How Much Will It Cost?

A Note on the Pandemic and Construction Costs

January 19, 2024

Today the United States is still dealing with repercussions of the COVID-19 pandemic. Almost four years into it, I’m still seeing a substantial upward trend in construction pricing from the contractors I speak with. This is due to several factors: high demand, continuing shortage of both contractors and tradespeople. Supply chain disruptions are less of an issue. Many people are working from home, and becoming acutely aware of the shortcomings of their houses, so demand for renovation work has remained high. People are feeling hopeful, and so are starting projects or going ahead with ones that have been on hold. Others are contemplating the need for additional affordable accommodation for aging in-laws, or adult children returning from college, so demand for backyard cottages and basement apartments has continued to grow. Still others are contemplating a move outside of cities. Tariffs imposed by the Federal government on softwood lumber from Canada have not yet been lifted. Imports of equipment and appliances manufactured in China (or Europe for that matter) may continue to be subject to additional tariffs and shipping delays. One contractor friend who’s been in the business for 40 years says he hasn’t seen pricing this volatile ever.

-RH

Now back to our regularly scheduled content….

One of the first questions a prospective client asks us is “How much will it cost to build what we have in mind?” It’s a hard question, but we’ll try to answer it.

Contractors, not architects, actually price projects of course, but architects develop seat-of-the-pants estimates in order to get the design in the right general ballpark. And then there’s a back and forth to arrive at a construction cost that works for the client.

Your total Project Cost is made up of…

Construction Cost (What it costs to build the building itself.)
Sitework Cost (what it costs to prepare your particular site for the building, including access for people and cars, utilities, sewer or septic, landscaping. Foundations are included in Construction Cost.)
Design and Consultants’ Fees and Reimbursable Expenses
Permit Fees
Financing Costs
Sales Tax

On this page I’m talking only about the hard costs of Construction Cost and Sitework Cost–what you’ll pay the builder. I’m happy to discuss the soft costs–design, consultant and permit fees, with you in person. (Architects are prevented from publically discussing their fees by anti-trust laws designed to prevent price-fixing.) I can recommend bankers who specialize in construction loans, but I do not offer financial advice.

Let’s declare some general assumptions then:

To the best of my knowledge, these prices reflect conditions in Seattle, Bellevue, Kirkland, unincorporated King County and environs as of January of 2024.
For a new building, the site is relatively flat and soils are good. For a renovation, the existing foundation is in good shape and structurally sound.
Total square footage is between 2,500 and 3,500, including the square footage of an unfinished basement and garage, if those are present. The cost per square foot is substantially higher on smaller projects and on projects where all space is finished to the same degree, and lower on larger projects.
You hire an excellent, reliable, licensed and bonded contractor who carries appropriate levels of insurance and pays his or her workers decent wages (such as one of these companies). The prices below are median ranges quoted by those contractors, updated to reflect current conditions.
You implement a comprehensive yet sensible range of green building strategies such as those we mention in the techniques section of our manifesto and you build to the Passivhaus standard of energy-efficiency. For the typical high-quality custom home, Passive House can be done for about the same price as conventional construction. For developer-quality small multifamily, if you forgo Passive House you might save 3 to 5%. The variations between projects due to site and program are larger than the variation in the cost of doing Passive House.
You do a project of a quality similar to what you see on our featured projects pages. Note that some of the featured projects were more expensive than I suggest here, some less.
Sales tax is not included in any of the prices here, because it varies by jurisdiction. (In Seattle for example, you need to add 10.1% to the total construction and site work cost.)

