When looking at real estate in British Columbia, it can be difficult to find a home that meets your needs and your personal budget. With rising house prices across Canada, many people are considering investing their savings in building their own home rather than buying an existing home that doesn’t meet their checklist. In this article, we will help you understand the average cost to build a house in British Columbia so you can determine whether building a home is a worthy investment.
Buying land to build on
The most important part of building your dream home is finding decent land to build on. Thankfully, British Columbia is known for its exceptional views and pristine land – all of which affect costs. The spectacular views and increased demand can make it difficult for anyone to find land that fits their wants, needs and budget.
Most people interested in building a home will need to look outside of urban areas to find an affordable site. However, the lower costs come at a price. If the land isn’t yet serviced then they will need to consider the cost of installing water, electricity and gas on site. This can be a big project for any builder and will likely drive up your construction price by a great deal.
It may be beneficial to look at land with an existing home. If you could find your ideal property with an old home, you could tear down the home and build your own on top of its foundation. This may be beneficial because the property would already be serviced and you wouldn’t need to pay the costs associated with pouring a larger foundation.
Consider the building site conditions
The location and geography of a property can dramatically change the cost to build a home. Typically, sites that do not have road access or are not level will be priced lower. This is because builders may have to invest in paving/creating a road to the site and grading the property so it is level. While a site may seem like the best value, it could actually cost you more because of the added steps in the building process.
Price per square foot: does it really matter?
When considering whether you want to build a home, you may hear the term “square footage” tossed around quite frequently. Square foot is the size of your home’s floor plan in square feet. It can be an important part of determining the ballpark figure that you will have to pay for your home.
The square footage can impact the amount of money it takes to build a house. Obviously, the bigger the customer home (the more money it will take to build it. This is why mansions go for much more money than tiny homes! The cost per square foot will also vary depending on whether the home is custom-built or follows stock house plans drawn up by an architect.
According to WOWA, it costs approximately $145- 260 per square foot to build a single-detached home that follows stock house plans in Vancouver. Those who choose to design their dream home will have to pay anywhere from $430-1090 per square foot for their custom-built home.
The cost per square foot The startling difference between the price per square foot may cause many to rethink whether they should design their home or choose stock plans.
Construction costs to expect
Many people expect that construction costs will take up the majority of their budget when they build their homes. This is true but, despite this, many people gravely underestimate the real building costs, only coming to realize their mistake after construction begins. This mistake usually caused by people focusing on the hard costs rather than both the hard and soft costs of construction.
Hard costs are associated with the construction of the physical structure of your home. This can include labour, materials, service installation, and more. It is not surprising that most people who choose to build their home are preoccupied with these costs; they just want to ensure that their new house is functional, safe and has the finishing touches that they love. But, before you consider what kitchen cabinets or exterior doors you will buy, you should think about the soft cost of building your home.
Soft costs are the important parts of home construction that aren’t typically thought of. Despite this, they play a vital role in the outcome of your project. These costs are associated with the design like architectural fees, engineering fees, project management and more. These costs can quickly add up when building your custom home.
There are many different factors that influence the overall cost of your custom home. Here are some things that are included in your construction cost:
- Labour costs (home builders, equipment rental, etc.)
- Services (e.g., water, gas, electricity, heat and air conditioning)
- Materials for your structure (e.g., wood, concrete for your foundation, pipes for plumbing, etc.)
- Interior design materials/fixtures (e.g., bathroom vanities, granite countertops, hardwood flooring, etc.)
- Services of a custom builder (i.e., engineers, architectures, interior design, etc.)
- Costs of any problems that arise
The cost of building permits
One thing that many potential home builders forget to include in their estimated cost is the building permits they need to obtain. A construction or building permit is a document that is issued by a municipal body and is mandatory for any construction project that involves constructing, renovating, or demolishing a structure. This is because it holds builders accountable to the local bylaws, Building Code, and health and safety regulations.
A construction permit needs to be bought before a project can even begin. In British Columbia, the price per permit varies by local government. For example, in the Regional District of Okanagan-Similkameen, just the application fee for a permit will cost $200 if the value of the project is under $100,000. If it is over that value, you will need to pay $575. This does not include the actual cost of the permit itself. The average price of a permit to build a house is typically in the thousands of dollars.
Building vs. buying costs: is it really worth it?
The approximate cost of building a 3,000 square foot single-detached home in British Columbia is anywhere from $525,000 to $975,000. However, it is difficult to determine a truly accurate price because many factors influence the price including the square feet, materials, land price, labour costs, permits and more. This may leave you feeling a bit overwhelmed at the cost, but it may be a better idea than opting for real estate.
In 2021, the average price of a single-family home in Canada ranges anywhere from $284,000 to $944,000, depending on what province or territory you chose to purchase in. British Columbia is the most expensive, sitting at an average price of $944,000. Because this is only the average, homes can be cheaper or much more expensive. For example, homes in West Vancouver are typically in the millions of dollars.
Choosing to build over buying may actually help you save money and get the house of your dreams, but this is dependent on many factors. If you choose to invest your money and build your home, it would be worthwhile to speak to a mortgage broker about your plans and borrow money to help pay for your new home. Building a home can be expensive, but you don’t have to do it alone.
Speak to a mortgage lender about your options
Those interested in building can get the financial help they need from a mortgage broker. They can help you cover the costs of your home project with one of three types of mortgages: a construction mortgage, progress draw mortgage or completion mortgage. Each provides a construction loan that can help build your home, but with varying regulations.
For instance, construction mortgages typically only require interest to be paid when your home is being built. After it is done, it turns into a regular mortgage. In comparison, progress draw mortgages allow your builder to pull funds from your mortgage to cover the cost of construction, but when your builder pulls funds, you need to start paying your mortgage.
Plan your budget before you build
Building your dream home is a worthy investment for many. However, it is hard to pinpoint exactly what the final cost of building a house in British Columbia will be. Before investing in building a home, take the time to consider the total cost by yourself and with a financial advisor.
When planning to build a home, remember to budget for:
- Land prices
- Site conditions (i.e., serving the land, grading, building a road, etc.)
- Construction permits
- Soft and hard costs of construction
- Estimated cost per square foot
- Labour
- Any emergencies or possible delays
Emma Scott is a Content Writer with a passion for accessibility, the environment, and history. She currently works for Merged Media (a proud partner of CREW & REP) in Guelph, Ontario.
