Buying A Home In Scottsdale Vs Building Your Own Home

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Published date: Jul 08, 2019
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build your own house in Scottsdale

So, you’ve found the best place to live in. The city of Scottsdale, AZ is incredibly appealing for its great weather, the growing economy, safety as well as for its available listings. Maybe you already started browsing around real estate websites and got in contact with real estate agents, but you haven’t yet managed to find the perfect home for your family. You probably also have an idea of what you are looking for, which is why you don’t want to settle for some house that is available as it doesn’t have that walk-in bathroom or kitchen island or any other top features that home buyers are interested in. And like that you are already facing a huge dilemma - should you build a house from the ground up or buy an existing home? 

Scottsdale is definitely a great city to live in, chosen by students and retirees alike for the many reasons to relocate. With plenty of vacant lands around, building your own house in Scottsdale, AZ might be a solution for your housing needs. The location is very important and it has a big impact on the price of the lot you want to purchase. One acre lots start at about $49,500 but can go as high as $998,000. That would be the first investment in your new future home that you’ll have to make. The next ones will have to do with the home itself, from contracting builders, getting the projects approved, buying the materials, and by the time your home is standing, you’ll have to deal with property taxes as well. However, local authorities strive to keep property taxes affordable. In Maricopa County, the property tax in 2020 is 0.64% of market value, according to smartasset[dot]com, while in Arizona, the property taxes are 0.72 of the market value. 

The cost of building a house in Scottsdale, AZ

There are many unpredictable expenses when it comes to building a house in Scottsdale, AZ. It is almost impossible to take absolutely everything into account from the beginning of the process. There are a lot of estimates that generally turn out to require more funds than initially expected. As a general rule, when you build your own house in Arizona, and everywhere else really, you should expect an increase in costs of about 20%. These are funds for the so-called unforeseeable expenses.

Is it cheaper to build a house or buy a manufactured home?

Firstly, you have to figure out if you will pay for the new construction in cash or if you’re going to take out a loan and make a budget. With cash payments, you won’t have to worry about monthly mortgage costs for the next 15 to 30 years. However, it isn’t easy or common to be able to pay for the construction of a new home in cash, in total. That is a lot of money and many don’t manage to save up those kinds of funds before they reach the timeline in their life to invest in a house.

Secondly, you have to add the cost of property taxes, homeowners insurance and repairments. When you set up a building site, though, you have to be financially prepared to handle an unexpected rise in the cost of construction. The average cost of a custom home building in Scottsdale, AZ is $125 to $150 per square foot but these values can be affected by a number of factors like geographical region, the style you’re looking for, the size and the materials. In regards to sizes, you should take into account the fact that new buildings in the US have a gross living area of 1,000 feet larger than in 1973, according to the American Enterprise Institute. An already built house will have fewer square feet but if you build your own house in Scottsdale, AZ you can decide however much square footage you want. Because the times have changed and lots are larger while homes became bigger, half of the new single-family houses built in the US are 2,436 square feet or larger. Over 1.3 million building permits have been issued in the US in 2018 every month, 64.3% of them for one-unit buildings. As 2020 came into the picture, the beginning of the year saw an increase in building permits issued nationwide as January came with 1.5 million. The number dropped steadily since then, then drastically in April to only 1 million, but in June and July, it started to climb again above 1.2 million. During 2018, properties in Scottsdale sold at an average of $243 per square foot and at an average price of $657,000. For 2020, up until March 1, 2020, homes sold for an average of $908,000 for a square foot price of $291.

Whether you should build or buy a house in Scottsdale, AZ also depends on the type of home you are looking for. Is it an investment property? Are you looking for a property you can turn into an assisted living facility? Are you interested in owning rental property in Scottsdale? Or are you looking for the house of your dreams where you can spend your golden years? It might be better to buy than to build if you’re after investment opportunities. However, if you want your dream home, it might be a good idea to build a new house in the South of Scottsdale. In North Scottsdale, it is far more expensive than in the southern neighborhoods. One excellent news, though, is that Scottsdale has been named the best city for job hunters in the US by WalletHub. According to census.gov, the median household income in Scottsdale is $84,600 while the cost of living in Scottsdale is 14% higher than the national average, as revealed by payscale[dot]com.

The pros and cons of building a house in Scottsdale, AZ

building a house in ScottsdaleShould you build, or should you buy a house? This is a classic conundrum that many homebuyers have to face. The local realtors in Scottsdale AZ are aware that there is a shortage of housing in the US. According to Zillow, homes sold within 65 to 93 days from hitting the MLS in 2018 and it looks like the real estate market is quite hot right now. It might be because those who were minors during the past recession have entered the job market and managed to save enough for a down payment. But Scottsdale attracts senior buyers as well.

