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Building Cost Per Square Foot | Why Cost Per Square Foot Doesn’t Mean What You Think

Asking a reputable builder, “So how much per square foot does it cost to build a custom log home?” is like asking how many licks does it take to get to the center of a Tootsie Pop. Sure, Mr. Owl did it in three but the right answer for both lollipops and the cost of […]
by Tom Ryan
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Asking a reputable builder, “So how much per square foot does it cost to build a custom log home?” is like asking how many licks does it take to get to the center of a Tootsie Pop. Sure, Mr. Owl did it in three but the right answer for both lollipops and the cost of custom home building is, “It depends.” While cynics criticize builders for being evasive, the truth is that using cost per square-foot as a predictor of future building cost is unreliable and often leads to poor and sometimes devastating decision making.

There are two major problems with using cost per square foot as an estimating tool for custom homes:
1. Standard or average cost per square-foot ($/SF) estimates fail to account for actual project particulars (i.e. home design, land, location, building materials, etc.).
2. There are no standard guidelines or rules for using the $/SF equation, which leads to inconsistency and inaccuracy.

In both cases, the outcome is an unreliable and often skewed predictor of total costs that should never be used as the sole justification for a log package or design purchase.

Too often, prospective home owners use “average” cost per square-foot estimates from log home providers or builders as their sole means of estimating construction cost. The problem with this approach is that it does not take into account actual cost drivers of land and site costs, home design, and customer selections. Land and site costs alone, particularly in areas with challenging terrain, can add significant unexpected costs.

Likewise, home design can produce major swings in actual construction cost based on such factors as home shape and layout, roof complexity, etc. Finally, customer selections are the ultimate unknown variables that can never be accounted for by using average cost per square foot estimates.

The standardization issue is a classic apples-to-apples dilemma that begins with the cost per square-foot equation itself. Some divide the estimated cost of construction by the total living or “heated” square feet while others use the total constructed square footage as the denominator. This seeming minor change has major implications on the actual cost of construction. In the case of a typical log home with 2,000 square feet of “heated” space and an additional 1,000 square feet of “unheated” space, a quote of $150/SF equals $300,000 using only “heated” space as the denominator and $450,000 when the total constructed footage is used. That’s a $150,000 difference!

So, what’s the solution? For starters, stop using cost per square-foot averages to determine if you can afford to build a log home and never design a home or purchase a log material package before you get a quote from a reputable builder.

If your goal is to simply determine a “ballpark” range of possible construction costs, using the top range of cost per square-foot averages provided by builders and not log home providers is acceptable. Always resist the temptation to use the low number (i.e. $100/SF from a range of $100/SF to $150/SF) as it will generally lead you to set unrealistic expectations. Working directly with local reputable builders is your best bet for securing realistic cost estimates to determine affordability. Most reputable builders will take the time to educate you on average costs and many will provide you with quotes if you provide them with your project particulars (i.e. land information, home design, and selections).

For more information on this or any other log home building or buying topic, visit Tom’s profile.

Comment Feed

5 Responses

  1. The solution would be if someone within the industry could detail how the builders calculate their estimate. What’s the process they use, and then let the homeowner use it too. Sure, it’s complex, but when you’re making this large an expenditure, a little time spent now, will reduce the heartache later.

  2. Bull. Average cost per square foot it just that…an average. If you have no experience then this is a hard number to come up with. One can make the estimate easier by eliminating the variables such as single story, vs two story, light fixtures, bathroom fixtures, kitchen appliances. But to say one cannot come up with an average cost per square foot means the builder wants an open checkbook to build the home or he hasn’t built enough homes to produce an average. The alternate is to build a home that one cannot afford or the buyer will not be able to furnish. In short, and unhappy customer.

  3. Howdy!! Do you use Twitter?? I’d like to follow you if that would be ok.. I’m absolutely enjoying your blog and look forward to new posts. Birmingham Roofing Contractors, 3506 Inverness Landing, Birmingham, AL, 35242, US, 205-301-2113

    Lilly NeumayerJuly 1, 2013 @ 4:22 amReply
  4. I am building a custom log home using salvaged material from an authentic log cabin. I have 2100 sq ft. I have dow everything I can to keep costs down by doing as much of the grunt work myself. Not including land costs, I think $100/sq.ft is about where I will end up based on current costs and work left to do. I am about 85% complete.

  5. Tim, is this a single story? What work are you doing for your cabin. Off grid? I am 55 and am interested in building a cabin myself. Have been reading about this for 7 yrs. Getting close to a decision soon. Please reply and send pics.
    Thanks,
    Pete

    Peter LinsterNovember 14, 2013 @ 2:37 pmReply



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