Anyone looking to buy a home these days might well be frustrated with high prices, rising mortgage rates, low inventory and competition from other buyers.
Experts believe there is a nationwide housing shortage of between 2 million to nearly 6 million newly-built homes, according to USA Today, and supply is expected to remain short for some time to come.
It could lead some to wonder if it would be quicker and cheaper to build a home instead of buying one ready-made. It’s not an easy project by any means. You’d need to buy land, secure permits, hire architects and builders.
The average cost to build a 2,000 square-foot house in the U.S. is about $300,000, not including the cost of land, according to Forbes. It’s highest in Alaska, Hawaii, and California--over $400,000. In the Northeast it averages $155 per square foot, according to Bankrate, in the West, $131 per square foot, in the Midwest, $109 per square foot and the South averages $100 per square foot. At $100 a square foot, a 2,000 square-foot house would cost about $200,000.
But these are rough numbers. You have to account for a range of costs, depending on location.
You’ll likely need a construction loan. These loans tend to be short-term, higher-interest loans, typically one year in duration, according to Bankrate, and often require 20% down, at least. The property must be built and a certificate of occupancy issued within the year.
That raises the prospect of delays, which can be caused by anything from weather to problems with getting permits. Other common reasons for delays include a disorganized builder, difficulty getting materials, homeowner selection delays, and scope changes.
It’s a lot to take on, but in some states, it could be cheaper to build than to buy a house. To find the difference between buying and building a home in each U.S. state, StorageCafe, a national storage-space search site, surveyed land prices per median lot size nationwide and determined the regional costs of making a contract with home builders, adjusted for 8% inflation. They then added 10% for administrative costs to these combined factors. Finally, they compared the totals with median house prices.
Data wasn't available for Alaska, North Dakota, Rhode Island and Vermont, and Washington D.C. and Puerto Rico were also not considered.
Here how building vs. buying looks in the other 46 states:
1. Hawaii
- Total building costs for land, construction & other: $551,145
- Median single family home listings price: $1,045,000
- Difference in building vs. buying: −$493,855
Hawaii tops the list for offering the biggest potential savings with building instead of buying.
California
- Total building costs for land, construction and other: $494,859
- Median single family home listings price: $699,900
- Difference in building vs. buying: −$205,041
Colorado
- Total building costs for land, construction and other: $492,295
- Median single family home listings price: $600,000
- Difference in building vs. buying: −$107,705
Utah
- Total building costs for land, construction and other: $537,856
- Median single family home listings price: $634,945
- Difference in building vs. buying: −$97,089
Virginia
- Total building costs for land, construction and other: $361,392
- Median single family home listings price: $457,588
- Difference in building vs. buying: −$96,196
Delaware
- Total building costs for land, construction and other: $393,641
- Median single family home listings price: $489,500
- Difference in building vs. buying: −$95,859
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Maryland
- Total building costs for land, construction and other: $365,296
- Median single family home listings price: $459,900
- Difference in building vs. buying: −$94,604
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Montana
- Total building costs for land, construction and other: $515,115
- Median single family home listings price: $599,000
- Difference in building vs. buying: −$83,885
Florida
- Total building costs for land, construction and other: $374,753
- Median single family home listings price: $451,235
- Difference in building vs. buying: −$76,482
Idaho
- Total building costs for land, construction and other: $504,544
- Median single family home listings price: $575,000
- Difference in building vs. buying: −$70,456
Washington
- Total building costs for land, construction and other: $493,459
- Median single family home listings price: $559,000
- Difference in building vs. buying: −$65,541
Massachusetts
- Total building costs for land, construction and other: $575,927
- Median single family home listings price: $629,000
- Difference in building vs. buying: −$53,073
Texas
- Total building costs for land, construction and other: $361,118
- Median single family home listings price: $411,990
- Difference in building vs. buying: −$50,872
Oregon
- Total building costs for land, construction and other: $502,355
- Median single family home listings price: $545,000
- Difference in building vs. buying: −$42,645
North Carolina
- Total building costs for land, construction and other: $363,011
- Median single family home listings price: $395,000
- Difference in building vs. buying: −$31,989
Georgia
- Total building costs for land, construction and other: $364,868
- Median single family home listings price: $395,000
- Difference in building vs. buying: −$30,132
Tennessee
- Total building costs for land, construction and other: $360,968
- Median single family home listings price: $374,000
- Difference in building vs. buying: −$13,032
New York
- Total building costs for land, construction and other: $524,151
- Median single family home listings price: $535,000
- Difference in building vs. buying: −$10,849
The following states didn't land in negative territory, but still come pretty close in price when it comes to building vs. buying.