As residents in a new, young country, we love new things, but only a few of us can afford them. Not all first-time home buyers may be able to meet the requirements for a construction loan in Scottsdale, AZ, which demands a down payment of 20-25%. Then, due to the heat, the cost of a new construction may be a lot higher than an existing home. Who would like to work on a site at 100 degrees? 

Furthermore, on the one side, the school districts in the southern part of the city are not the best, either. On the other side, the north of Scottsdale is dominated by gated communities, so finding a small lot for a single-family house might be difficult. And then you have to remember that the value of the house has a bearing on your property tax. Are you sure you can maintain the house after you move in with your significant other? Building a house in Scottsdale is stressful, just like in any other city. It brutally takes a lot of your time and with all the inspections and code setbacks, your bank account will drain. To avoid all the cons of building your own house, buy a turnkey property.  

In spite of all the cons, when you have an income higher than the average American, and money is not a problem, building a custom house will bring you a lot of satisfaction, for sure. Don’t forget that in this arid climate you must consider installing an in-ground swimming pool to cool down after a hot day. This involves another permit, another contractor, and lifelong maintenance costs but also a lot of joy and satisfaction. Building a house in Scottsdale, AZ has even more benefits. Aside from building a home made-to-measure, just like in your dreams, you also get the chance to have features that other properties don’t possess, such as a wine cellar or a basement bar. If you like to entertain a lot, these are a must. Let’s not forget about closets, too. Having a walk-in closet and enough storage space is a luxury in itself, but even more so in Scottsdale. And if you like to cook, maybe you would like a larger kitchen with an island in the middle as well as a larger dining area to accommodate all your guests. 

Overall, it is better to buy an existing house than to build a new one. First of all, because a real estate agent in Scottsdale will guide you throughout the buying process and the closing costs are transparent, whereas a building company may only give you an estimate of the total cost. Secondly, a new building uses a lot of energy and many natural resources. And in the third place, you may have to rent before you move in the new construction, which only adds to your financial pressure. 

Moreover, Scottsdale is huge. Since it covers a large area, without a car, you will have to rely on the Scottsdale Trolley. But here is the best part: the trolley is free! There are four routes that allow you to jump on the Valley Metro Transit. So Scottsdale is not among the cities with the best public transportation. Nevertheless, Scottsdale’s Old Town is a major tourist attraction especially for those who want to get a feeling of the Old West. 4.4 million people have taken a day trip to Scottsdale in 2017, most of them enjoying the shopping opportunities, dining, and swimming. With an annual occupancy rate of 68.3% in 2017 and with hotels charging $195 per night, don’t you think that it is worth investing in a vacation property in Scottsdale? 

 

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How much does it cost to build your own home in Arizona?

Scottsdale aerial view

Since building involves so many uncontrollable variables, the idea is likely to appeal to the upper-high market or high earners, not those that are rich yet. While initial building costs are quite considerable, the cost of home ownership in Scottsdale AZ must not be neglected, either. And it would be better to start from that when preparing the blueprints. 

The cost of the blueprints starts at about $500 and can go beyond $2,000, depending on the complexity of the project. So, should you build a one-story or two-story house? On a small land lot, you may want to build a higher building to enjoy a larger yard. It is also cheaper to go up than out, so a two-story house is cheaper to build. But you can’t build a house randomly. Most houses in the area follow certain styles or architectural currents. Ranch houses are quite popular, as well as the Tuscan style and the Mediterranean revival. So, you will definitely feel uncomfortable owning a tiny home in a neighborhood where homes are spread out around a swimming pool. Be aware that even your permit may be denied if you don’t follow certain architectural guidelines. For example, the design of a building should bring out the region’s naturally occurring materials, colors, and textures; it must have character. So, you can’t build whatever you have in mind. 

For example, in the R1-130 district, all lots must be at least 200 feet wide and contain no more than one single-family unit. Buildings cannot be higher than 30 feet, while the front yard should be at least 60 feet. The distance between two neighbors must be at least 60 feet, also. So, with so much space around the house and with the height limitation, building a house in Scottsdale doesn’t come cheap at all. The city of Scottsdale encourages everybody to use the One Stop Shop for whatever information they need. You may find it at 7447 E. Indian School Road, Suite #105 Scottsdale, AZ 85251 - 8 a.m.-4 p.m., except on Wednesday (9 a.m.-4 p.m.). 