In terms of features, the level of quality chosen by most of our clients includes:

A nice but not elaborate level of detail in the interior and on the exterior of the building.
High quality ultra-energy-efficient triple-glazed windows.
Hardwood flooring in living, dining and bedrooms, cork or linoleum in the kitchen, ceramic or stone tile in baths and entry. (Carpeting is less expensive, but bad for indoor air quality.)
Ceramic tile or artisan plaster shower surrounds. (Fiberglass or acrylic inserts are a much cheaper alternative.)
Custom cabinetry in the kitchen, as well as a few built-ins throughout the house. (Ikea cabinets are less expensive, and not bad, but a PITA for contractors to work with.)
Solid surface counter tops, such as granite, Silestone, or Richlite. (Plastic laminate–“Formica”–is much cheaper, but also less durable.)
High quality appliances from Beko, Dacor, Thermodor, Miele, Bosch et al. (These fall between Sub-Zero, Viking or Wolf on the higher end and the lower-end Kenmore or Whirlpool on the lower but still very usable side.)
Highly efficient and comfortable heating, ventilation and filtration systems. (High efficiency heat pump space and water heating, and European 92% efficient heat recovery ventilators.)
Nice energy-efficient lighting, including good looking, high quality fixtures, all LED, with dimmers throughout.
High quality low-toxic paint in (often) different colors on the ceilings and walls.
Choosing the contractors we recommend, which means working with nice people on a project that is done on time, within 5% (or less) of the quoted estimate, with conscientious follow-up with any problems that surface in the work later on.

Again, we’re going to talk about construction cost only here. The following numbers do not include design or permit fees. Here’s the bottom line:

Kitchen Renovation – Starting at $120,000. From scratch, down to the studs, including all new cabinets, solid-surface countertops, nice lighting, high quality plumbing fixtures and appliances, but without moving many walls inside or expanding into an addition.

Second Story Addition – Starting at $450,000 for the typical two bedrooms and a modest shared bath upstairs, and a new stair up, if the main floor of the house remains more or less as it is and there’s either an existing stair to the attic or an easy place to put a new stair that will conform to code. Figure on spending at least $450,000 if your second story wish list includes two bathrooms and three bedrooms. Figure $650,000 and up if you are remodeling the kitchen and a bath on the main floor, and upgrading house systems like plumbing, heating and electrical, at the same time. (If you get to the point you want to move a lot of stuff around and upgrade most building systems, it may make more sense to deconstruct the existing house and start from scratch.)

Lifting a House – (Building a new lower floor.) More expensive than you might think. Spring 2018 we had an estimates than ranged from $350,000 to $400,000 for lifting an 800 square foot house and building a new floor underneath, with a master suite and laundry/uility room and office. I would expect those prices to be $425,000 to $550,000 today. Basically, the cost of new construction for the new space, plus demo of the existing basement, excavation if any, and the cost of lifting the house.

New Custom House or Whole House Renovation – For the house only (not counting sitework), starting at $500 per square foot, counting all square feet including the basement and garage. This is for a typical Passivhaus design—that is, simple envelope, not a lot of bump outs or dormers, slab on grade, everything as described above. For an ultra-modern house with big wide lift and glide doors, minimal interior and exterior trim (eg reveals at wall bases instead of baseboard, flush pivot doors, etc), elegant cabinets and very-high-end lighting, appliances and equipment figure more like $750/SF.

To that, for a new house on an undeveloped site outside of the city, you would add a minimum of $80,000 for site work (septic system or sewer connection, gas and/or electric connection, a well or water hook-up, driveway, walkways) and a minimum of $20,000 for basic, permit-required landscaping. If the site is in unincorporated King County and has wetlands on it, there will be wetland mitigation fees, currently $9 per square foot of area that is disturbed. An in-city project will still have some sitework costs, including hook-up to utilities and sewer. A “real” landscape which we always love to do, including new plantings and trees, paths, fencing or garden walls and a rain garden, is going to be $70,000 and up.

Rowhouses, Townhouses or a Small Mixed Use or Apartment Building – Costs on multifamily vary a lot. Generally though, you can expect about $300 per square foot plus sitework for the residential portion, $350 per square foot for any finished commercial space. This would cover a small spec development, a Baugruppen or co-housing. Note that these are estimates from a larger contractor who normally builds projects of this scale, and reflect the more modest choices a speculative project would make as far as materials, finishes and design compared to a custom single-family home.

