Weighing whether to buy a house or build one? A new report indicates building would generally be the less-expensive option in Utah.
A study by StorageCafe shows that building a house in Utah is nearly 15 percent cheaper than buying one. That puts Utah fourth among states for cost-effective homebuilding.
The study looked at land prices per median lot size nationwide and the 8 percent inflation-adjusted regional costs of making a contract with home builders, then added 10 percent for administrative costs to those combined factors. The figures were compared to{mprestriction ids="1,3"} median prices for single-family homes.
The national median price to build a home is $421,000, while buying is $415,000, a difference of $6,000. In Utah, the median is $538,000 to build a home, while the median listing price for an existing home is $635,000. That is a difference of $97,000.
The $538,000 building price includes a national-high median of $234,000 for land per acre, a median lot size of 0.21 acre, making the total price of a median land lot of $49,000. The regional median price of a construction contract is $440,000.
“Utah has been a rapidly up-and-coming state in recent years, with a booming tech sector and real estate prices to match,” the report states.
The largest build/buy difference was $494,000 in Hawaii. Building costs $551,000, while the median home listings price is nearly twice that, at over $1 million. Buying makes the most sense in Pennsylvania, where buying costs $345,000 while building costs $528,000, a difference of $183,000.
Buying makes more sense than building in Salt Lake County. The median price of an existing home is $636,400, while building would cost $711,500, making buying $75,100 cheaper. Salt Lake County has the state’s smallest median lot size at 0.16 acres but also the highest land prices at $1.3 million per acre.
Utah features wide extremes, depending on where a person lives. In Summit and Wasatch counties, for example, building is much more cost-effective than buying. In Summit County, the building median is $677,193, while the price median is over $2.4 million, making the difference a whopping $1.75 million.
Other building-is-cheaper counties are Rich and Washington.
At the other end of the spectrum, Cache, Box Elder and Salt Lake counties are the best counties for buying a pre-existing home. In Cache County, building costs a median of $643,474, compared with a median purchase of $498,000, a difference of $145,474. Other better-to-buy counties are Davis, Sanpete, Iron, Utah, Weber and Kane counties, with differences ranging from $14,000 to $73,000.
In the U.S., building costs less in 18 states as opposed to 28 states where buying costs less. High listing prices of ready-made houses can make constructing one from scratch a more cost-effective option, especially in popular coastal locations, the report indicates.
The states of Utah, Colorado, Montana and Idaho are all in the top 10 for saving money when building a home. The Southwest states of Nevada, Arizona and New Mexico tend to have lower home prices, making homebuilding there look less profitable.
The report is available at https://www.storagecafe.com/blog/is-it-cheaper-to-build-or-buy-a-house-in-the-us/.{/mprestriction}