Once you have your blueprints ready, go apply for a building permit. While Arizona was the tenth state by the number of building permits issued in 2017, Scottsdale, AZ issued only 632 building permits during 2017, but in 2018 there were a total of 1,167 building permits issued in the city alone. The cost varies from one project to another, but you should have at least $725 set aside for it. Then there are the following costs:

  • Providing access to utilities: $32,000
  • Lot clearing and grading: $2,700
  • Foundation: about $6 per square foot
  • Framing: between 60 and 70 percent of the final cost ($5-10 per square foot)
  • Electricity and Plumbing (including HVAC): $40,000
  • Exterior finishes: $12-20 per square foot
  • Interior finishes: anywhere between $4,000 and $8,000, but there is no upper limit
  • Hiring an interior designer: $6,000 

Living in modular homes in Arizona

arizona mountains near scottsdaleNow that you’ve found the cost to build custom homes in Scottsdale, you may want to find what it is like to live in modular homes in the Copper State. This type of dwelling might be a great choice for those who want to move in quickly. Scottsdale is home to at least 11 prefab homes manufacturers such as Britco Homes, Cavco, and Palm Harbor Homes. Though manufactured homes don’t sound like the most glamorous dwelling, the industry is booming. Warren Buffet owns the largest prefab manufacturer in the country - Clayton Homes. The cheapest modular home on the market is located in the south of Scottsdale and is priced at $25,000 for 1,000 square feet (2 bedrooms, 1 bathroom). Modular homes in Arizona, and particularly around Phoenix, have been quite a hit since the 1950s. 

According to the US Census Bureau, more than 4,500 residents of manufactured homes have been forced to move from the Phoenix Metro area to make room for new real estate developments. This trend continues today. Mobile home parks notify their residents that they have to move because the land is too precious to host affordable housing. With tears in their eyes, they pack their belongings but many modular homes in Arizona are so old they can’t be moved without completely destroying them. So, living in modular homes in Arizona, and especially in Scottsdale, is threatened by the greed of large real estate investors. This type of housing is about $400 cheaper than a month’s rent in an apartment building. Also, the median income of those living in mobile homes is only $34,000. However, real estate agents in Arizona are doing everything they can to locate affordable housing for every low-income family.  

In conclusion, we have found that due to the architectural guidelines, the cost of building a house in Scottsdale might be too high for wannabe homeowners. Affordable housing in mobile-home parks is replaced by gated communities or other residential developments. So, those who want to move to Scottsdale on a tight budget should consider buying an existing home. There are plenty of luxurious properties as well as condos, which start at $132,000. And because Scottsdale’s administration is doing so well at providing jobs for its residents, the city will continue to grow, so any real estate investment will at least retain its value in the future.

Why building a house in Scottsdale, AZ might be the best for you?

Building a house in Scottsdale, AZ has even more benefits. Aside from building a home made-to-measure, just like in your dreams, you also get the chance to have features that other properties don’t possess, such as a wine cellar or a basement bar. If you like to entertain a lot, these are a must. Let’s not forget about closets, too. Having a walk-in closet and enough storage space is a luxury in itself, but even more so in Scottsdale. And if you like to cook, maybe you would like a larger kitchen with an island in the middle as well as a larger dining area to accommodate all your guests. 

Conclusion

In the end, it is your decision and it depends on precisely what you want from that house. Some might consider that it is better to buy an existing house than to build a new one. First of all, because a real estate agent in Scottsdale will guide you throughout the buying process and the closing costs are transparent, whereas a building company may only give you an estimate of the total cost, which is something to be expected however you decide to build a house. Secondly, a new building uses a lot of energy and many natural resources, but a new building can also be extremely cost-efficient if you decide to build a passive house. And in the third place, you may have to rent before you buy or move in the new construction in Scottsdale, which only adds to your financial pressure unless you already have a place to stay. Building a home from scratch is a very consuming and stressful experience, while, if you buy a house, you have realtors available who can take care of everything for you. 

Moreover, Scottsdale Arizona is huge. Since it covers a large area, without a car, you will have to rely on the Scottsdale Trolley. But here is the best part: the trolley is free! There are four routes that allow you to jump on the Valley Metro Transit. So Scottsdale is not among the cities with the best public transportation. Nevertheless, Scottsdale’s Old Town is a major tourist attraction especially for those who want to get a feeling of the Old West. 4.4 million people have taken a day trip to Scottsdale in 2017, most of them enjoying the shopping opportunities, dining, and swimming. With an annual occupancy rate of 68.3% in 2017 and with hotels charging $195 per night, don’t you think that it is worth investing in a vacation property in Scottsdale?

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