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Last updated: July 8, 2022 • Home Improvement

How to Choose a Home Builder

Your home is the place where you throw your coat, take off your shoes and just relax after a hard day’s work. If you’ve been planning to invest in your first home over the past two years, the harsh reality of the 2022 housing market might have led to you reconsidering. 

The housing market of the last two years isn’t the most affordable in any part of the US or the world if you want to broaden your scope, but that doesn’t mean a home is completely off the table for you. It all depends on budgeting and what you are willing to do, so for those looking into building a home, we have some great tips on how to choose a home builder for your new home. But first, let’s take a quick look at what’s expected to happen to building prices in 2022.

Summary:

Is 2022 a Good Year to Build a Home?

new home build construction wooden

While the past two years have left the housing market in shambles, even the simplest of predictions proved difficult to make.

Supply chain issues, increasing demand as millennials reached the average home purchasing age, limited inventory due to supply chain issues and lockdowns, and COVID are still making everything in our lives more difficult. Those considering buying or building a home had nothing to assure them that it would be a good idea. There are already people affected by decisions made during 2021 who are now experiencing rising interest rates that they have to deal with while their income either didn’t increase or did so only barely. 

Interest rates on the most basic necessities are still off the wall, and an economic crisis is just around the corner. Any decision made during 2022 should be incredibly well thought of. These are uncertain times, and with everything from the war going on in eastern Europe to the accelerating climate crisis, nothing is certain. These are not the most accessible times to make financial decisions, especially when it comes to one of the most significant financial investments of our lives. But still, we need homes. Unfortunately, that might mean we need to reconsider what we expect to get from our homes. The tiny home trend is on the rise for a good reason. Building materials are expensive, just like everything else, so limiting the amount of material you use is one way to limit your building budget. 

How much does it cost to build a home?

deign new residential building

Many people are looking into building their own home as of 2022, especially seeing as the rental market is going haywire as well and is growing less and less affordable. However, there are a few things to take into consideration when it comes to building your own home. Before we go into how to find the right builder for your new home, let’s try to understand what’s happening with the price of materials in the face of global shortages happening. 

The most used material for single-family homes is lumber. Sadly, the price of lumber went up by 400% between the spring of 2020 and 2021. This directly impacted the price of building new homes, and even renovation costs sky-rocketed. Initially, this price increase was directly linked to the pandemic and issues in the supply chain. Later on, in 2021, the increase continued due to increased demand. In 2022, however, while the pandemic affected the supply chain less than it did in the previous years, expecting those prices to drop to pre-pandemic levels may not be a good idea as they are unlikely to drop. Furthermore, construction prices are expected to continue to climb at a lower rate, so this year might be ideal to invest in building a new home before prices grow even further.

When it comes to prices, the average cost of a home varies based on location and materials used. Without getting into specifics, what we can say to answer the question of how much does it cost to build a home is the cost per square foot. Data suggests that the cost of building a home is between $100 to $200 for each square foot built, but it may be difficult to build one at the lower end of that range. As we mentioned, location matters, so you should keep in mind that the square foot of a built home goes over $400 in places like New York City or San Francisco.

Just to give a few more ideas, take a look at the table below:

CityCost to Build a Home
Los Angeles$1,200,000
New York City$850,000
Washington D.C.$696,000
Denver$600,000
Austin, TX$500,000

What does 2022 bring for home prices?

money bag 2022 wooden house

We all know the pandemic’s effect on housing prices with an annual increase of 19.5% in the US during autumn of 2020 and 2021. In 2022, housing prices are expected to continue to climb. However, that climb will be more steady, and the predictions limit price increases to 3%. 

Another factor you need to consider before you decide whether you want to buy a home or build a new one is mortgage rates. During the first two years of the pandemic, the Federal Reserve supported the housing market through asset-backed purchases. This lowered the cost of borrowing, making it more accessible for people to afford mortgages. Those measures will be more than certainly dropped during 2022, which will increase the interest rate. This, however, affects construction rates as well, and you can see that 2022 has lower rates, but those aren’t expected to last through 2023 or beyond. Still, we need to keep an eye on our expenses which is why we’ll also look into the next section as expansive homes aren’t only increasingly more expensive to buy or build and less sustainable in the long run.

