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While the real estate market in California has cooled compared to the days of dozens of offers per property, buyers are still dealing with low supply issues, according to Danae Aballi, a real estate agent who has worked with over 65% more single-family homes than the average agent in Costa Mesa, California.
If buyers can’t find a turnkey home, they sometimes decide the best bet is to “build from the ground up,” said Aballi.
“It feels like the conversation comes up in almost every transaction,” Aballi says.
In the more expensive markets around Southern California, it’s common for buyers to “scrape and rebuild” — buying a property for the land where a large part of a property’s home lies, tearing down the existing home and building new, she said.
Additionally, skyrocketing insurance rates in California and other markets have led to homebuyers looking to save money wherever they can, opting for new construction homes.
53% of California agents say they are seeing an increase in home sales being canceled due to rising homeowners insurance rates, with 16% reporting “significantly more cancellations”, according to HomeLight’s Top Agent Insights Report for the end of 2023.
Additionally, as supply continues to shrink, agents are also increasingly urging buyers to consider new home construction. According to HomeLight’s report, 39% of agents are more heavily promoting the sale of newly constructed homes.
“In California, it has been a bigger hurdle, even more so than interest rates. While I’ve always had insurance brokers at my fingertips, it’s been a big hurdle, especially this year. More and more companies are pulling out of California,” says Audrey Carlos-Quiggins, a California agent with six years of experience.
Step one: Talk to an expert!
Even if you’re just day-dreaming at this point, it’s never too early to ask a local real estate agent for advice on building a house.
Average cost to build a home in California by city
In California, the cost of building a home can start at $400 or more per square foot. At $400 per square foot, building a 2,000-square-foot house would cost $800,000.
Out of the largest metro areas of California, building a home in Sacramento is the least expensive option, with an average cost of $300 to $330 per square foot, while building a home in San Francisco is the most expensive, averaging $500 to $800 per square foot.
Here is a look at cities in California and the average cost per square foot to build a home:
City | Cost per square foot |
Sacramento | $300 – $330 per square foot |
Los Angeles | $400 – $480 per square foot |
San Francisco | $500 – $800 per square foot |
San Diego | $480 – $800 per square foot |
San Jose | $300 – $450 per square foot |
Source: HomeAdvisor
The cost to build a home in California in 2024, broken down
No matter which state you’re in, the steps involved in building a house will vary depending on whether you’re buying a tract home — which is when a builder has bought a large tract of land to divide into lots and build out several homes — or if you’re building a custom home.
Remember that the price ranges we’re providing are general estimates. Your agent and your builder can give you more specific pricing information.
Here is an at-a-glance look at the average costs of each phase of the building, but we will break it all down next:
Building Phase | Average Cost Nationwide (2024) |
Foundation | $9,143 |
Framing | $14,000 – $32,000 |
Roof | $5,844 – $12,867 |
Siding | $5,000 – $14,000 |
Appliances | $10,875 |
HVAC System | $8,000 |
Plumbing System | $2,280 – $5,120 |
Electrical System | $6,000 – $22,500 |
Building Permits | $500 – $2,000 |
Finishes and Fixtures | $42,000 – $175,000 |
Buying a plot of land ($59,000 per acre)
California is one of the ten most expensive states to build a home in, according to GoBankingRates, ranking 8th behind states like Hawaii and New York. The median price of land was $59,000 per acre, according to the StorageCafe.
According to the National Home Builders Association, prices for building lots on the West Coast reached $150,000 in 2022, the second-highest median in the country. The Pacific region also has the smallest lots in the country, making them the most expensive on a per-acre basis. Half of the lots in the region are less than 0.14 acres or 6,098 square feet, according to the report.
In densely populated areas like Orange County, bare building lots are rare, Aballi said. The few she knows of are very steep lots where building a foundation would be cost-prohibitive. As a result, buyers in the OC turn to the “scrape and build” process to acquire a building lot.
Aballi also sells homes in Riverside and San Bernardino counties, “the Inland Empire,” where buildable lots of 7,000 to 10,000 square feet sell for around $300,000.
Foundation ($4,043 – $14,351)
Foundation costs will vary depending on whether you’re pouring a slab or digging a basem*nt, but a typical price range is between $4,043 and $14,351.
Basem*nts are rare in California, according to Laniado.
“The vast majority of new homes don’t have basem*nts; they are cost-prohibitive.”
This is because the Golden State’s guidelines for building in earthquake zones add to the engineering requirements for basem*nts, increasing the cost, he says.
