork, etc. However, you won’t have the added expense of hiring someone to manage them for you.
Of course, being your own general contractor means you’ll need to build a reliable network of subcontractors you can call on to do the actual work. In some cases, you may be able to hire friends and family. But don’t outsource work to them that’s beyond their skill level. Risking their health and safety and poor workmanship isn’t worth it.
If you end up with any construction defects from a professional, however, consult a reputable construction attorney. They can help you know what your options are.
4. Choose cost-efficient building materials
You can also save money on building materials. For example, you can shop locally to limit transportation costs of getting building materials to you.
You can also opt for salvaged or recycled building materials. These include materials from old buildings, such as doors, floors, windows, etc. It could even include old shipping containers that you repurpose for your home. Get creative. Just ensure your home still meets local building codes.
5. Buy building materials at a discount and stick to a budget
At times, you can buy building materials at a discount. For example, general contractors can often get bulk discounts from suppliers. So it never hurts to ask a supplier what discounts they offer. After all, materials are the most expensive part of new builds.
Start by setting a budget for supplies and planning which materials you will buy. Adjust your plans as you go to stay within the budget.
6. Add energy-efficient home features
Consider adding energy-efficient home features to your new house. These can cost you upfront but save you money in the long run and provide special tax breaks. Check EnergyStar.gov to see which appliances qualify. Some examples include certain refrigerators, washers, and LED light bulbs.
Other energy-efficient features to consider are solar panels and double-paned windows (which are relatively standard these days).
7. DIY when you can
Finally, try to do it yourself (DIY) when possible. Simple jobs like interior painting or setting up the doorbell may be manageable on your own.
However, beware of doing more complex jobs on your own. You don’t want to risk doing a poor job that will require you to pay someone to fix it.
The bottom line
At the end of the day, building a new home can be a great option in the current housing market. It affords more control over design and costs, allowing you to make your home more affordable than an existing home might be.
To get a headstart, start exploring home designs and subcontractors in your area.