Arizona
- Total building costs for land, construction and other: $492,664
- Median single family home listings price: $489,900
- Difference in building vs. buying: +$2,764
Nevada
- Total building costs for land, construction and other: $493,369
- Median single family home listings price: $489,000
- Difference in building vs. buying: +$4,369
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South Carolina
- Total building costs for land, construction and other: $362,706
- Median single family home listings price: $354,990
- Difference in building vs. buying: +$7,716
Here's how the numbers break down in the rest of the states, where it's likely cheaper to buy than build:
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Alabama
- Total building costs for land, construction and other: $367,458
- Median single family home listings price: $349,995
- Difference in building vs. buying: +$17,463
Wyoming
- Total building costs for land, construction and other: $518,596
- Median single family home listings price: $499,000
- Difference in building vs. buying: +$19,596
New Jersey
- Total building costs for land, construction and other: $547,703
- Median single family home listings price: $499,900
- Difference in building vs. buying: +$47,803
Kentucky
- Total building costs for land, construction and other: $358,765
- Median single family home listings price: $299,900
- Difference in building vs. buying: +$58,865
Oklahoma
- Total building costs for land, construction and other: $359,375
- Median single family home listings price: $299,000
- Difference in building vs. buying: +$60,375
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Minnesota
- Total building costs for land, construction and other: $452,776
- Median single family home listings price: $388,000
- Difference in building vs. buying: +$64,776
Mississippi
- Total building costs for land, construction and other: $362,544
- Median single family home listings price: +$287,000
- Difference in building vs. buying: +$75,544
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New Hampshire
- Total building costs for land, construction and other: $566,758
- Median single family home listings price: $475,000
- Difference in building vs. buying: +$91,758
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Louisiana
- Total building costs for land, construction and other: $361,648
- Median single family home listings price: $268,500
- Difference in building vs. buying: +$93,148
Arkansas
- Total building costs for land, construction and other: $358,176
- Median single family home listings price: $259,900
- Difference in building vs. buying: +$98,276
Nebraska
- Total building costs for land, construction and other: $466,855
- Median single family home listings price: $363,677
- Difference in building vs. buying: +$103,178
New Mexico
- Total building costs for land, construction and other: $488,499
- Median single family home listings price: $384,925
- Difference in building vs. buying: +$103,574
Wisconsin
- Total building costs for land, construction and other: $456,137
- Median single family home listings price: $340,000
- Difference in building vs. buying: +$116,137
Connecticut
- Total building costs for land, construction and other: $573,576
- Median single family home listings price: $449,000
- Difference in building vs. buying: +$124,576
Kansas
- Total building costs for land, construction and other: $449,342
- Median single family home listings price: $321,750
- Difference in building vs. buying: +$127,592
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West Virginia
- Total building costs for land, construction and other: $357,646
- Median single family home listings price: $225,000
- Difference in building vs. buying: +$132,646
Indiana
- Total building costs for land, construction and other: $451,641
- Median single family home listings price: $309,900
- Difference in building vs. buying: +$141,741
South Dakota
- Total building costs for land, construction and other: $478,613
- Median single family home listings price: $335,000
- Difference in building vs. buying: +$143,613
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Michigan
- Total building costs for land, construction and other: $451,973
- Median single family home listings price: $299,000
- Difference in building vs. buying: +$152,973
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Missouri
- Total building costs for land, construction and other: $445,226
- Median single family home listings price: $289,900
- Difference in building vs. buying: +$155,326
Iowa
- Total building costs for land, construction and other: $460,328
- Median single family home listings price: $299,000
- Difference in building vs. buying: +$161,328
Maine
- Total building costs for land, construction and other: $544,297
- Median single family home listings price: $379,900
- Difference in building vs. buying: +$164,397
Illinois
- Total building costs for land, construction and other: $460,882
- Median single family home listings price: $295,000
- Difference in building vs. buying: +$165,882
Ohio
- Total building costs for land, construction and other: $450,406
- Median single family home listings price: $272,490
- Difference in building vs. buying: +$177,916
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Pennsylvania
- Total building costs for land, construction and other: $527,925
- Median single family home listings price: $344,995
- Difference in building vs. buying: +$182,930
See more data and the methodology for this study at StorageCafe.
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