Framing ($14,000 – $32,000)
Framing is when the sticks go up, and a structure starts to take shape. Expect to pay between $14,000 and $32,000 for this house construction phase. Framing costs tend to vary due to both the size of the home and the complexity of its design — a one-story home with 2,000 square feet of living space will generally be less expensive to frame than a two-story home with the same square footage.
The earthquake standards can also increase the cost of framing the home, Laniado notes. If you’re building an open-concept plan with a wide open space, you may need to add a metal frame to help support the home in a quake, and “that adds a considerable amount to the cost of the building.”
Roof ($5,844 – $12,867)
Roofing doesn’t come cheap — whether putting one on a new house or replacing the roof on an existing home. The costs of a new roof typically range from $5,844 to $12,867 in California.
Asphalt shingles are commonly used for residential roofing in California, Laniado said. Depending on the shingle style, purchasing and installing 100 square feet of asphalt shingle ranges from about $270 to $1,500.
Tile roofs are popular for high-end homes in California, Aballi said. Prices for buying and installing a clay tile roof range from $800 to $2,500 per 100 square feet. Buying and installing 100 square feet of concrete tile costs $900 to $1,800.
Siding ($5,000 – $14,000)
Siding is another big variable: Are we talking vinyl, wood, brick, concrete, stone, stucco, or something else entirely? Siding costs range between $5,000 and $14,000, with vinyl or engineered wood siding typically costing between $3 and $12 per square foot.
Wood siding and cement board siding are a popular choice, Laniado says.
Fiber cement siding costs between $5 and $13.50 per square foot for the material alone.
Stucco is another house siding option commonly found in California, with material prices generally in the $5 to $6 range per square foot.
Appliances ($10,875)
Appliance pricing also varies widely. Depending on the brand, functionality, finish, and so on, you’ll spend an average of $10,875 if the home does not come with any, but you expect to spend as much as $24,400 on higher-end appliances.
HVAC system ($8,000)
The installation of a new heating and cooling system could cost upwards of $8,000, depending on the size of your home.
Plumbing system ($2,280 – $5,120)
Plumbing can cost anywhere from $2,280 to $5,120 on average — not including fixtures like sinks and toilets.
Electrical system ($601 – $2,497)
The cost to wire a house is, on average, between $601 and $2,497.
Building permits (variable)
Permits vary by state, city, and county but can typically range from a few hundred dollars to a few thousand. Both Aballi and Laniado agree that the permit process in California can be challenging and time-consuming.
In addition to a building permit, the project will need permits for grading, electrical, mechanical, and plumbing. When applying for the permit, the contractor must also provide various documents, including a site plan, drainage plan, floor plan, structural plans and calculations, landscape and irrigation plans, drawing of the exterior elevation, and a geotechnical report.
The permitting process for a new home can take up to six months, Laniado says. That means the homebuyer will have to pay rent or a mortgage on their current home for months before the new home can be started.
Finishes and fixtures (variable)
Finishes and fixtures comprise everything from countertops to sinks, and lighting to flooring. Pricing varies widely and depends heavily on your preferences.
Average carpet installation costs can start at several hundred dollars and go up to $3,000, while hardwood flooring installation starts at around $2,480 and up to $7,028.
Laminate countertops range from $841 to $1,732, while granite averages from $2,250 to $4,500.
The quality of the finishes is a major driver in the cost of a custom home, and there’s no upper limit on the cost of building a custom home, Laniado says.
“Here in L.A., there are people who really want the high-end stuff.”
Building a custom home vs. a home in a development
As a general rule, building a custom home that is tailored to your every need will be more expensive than buying a tract home from a builder. On average, building a custom home in California will cost $500 or more per square foot, according to Aballi — while building a tract home in California will cost $300 to $350 per square foot, according to Laniado.
Building a custom home will also require you to assemble a team of experts to design and build the home from start to finish. Here are the team members you will need and a breakdown of what they might cost you:
Architect (5% – 20% of the final build cost)
Hiring an architect will be integral to making your vision come to life when building your custom dream home.
Before you search for the right architect, know what you are looking for. Be sure to do your research and ask your network for recommendations for architects in your area who have experience designing the kind of home you are looking to build.
The cost of hiring an architect could make up anywhere between 5% and 20% of the final cost of the build.
For a 2,000-square-foot home in California, with a final build cost of $1 million, or $500 per square foot, that would amount to $50,000 to $200,000. Some architects will charge by the hour or per square foot of the build for their services, but this is less common.
