A lot has happened in the world and in the housing market since 2020 when Covid19 changed the job-scape in America by making many jobs mobile. This has allowed many to relocate to their favorite destination, so long as they can get high-speed internet.
Because southern Colorado is one of the most desirable areas in the country to live, a lot of new faces have moved here which has driven up our home prices by over 40% in the last two years. The high demand and low inventory in home sales in conjunction with a huge hike in building materials has driven up the cost of building like we have never seen before.
The recent rise in interest rates has slowed pre-built and new construction home sales down which seems to be allowing inventory to catch up to the demand and should, in turn, bring materials costs down as demand wanes. So how much does it cost to build a custom home in Colorado in 2023? Keep reading and we will unpack that question…
There are several elements that go into the cost calculation for every custom home project and most of them are specific to the piece of land (aka, Lot, or Plot) that is being built on. Here is a list of items we account for when creating a budget for a custom home:
1. Cost of land (separate from the build budget, but part of the overall project cost).
2. Cost of Infrastructure (utilities onto lot and/or well and septic).
3. Site costs (lot clearing, tree removal, driveway building, etc.).
4. Tap fees, permits, and other fees.
5. Design, engineering, and estimation.
6. Building costs.
7. Landscaping/lot finishing costs.
Most custom home projects start with the client acquiring a piece of land prior to working with a builder, though some builders offer land they have purchased (which
they will mark up) to their clients as a package deal along with the build project. In the case of the client purchasing land separately, land cost is not added to the build budget with the builder but should be accounted for in the overall project cost for a true project total investment. In the case of purchasing land from a builder, most likely the entire project cost will be combined into a fixed price which includes the builder’s mark-up on the land and all other costs and profit. Land costs in Colorado vary by location, size, and amenities. Since 2020 land prices have increased with home prices and inventory on land is low but starting to rise.
1. Many of the lower priced lots available that have been on the market for a while have been passed over 1000 times because they have something bad/expensive to overcome. For instance, a client recently brought us a very affordable lot to investigate that ended up not having access to municipal water and no water rights to drill a well, which only left a cistern that would have to be manually filled as an option (not a great lifestyle choice for most). With a little research you should be able to expose why a lot has been on the market for a while so you can decide if it is worth what it will take to overcome.
2. The cost of the dirt is only one part of the cost of land… this is where a little due diligence can pay huge dividends. Though it is not possible to foresee every pitfall that may come with a piece of land (especially when it comes to the type of soil under the surface), it is possible to do a little research on utilities availability, water rights, nearby well depths, etc. One of our recent builds required bringing electricity onto our lot from down the road which added almost $100K to the project cost… things to consider!
3. Before purchasing land consider doing a sub-surface soil test. Though a soil test won’t tell the full story of soil conditions, for under $1K you can have the peace of mind of knowing if there is clay present that will require an expensive over-dig or not.
As far as pricing goes, the numbers are all over the place but most pieces of land suitable for a custom home will cost between $200K – $400K in El Paso County.
If your land is in town, your lot may have municipal utilities (city water, sewer, gas, and electric) stubbed onto your land. In this case your only utility costs will be the tap fees and getting the utilities from the stub to the house. In older neighborhoods the utilities might be in the street right in front of your land and you will have to do a street cut to access them. In this case you will have the street cut costs which can add $10K or more.
If you are building in a rural area, you are likely to have gas and electric stubbed onto your lot and will be required to have a well drilled and a septic system for waste as there will not likely be municipal water and/or sewer to access. If this is the case, you can count on paying anywhere from $12K-$30K (very rarely can be as high as $80K if it is super deep) for the well (depending on depth) and $15K-$35K for the septic system (depends on if it is a pressurized engineered system or a standard gravity fed). For gas and electric, the length of the line from the stub to the house will determine the cost of the install. If you do not have gas available, you might have to operate from a propane tank which can cost $5K – $10K to purchase. If you do not have electricity on your land, you will need to get an estimate from the electric company to know that cost.
This one is entirely dependent on your lot features. If you have a fully tree’d lot in Black Forest that needs a 400′ driveway, and 100 trees cleared you could have
$20K in site prep. If you have an open lot with a 100′ driveway you could have $3K – $5K in site prep.
These fees depend on the area you are building in, the township, the utility companies, etc. If you are building in Colorado Springs (in city limits) you can expect to pay $18K-ish for utility tap fees to CSU, and a building permit fee of $3K-ish. If you are building in Woodmoor you can expect to pay $40K-ish in utility tap fees for water and waste and $8K-ish in electrical tap fees and a $6K-ish building permit fee (thanks to the county road maintenance fee). A little research should let you know what you will be up against for these costs.
Every custom home starts with an architectural design and supporting engineering for structural and mechanical systems (also known as soft costs). You can expect to pay between 3% – 6% of the build cost for these services. If you build with Elk Ridge Custom Homes you can expect to pay less – between $25K – $40K for design, engineering, and estimation services. If you opt to go the “semi-custom” route (pre- made plan as opposed to a fully custom start with a “blank sheet of paper”), you can expect to save at least a few thousand in this line item.
Everything from the excavation to the paint lives in this category. Your design complexity, square footage, and finish choices will drive this budget wherever it is going. Being a Design | Build firm allows us to design to your budget goal which keeps us in the right ballpark from the beginning, rather than trying to make a budget fit a design, which never ends well. With current market conditions we are seeing build costs ranging from $280/sqft to $500/sqft on our current builds, though we do not use the cost per foot as an estimation tool as every design/build/client is so different.
Every client has different needs or wants in this area. We have many clients that just want a finish grade done around their home so they can hire a landscaping company on their own after we are completed with the build. In this case, there are no additional costs on our side since we include finish grading as part of our process. We have also coordinated everything from simple landscaping for 10′ around the home to elaborate landscape designs with boulder retaining walls, outdoor kitchens, and water features. These can range from $5K to $250K+.
There were a lot of numbers and scenarios thrown out above but don’t let those scare you. Here are some real numbers from current builds of ours for your reference:
Current project: 3 bed, 3.5 bath 3300 sqft modern farmhouse rancher w/crawl space with all high-end finishes including beamed vaulted ceilings – Build Cost (includes everything except the land cost) $1,250,000
Current project: 4 bed, 3 bath 3200 sqft Mid-century modern rancher w/walk-out basement with medium finishes throughout + vaulted beamed ceilings – Build Cost (includes everything except the land cost) $960,000
Current project: 3 bed, 3.5 bath 4100 sqft modern minimalist rancher w/walk-out basement with all luxury finishes throughout – Build Cost (includes everything except land cost and landscaping) $1,360,000
If you would like more information about our processes, see pictures of some of our projects, or learn more about financing a custom home, please follow the links below or contact us to start a conversation about your project.
Thank you for reading!