Backyard Cottage (DADU) – For an 800 to 1,000 square foot cottage, $400,000 to $525,000. The cost for site-built and prefab are about the same. Prefab costs are often misleadingly quoted for the building exclusive of foundation and site work, so the total costs end up being similar. For a backyard cottage, reducing the size does not proportionally reduce the cost. Remember, it’s a whole house, just smaller.

Garage or Outbuilding – $250 to $300 per square foot (about half the cost of finished space) for simple buildings that do not include plumbing or heating. For heated and finished space square foot prices are similar to those for new house construction. [Ask me about the backyard hut design I’m working on! It will be a perfect home office, extra bedroom, writing hut, or art studio, and it can be built without a permit.]

Is it possible to build for less? Maybe! A few of the options to reduce costs: fewer features, a simpler design with fewer bumps and bays, less detail, a lower build quality or a less experienced contractor. I’ve called out my assumptions for the level of build quality above. If you are fine with giving up some of those things you can reduce the price by up to 20%. My Firewise Colorado Passive House, which was value-engineered at every step of the way, came out at $205/SF. One interesting approach is to build a structure that houses more than one family. Our Multigenerational Passivhaus for example, was priced at $225 per square foot in June of 2015. It would be more like $350 per square foot today, but sharing walls and amenities has both financial and social advantages!

Program, Quality and Budget

There are three constellations in the galaxy of construction cost. Program, Quality and Budget.

Program is the list of rooms and functions you want to include in your project. A simple program for a house would be “three bedrooms, two baths, a great room, kitchen and a two-car garage.” The program typically also includes intentions for the feelings or style of the various spaces, and sometimes detailed requirements for the function.
Quality includes both the level of fit and finish and the kinds of materials and assemblies in the work. The difference between say plastic laminate and granite countertops, vinyl versus wood windows, paint that lasts four years and paint that lasts fifteen years, etc. I would include some of the fancier green features in this category, such as photovoltaic and solar hot water panels, and rainwater collection.
Budget, of course, is budget. It might also include your willingness to reduce costs by participating in the actual building process.

As the owner, you can pick any two of these three things to be fixed. The third must remain a variable that the architect or contractor “controls.” That is, if you have a fixed budget and a fixed program, you have to allow the quality to be the variable. (That is, you may have to reduce the level of quality in order to reduce the cost. You might settle, for example, for less expensive appliances, use a lower quality contractor, have a comp roof instead of a metal roof, forced air instead of in-floor radiant heat, etc.) If you have a fixed budget and a fixed level of quality, you have to let the program be the variable. (That is, to meet your budget you may have to give up a bathroom or bedroom, or build a garage later, etc.) If you have a fixed program and fixed level of quality, the budget has to be flexible.

Getting a project built almost always involves a process of the owner choosing how they will balance all three areas. Giving up a some quality and a bit of program and increasing the budget is the way most of our clients go. There are limits to how much each of the three main components can affect the mix. “Program” can only be reduced so much–chances are you’ll still need to retain most of the normal components of a house–someplace to relax, cook, eat, bathe and sleep that is. Leaving out the Lifestyles of the Rich and Famous end of the spectrum, on a new house or whole house renovation “Quality” can make about a ten per cent difference either way, from minus 10% for the least expensive approach possible with no fancy green features to plus 10% for very high quality and most or all the fancy green features you could ask for. (By “fancy green features” I mean things like a solar hot water system, or photovoltaic panels.) On smaller projects like a kitchen renovation “Quality” is a larger variable–20% either way. You can only go so low. There is a bar, at this point in our economy and culture, that must be stepped over to build even the least expensive custom house.

There is no magic budget bullet available to some architects and builders but not to others. If someone says they can design you a house and get it built for less than I’m talking about here, do some serious research, and find out what you’re giving up in the “program” or “quality” department. There are ways we can design a house to reduce the cost to build it, and we employ as many of them as our clients are willing to consider on their particular project. We believe there is a direct connection between construction cost and ecological consequence, so keeping costs down is part of our green approach. But, like everything else, when building or renovating a house you get what you pay for. I recommend concentrating your investment in the parts of the house that are difficult or impossible to change once the house is built: insulation, windows, ventilation and air-tightness. In other words, build a Passive House!