Building vs. Buying a Home in Philadelphia

Building a home is a significant undertaking, both in terms of time and finances. In Philadelphia, the average cost to construct a house ranges from $201,000 to $310,000. However, this figure doesn’t include additional expenses like land acquisition, permit fees, and excavations. On average, homeowners spend 9 to 12 months in the construction process. In this blog post, we’ll explore the costs and considerations of building a home in Philadelphia compared to buying an existing one.

Average Cost Breakdown

The average cost to build a house in Philadelphia is approximately $124 per square foot. Here’s a breakdown of costs for varying home sizes:

• 1,000 sq. ft.: $124,000
• 1,500 sq. ft.: $186,000
• 2,000 sq. ft.: $248,000
• 2,500 sq. ft.: $310,000
• 3,000 sq. ft.: $372,000

Factors Influencing Costs

Several factors can influence the cost of building a home, including:

1. Material Costs: Building materials account for roughly 50% of the overall cost. Prices have seen an increase due to supply chain disruptions and higher demand.
2. Contractor Charges: Contractors typically charge between 10% and 20% of the total construction value. This includes hiring various professionals like electricians, plumbers, and carpenters.
3. Electrical and Plumbing Costs: Electrical work costs between $7,500 and $12,500, while plumbing installation is approximately $12,000.
4. Roof Installation: Depending on the material chosen, roofing costs range from $3,700 to $42,000.
5. HVAC Installation: Installing a new HVAC system can cost between $1,500 and $12,500, depending on factors like size and type.

Soft Costs

In addition to the hard costs directly related to construction, there are soft costs like permit fees, land acquisition, and interior furnishings:

1. Land Cost: Averaging around $45,000 per acre, this is a crucial expense. Clearing and leveling the land can cost between $1,500 and $3,000.
2. Permit Costs: Building permits can range from $5,000 and cover various aspects such as building, HVAC, plumbing, and electrical.
3. Home Interiors: Budget at least $20,000 for furnishings in a 2,500 sq. ft. home.
4. Interior Designer Costs: Hiring an interior designer can add an average cost of $5,400, depending on your requirements.

Financing Options

If you don’t have the full funds, consider these financing options:

1. Home Construction Loan: This can cover both land purchase and construction costs. There are construction-to-permanent and construction-only loan options.
2. Personal Loan: Use a personal loan to cover specific expenses not initially accounted for.
3. Home Equity Loan: For homeowners with existing properties, this can help finance the construction of a new home.

Is It Cheaper to Build?

If you already own land in a desirable location, building your own home in Philadelphia is typically more cost-effective. It allows for customization and ensures you get exactly what you want. However, if you don’t own land, buying an existing home might be a more straightforward and quicker option.

Conclusion

Building a home in Philadelphia involves careful planning and budgeting. Consider factors like land acquisition, permit fees, and interior furnishings in addition to construction costs. Owning land can significantly impact the overall expense. Weigh the pros and cons carefully to make an informed decision about building or buying your dream home.