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How Much Does it Cost to Build a Tiny Home?

small white house

Most people are convinced that the appeal of tiny homes is solely a result of the accelerated increase in housing costs. However, while it’s much more affordable to buy or build a tiny home, this movement is based on social and lifestyle changes many people have embraced over the years. The affordability of tiny homes is certainly appealing across the US. Still, maintenance costs and the affordability of this minimalist lifestyle attract more and more people to this sustainable living style

While they are generally known as tiny homes, downsizers also refer to them as small, micro, or miniature homes, and the most cost-effective option is the house on wheels or the van home. Building regulations can differ by state or county, but the size, type, and placement also affect these regulations. That is why it’s important to check with your local authority before you start investing in a tiny home.

It’s difficult to give average building costs, but across the nation, you can expect to spend somewhere between $40,000 and $80,000. Still, depending on the type of the home and its location, you can spend as little as $20,000 but also as much as $200,000. It’s really up to what you want from it and the features you want to be included in your tiny home. What’s more, the cost of living in a tiny home varies between $500 and $1,000 monthly. If you want to go even lower, look into van living, as there are more than enough examples of influencers that do not want to be tied down to a patch of land and decide to live an amazingly minimalist lifestyle while they travel the world. When it comes to van life, while the cost of the van can be between $1,000 and $100,000, the conversion cost is between $ 4,000 and $100,000 if you DIY the whole process.

How to Find the Right Builder for Your New Home?

yellow safety helmet on workplace

The housing shortage across the US makes building new homes more appealing for those on the market for their first home. Besides the economical aspect of building versus buying, any new homeowner is ecstatic at the idea of making their homes based on their exact needs and desires. Whether it comes to interior design or floor plans, building your own homes gives you the opportunity to bring your dream home to life, choosing the right kind of builder is essential for a project like this. During your vetting process, you’ll need to determine whether you’ll use a custom builder or a production builder.

  • Custom Builder – they create your home from top to bottom taking you along from a blank sheet to a turnkey property. Custom prices, unique product, design independence, and extended time frame.
  • Production Builder – they have construction down to an art and build hundreds of homes yearly. Fixed prices, speed, contractor negotiations, and development amenities.

How to Choose a Builder for Your New Home?

bearded man holds two paintbruhes

Figuring out the type of builder that is most suitable for your new home requires you to create a vetting process. There are many home builders out there, and finding out who are the top 10 home builders in your area means you’ll have to make your own checklist. While browsing through online lists of home builders may seem the easy way out, sometimes going the easy route may not be the best course of action. 

Further investigation ensures that the home builder you choose fits your needs and can bring your dream home to life. Following the suggested stages of a vetting process can minimize the stress of the project once the plans are set into action. When choosing a home builder you need to look into more than just the cost of construction so keep reading for some of the most important factors to look into before you sign the contract with your home builder.

Paperwork and Responsibility

young couple going through their finances

While this might be an obvious thing to check before you contract any home builder, the paperwork involved can be a bit complicated when it comes to home builders. The first thing to check is whether specific details are stipulated in the contract. What you’ll need to look into is if the builder complies with building permit requirements, all the required insurances, and licenses specific to the city and state they work in. 

You should not limit these requirements to be at a minimum level, but the bare-minimum needs to include up-to-date liability insurance and compensation for employees. The home builder must be able to show any related documents at request from the client in order to confirm their existence and ensure their practice is responsible for their workers. As both buyer and contractor need to be covered in case damage occurs during the building process or workers get injured, public liability insurance is required. Verify that the home builder has insurance-backed warranties or guarantees and see if these are included in the cost of the project or need to be covered additionally. Determine what is covered or not in the contract before you sign anything because this can increase the overall cost for you.

Reviews from Previous Customers

spreading secrets

We already mentioned that online lists of top builders in your area may not be the best way to go as they can provide a biased opinion. There are more direct ways to verify whether the home builder is respectable and appreciated in their field that can provide much more reliable information for you. Firstly, look into previous projects they worked on. While online reviews can give you a general idea of what to expect, talking directly to previous customers will make it possible for you to dig deeper. 

Secondly, get in touch with local vendors whom the home builder collaborates with. Looking into their accounts and whether the home builder has good credit with suppliers in your area can be the difference between you having access to the necessary materials in a timely manner or not.

The last stage of this vetting process is the building inspection department. By this point, the number of prospective home builders should have thinned out so ask the local building inspection department about them as they inspect the final product. If there is anyone that can vet a home builder it’s these inspectors as most departments are familiar with most builders in the area.

