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Factors that Affect the Price Per Square Foot of a New Custom Home

Learn which features and upgrades impact the cost of building a new home in Toronto

In a previous article, we talked about how much it cost to build a custom home in Toronto , and we provided a price range depending on what features are including in the home. In this article, we outline six factors that will have an impact on the price per square foot of a new custom home.

(1) Style of Home

The two most common styles of homes in the Toronto area are the bungalow and the two-story home. Bungalows will generally cost more per square foot because the footprint of the bungalow needs to be larger to achieve the same total square footage. When building a bungalow, there are costs in your budget that will essentially be double the cost of a two-story home. For example, the foundation, concrete basement floor and the roof are all substantially larger on a bungalow. Although the price of these items may not double because all the elements are still present in each, it will be significantly higher in the bungalow and as a result drive up the cost per square foot.

Bungalows costs more per square foot than a two-story home


(2) Building Materials and Construction Methods

There are different ways to build a new home. In the Toronto area, we are fairly consistent with one another in our techniques and materials and we are all guided by the Ontario building code as our "minimum standard".

However, good builders use higher quality materials to build stronger more dependable homes. Items such as higher strength concrete and reinforcing steel bars in the foundation and concrete floors, kiln dried framing lumber , 3/4" spruce plywood flooring and manufactured floor joists, higher quality shingles as well as some of the green initiatives mentioned above are a few examples. When implemented with best practices construction methods, you get a home that may initially cost you more money, but will put you closer to a defect free, maintenance free and stress free environment that will give you years of comfort and a higher resale value.

(3) Green Initiatives

Building green is definitely in style today and incorporating energy conscious options in your home is a good choice. There are lots of options to choose from, including countless people in the industry that are "gurus on the green world" and several organizations that set high standards for energy efficiency. Organizations such as LEED, Energy Star, R2000 (visit Natural Resourses Canada), and Net Zero have assembled the criteria that set the standards for the industry. This standard is higher than the local building codes and continues to escalate to stay ahead of the building codes as the codes improve.

Energy Star rates homes on a scale from 0 to 100 with 0 essentially being outside and 100 being completely self sufficient. The current Energy Star standard is 80. LEED standards are bronze, silver, gold and platinum, and are based on a series of requirements that you must meet to achieve a certain level.

The objective of these organizations is to set standards that will help you build an energy efficient home. Items such as solar panels, photovoltaic cells, higher insulation values, more efficient windows, advanced heating and cooling systems are included in the criteria.

The initial cost layout for these items is obviously more. However the benefits are numerous:

  1. There are rebates and tax credits to help offset the costs.
  2. Your personal comfort level within the home will be increased.
  3. You will eventually recover these costs by the savings on your energy bills
  4. The resale value of the home will be increased, especially if you have met the criteria of one of the organizations above, and achieved a rating.
(4) Finished Basement vs. Unfinished Basement

Typically the space in your basement does not get counted in the actual square footage of your home. A 2800 square foot home with a finished basement is still a 2800 square foot home, but you have a finished basement. Real estate listings for houses with finished basements will show the rooms in the basement as a (+) . A house with 3 bathrooms on the main levels and 1 in the basement is listed as 3+1. Because the basement is not included in the square footage, all costs put into finishing the basement will simply cause the cost / sq. ft. to increase.

Because the basement is not included in the square footage, a finished basement costs more per square foot than an unfinished basement. However, with a finished basement, you get to enjoy the extra space.


(5) Options and Upgrades

There are unlimited options that can be incorporated into a home. However, there are a select few that can substantially increase the price per square foot. These are kitchen cabinets, plumbing and electrical fixtures, as well as exterior cladding.

In a modest custom house, a kitchen may cost around $40,000. However,one can easily double that price by selecting a lot of extras. The same applies with plumbing and electrical extras. There is a lot to choose from, but these fixtures can become extremely expensive when going to the high end of the scale.

Take one example of a bathroom which includes one tub, one shower, one toilet, two sinks, a bidet and three light fixtures. Where one homeowner selects modestly priced fixtures and the second homeowner selects high end fixtures that are triple the price, the cost per square foot will obviously be higher for the second homeowner. If this is typical for all selections throughout the house, the price per square foot can easily be $100.00 / sq. higher for the second homeowner. However, like anything, it is best to buy what you can afford. In the end, you want to enjoy your selections, and you know that the better the quality, the higher the resale value will be.

(6) The People You Hire

If you are building a new home, one of the first decisions you will make is to build the home yourself or have a professional contractor build it for you. Many homeowners who have the knowledge and time have built their own houses with varying degrees of success. If you decide to go this route, you must be prepared to spend some time shopping around for tradespeople and suppliers.

There are lots of people out there ready to work for you but are they the right people? There are also tradespeople who are busy and don't care if they get the job. These people are inclined to price high, so it is important to shop around. The trick is to find the right person for the right price.

When doing a multiple task project such as building a house that involves over 30 different trades, one prudent choice is to hire a General Contractor (commonly referred to as a GC) to manage the job for you. These contractors know the trades and have the ability to get better pricing. It is not uncommon for a General Contractor to do a job (with their fee included) for the same price you did the job with no management fee included. Essentially you get the contractor for free.

Contractors will save you money by getting better prices on labour and materials from their existing trade and supplier base. They will also save you money by using their experience and knowledge to avoid costly mistakes, potentially caused by the lack of experience of a layperson. Click here to read more about the advantages of hiring a contractor vs. doing it yourself.

Harlequin Homes is a reputable builder/renovator working in the GTA. Please feel free to call us at 416-771-8597 to discuss your plans and ideas.

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