You know what you want in a second home, and each person’s wish list will be different. Building a luxury home to fit your lifestyle and tastes can be a rewarding alternative to buying an existing home, since you can create it exactly how you want it. But it can be expensive, and it’s easy to get carried away with luxury finishes. How much you’ll pay to build a home depends on a lot of factors, among them the size of the lot and home, level of finishes and labor costs where you live. Generally speaking, it costs $200-$500 per square foot to build a custom or luxury home. Labor typically makes up 40% of the total cost, with materials, permits and design fees making up the other 60%. To give you a more detailed understanding of where your budget goes when building a luxury home, we’ve broken down the costs into eight key areas. Remember, your specific costs will vary based on the factors discussed above, and fluctuating material costs – more on that later.
One of the first expenses in building a luxury home is your homesite. The cost of land will vary based on the lot size, location and the local real estate market, but it’s also important to consider how the physical features of the land will factor into your budget. For example, a fully wooded lot will require tree removal, rocky soil will cost more to excavate for a foundation, and land with a steep grade might need extra engineering to make it suitable for building. Plan for 3-8% of your budget to go into site prep work (not counting the cost of the land itself).
How will you design your new home? There are a few options when it comes to creating blueprints for your new home. The least expensive is to work with a developer and choose from pre-existing floor plans, with some customization options. If you’re looking for a completely custom home, you’ll need to hire professionals to put your vision on paper, including an architect and engineer, and possibly an interior designer. You can expect to spend 5-15% of your budget on these services.
The larger your home, the more your foundation will cost. A larger footprint simply requires more excavation and more concrete. The topography of your lot will be a major factor as well. Building on a hill will cost significantly more than building on a flat, well-drained lot. Generally, your foundation costs should be 5-15% of your budget.
In a typical year, framing eats up 10-20% of your budget, but between 2020 and 2021, lumber costs have skyrocketed. By the end of April 2021, lumber prices were up an incredible 340% from the year prior. According to the National Association of Home Builders, this price surge is tacking on almost $36,000 to the average cost of building a new single-family home.
Your basic internal systems are the behind-the-scenes workhorses that keep your life running comfortably from day to day, and they include things like insulation, HVAC, plumbing and electricity. Luxury add-ons can include radiant floor heating, intercoms, security systems, built-in stereo systems, smart home features, central vacuums, indoor pools, spas and more. Getting these systems right the first time is worth it, in terms of both money and hassle down the road, even though they represent 10-15% of your budget.
Appliances & interior finishes
This is where you get to have the most fun. Selecting high-quality kitchen appliances, plumbing fixtures and little details like exposed beams and crown moulding can take your home from average to amazing. Plan on setting aside 25-35% of your building costs for interior work.
The cost to build a luxury home also includes essentials like roofing and siding, and the materials you choose will impact your budget. Stone and brickwork will increase the cost, as will specialty roofing materials like slate or metal. You’ll also need to budget for paving walkways and driveways, and for landscaping, including outdoor lighting and sod. Expect to use 15-20% of your budget for this important exterior work.
Contractor fees & permits
Approximately 17% of your budget will go to paying your contractor and handling miscellaneous expenses like site waste removal and building permits, so be sure to factor in those costs.
The Pacaso difference
If a luxury second home is in your dreams but the time and money to build it are out of reach, a Pacaso might be a perfect fit. Pacaso co-ownership offers all the comfort of a fully furnished, professionally decorated luxury home in a stunning location. Plus, you’ll get the peace of mind of integrated property management from the experienced Pacaso Crew. Visit Pacaso to view listings and learn more about the many benefits of co-ownership.
Buying a vacation home has lots of upsides and some downs