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How much does it cost to build a house: Toronto

by Corben Grant on 25 Nov 2021

The housing market in Toronto has been facing seriously tight supply issues for a few years now and there are more buyers eager for a house in Toronto than there are homes for them to buy. Perhaps you are in this situation and want another way. Or maybe, you just aren't impressed with the homes on the market and want to design your own dream house.

In these cases, you may have considered building a new house instead of buying a resale home. This is an option that many people take, though it comes with its own challenges. Especially in the city of Toronto, building a home is no simple task, but it can still be done.

Cheaper to buy or build?

In general, you can build a house for a comparable price to buying a home, though there are some additional costs at first. A newly built house is still a house and will still appreciate in value so you will easily get a return on the extra costs in a few years.

However, when you start looking at an area like Toronto, things can get expensive. Unless you are extremely lucky, you should prepare yourself to spend a lot more in Toronto than you would in other areas. This may be fine for those who are willing to drop millions on a custom luxury home, but not so much for the average homebuyer.

On average, it will probably be cheaper upfront to buy a resale home, but if you want a home for cheap you probably should look outside Toronto to begin with.

Finding a property in Toronto

Before you can build a home, you need to know where it’s going to be built. Unfortunately, as a highly developed and dense city, there is not a huge amount of vacant land in Toronto today. And, unless you are a major developer, most areas of the city are going to be out of the question for new builds.

Your other option is to find a property with an existing home and remove it to build a new one. This is the most realistic option, but it’s going to greatly increase the costs and time required to get the job done. In order to do this, you not only need to buy or mortgage the existing home and property, but you will also need to pay the costs involved with demolition, and only then, start looking at building costs.

Production or custom house?

There are two main options when it comes to building a home. The first is a production home. These homes are pre-designed by a contractor who will offer you a range of different home plans to build. Though you may have some customization options available, for the large part these homes are pre-determined. This option is cheaper than a custom build.

A custom house requires you to create an entire home plan from scratch. You will need to hire a custom home builder to work with you on this process. A custom home cost will be significantly more than a production home but you will end up with a perfectly customized finished product.

What is the average cost of a new build?

Land costs

Assuming you are buying an existing home in Toronto for its land, you will probably look for a detached home. The average price of a detached home in Toronto and the GTA is over $1.5 million dollars, but there may be options for as low as around $700,000 if you are lucky. Demolition of an existing house can cost you $10,000 to $50,000.

Hard costs (average per square foot construction costs)

Hard construction costs refer to the actual labour and material costs that go into the house. Hard costs for the GTA can cost $200-$300 per square foot or more for a production home. A custom-built home can cost up to $900 or more per square foot. How much you pay per square foot will vary a lot by project, and costs in the construction industry change all the time, so these are only estimates. These costs are 'hard' because they are fixed costs based on the quoted materials and labour needed.

Soft costs

Soft costs are the costs of anything else in home construction such as legal fees, permits, surveys, engineering, zoning review, house plans, insurance and more. Soft costs can vary a lot but will likely cost you at least $30,000. These costs are 'soft' because they can change and vary during the build process.

Additional fees

There are many other fees you will likely pay beyond hard and soft costs. Some of these are administrative, such as land transfer taxes, but will also include materials costs such as landscaping, appliances, and furnishing.

Total cost and financing options

In total, you should expect to pay at least $1,000,000 to build a 3,000 square foot home in Toronto, though a custom project can cost significantly more. This is in addition to costs in acquiring the property.

If you need to finance a build, there are special mortgage options available, but they are a bit more complicated than your standard mortgage. Construction mortgages usually pay out in stages during the construction process. You should talk to a mortgage broker for more specific details.

Areas to consider outside Toronto

While building your dream home is going to cost you regardless, you aren't making things any easier by choosing to build in Toronto. Luckily, in southern Ontario, there are many other nearby areas that can still easily access the city. Particularly if you are commuting for work but don't need to live in the city itself, this can be a great option. In the GTA, you will generally find more vacant land and more affordable land the farther out you go. Other popular nearby cities where you can settle and still have access to the city include Oshawa, Newmarket, and Milton among others. You may even choose to build your home in a rural area, which can offer a savings over the city as well as a more private and quiet lifestyle.


Building a home can be a challenging but rewarding experience. In terms of the total cost, you may pay more upfront than a traditional home, but the satisfaction of a new home and future appreciation of value will make up for these costs. If you want to try to save money, just be careful. There are a ton of small but important steps along the way and everything must be done properly. We recommend working with a reputable builder who can help you understand all the costs involved and get your construction project done on time and on budget.

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