Quality over Quantity

builder shows tick concept

When you look at the housing market you will find different types of homes of different quality standards. We all have seen newly built homes with cracks in walls, unfitted windows, or poorly installed flooring. This happens because the housing industry is a profit-making industry and like in any other industry, here too you will find home builders that are only interested in making a profit at the expense of quality. While not a rule, but something you should consider, a home builder that builds fewer homes needs to be more focused on quality rather than quantity. Working fast doesn’t mean working qualitatively. 

Similar to the vetting process above, touring homes built by the home builder gives you the chance to see the quality of their work. Model homes may not provide realistic expectations so it is better to find those previous customers and tour their homes if at all possible. Ask to have a chat over a cup of coffee or brunch and figure out whether they are happy with the end product. Any information you can get from them is gold when trying to find the best home builder for your project.

Transparency and Know-How

answering questions about constructions

From many perspectives, it’s a lot easier to buy a home that’s already built than to build one from scratch. The whole process is a lot more complex for buyers that build their home seeing as they’ll have to deal with the whole building process. Delays can occur with plenty of other unforeseen issues from getting all the building permits to ensuring that everything is done according to the zoning laws, not to mention that if you don’t choose the right home builder, the whole project can become a nightmare. 

Making sure that you find the right builder for your new home is the most important decision you will have to make. Finding out who are the top 10 home builders is only the first step as your vetting process needs to go beyond that as we showed throughout this article. They need to be incredibly knowledgeable and transparent throughout the building process: before, during, and after. Having a list of questions to ask their sales representative is essential, which is why we make sure you cover the most important aspects before you decide on the home builder you’re contracting. 

The following questions should be covered before you sign any documents to make sure you are working with the right builder. Keep in mind that these come on top of the vetting processes we cover above.

  • How long will it take to finish the project?

When you build a home from scratch it’s important to have a timeframe for the whole project, but also for the more important stages of the build. For instance, if you decide on a prefabricated home, the whole process should go along faster, but if the delivery process incurs any delays, the whole project will suffer delays. Making sure that every stage of the building process goes according to plan underlines the need for a plan to exist. If any delays occur, you should know that you can ask for damages so make sure to cover this with your builder.

  • Are there any incentives to use a lender preferred by the builder?

Home builders can have access to better prices when it comes to the materials used to build your home and some can also have partnerships with lenders meaning that you could get access to better loans depending on the builder you use.

  • What are the standard finishes and what are the options?

Many home builders can have standard design options that can give you the standard cost for the project, but they also have special features that are not standard in their portfolio. Make sure you understand what is and isn’t included in the price of your home. Also, for your vetting process, you should ask for fliers or catalogs that have all this information included. Like that you’ll be able to compare prices between builders.

  • Is there a home warranty they offer?

Just like the kitchen furniture you purchase from IKEA, a new home can come with a warranty. If the home builder offers a warranty, you need to understand what this warranty covers, how the repairs are done and what the protocol is. For instance, if the warranty team or the team sent to do the repairs is a third-party contractor, they might not be familiar with the homes built by this builder or its features.

  • Additional vetting questions:

What are the energy-saving features?

What are the floor plan options? – for production builders

Who will oversee the construction process?

When can changes or upgrades be made before or during the building process?

When and how will the final price of the home be determined?

How will I have access to the home during the building process?

Is there an HOA?

How does the inspection process occur at key points during the building process, at the end stage, and for any possible corrections after the project is completed?

Conclusion

Deciding to build a new home from scratch is not easy but, overall, it can be cheaper, especially if you limit square footage to what you actually need. Embarking on this exciting journey may be scary at first and stressful during the process, but when you’ll see the end result all that stress will pay off. Your dream home will be made based on exactly what you asked for if you find the right builder for your home. While figuring out how to choose a home builder for your future home is simplified through this vetting process, this can also be considered a starting point. There are many other questions you can ask, but the vetting process above is considered sufficient by experts in the field.

If there are any other factors you think someone who wants to build a home from scratch should look into, feel free to let us know in the comments section below. We are sure that there are many other things people may want to know before they start the home building process about the builder they choose. However, if you found this article helpful and plentiful for your next home building project Like & Share it with friends and family to make sure everyone has access to the tools necessary to build their dream home as efficiently and stressless as possible.

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