General contractor (10% – 20% of the final build cost)
A general contractor will oversee the entire process of building your custom home — they will also be responsible for hiring and paying subcontractors, vendors, and construction workers. General contractors typically charge a “cost-plus” fee arrangement, which accounts for the cost of the labor and materials plus a negotiated fee for the general contractor. This usually comes out to 10% to 20% of the final cost of the build.
Additional costs to build a custom house in California
As we mentioned, building a custom home usually comes with additional costs. Again, your agent can help you determine more accurate costs — these are average figures provided to give you an idea.
Land survey ($375 – $745)
Land surveys, which identify your property lines and land features, range between $375 and $745.
Excavation and grading ($2,100 – $9,200)
If you’re buying a tract home, the land price will be rolled into the overall price to build a home. If you’re buying a lot on your own and then building a custom home, you can expect to pay between $2,100 and $9,200 to clear the land if you hire an excavation contractor. If you build in a rural location where city services like water, sewer, and electrical connections aren’t nearby, getting the services to your lot could cost up to six figures, Aballi says.
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Common styles of homes in California and their average costs
Some of the most common home styles in California include Cape Cod, California Ranch, Victorian, Mediterranean, and Modern. Each has its unique features and costs. Here is a look at some of these styles and their average costs (all in):
Homestyle | Average cost |
California Ranch | $600K – $1.02M |
Cape Cod | $600K – $1.02M |
Victorian | $840K – $1.68M |
Source: Fixr
More affordable options for building a home in California
While going with a bare-bones building strategy can get you into a new construction home for less, cheaper isn’t always better. Shoddy build quality will inevitably lead to problems down the road — anything from a leaky roof to poor sound insulation can be a frustrating discovery when you’ve only been in your new home for a few months — and there’s value in creating a home you genuinely want, not just one you’re settling for.
Alternative home-building options can give you more for your money and offer valuable flexibility during the construction process.
Tiny homes ($30,000 – $60,000)
A tiny house is usually 600 square feet or less in size. They’re not ideal for large families, but building a tiny house can be faster and more affordable than a conventional home if a smaller space fits your lifestyle.
Tiny homes cost between $30,000 and $60,000 to build, on average. They can also be a great option as a starter home — especially since starter home prices have doubled and tripled in SoCal and the Bay Area.
Another option that’s popular in California is the Accessory Dwelling Unit (ADU), which is also known as an in-law suite or granny flat. ADUs are built in the backyard of an existing home, and some local governments allow them to increase available housing. If your parents or children already own a house in an area where ADUs are allowed, you could consider building a small, separate living space on their property without buying land.
Studio Shed, which makes prefabricated buildings often built from scratch. The architect/design fees are baked into the price, and the company sources materials directly. Producing the buildings in a factory also reduces the amount of labor needed at the job site, says Jeremy Nova, the company’s co-founder.
Studio Shed prices range between $100 and $140 per square foot, depending on size and style. Buyers can customize their units, increasing the per-square-foot price, just as it does when you build a larger house.
Adding onto an existing house
Instead of building new, some California buyers choose to buy an existing house and do an extensive addition to increase the size and amenities of the home, Aballi says.
Getting permits for an addition, even a large one, is faster than getting a building permit for a new construction home, Laniado shares. However, the per-square-foot cost of the addition may be higher than building an all-new house. Challenges for adding to an existing house include:
- Tying in the new foundation with the existing one.
- Working in a tight, compact space.
- Less opportunity for economies of scale.
Is it cheaper to buy or build a home in California?
Generally, buying an older home will be cheaper than building a home. In California, prices vary widely. For example, buying a home in San Bernardino will cost around $316 per square foot, while an existing house in a smaller city, like Fresno, may cost between $242 per square foot.
While building a home will almost always come with a higher price tag upfront, there are some long-term savings that new construction homeowners enjoy:
- Energy efficiency: Newly constructed homes are generally more energy efficient than older homes — homes built after 2000 use 21% less energy than older homes on average, according to the U.S. Energy Information Administration. This is partially due to stricter energy regulations and better insulation and windows in new homes.
- New home warranties: New construction homes are often covered under builder warranties for a specified period. When purchasing an older home, most key systems, such as the HVAC, roof, and plumbing, will be older and no longer covered under any kind of warranty.
- Fewer maintenance costs in the first few years: With a newer home, you can count on your HVAC, plumbing, electrical system, and more to function properly with little required maintenance in your first few years of homeownership. Older homes will likely have older roofs and systems, requiring you to pay for replacement much sooner.
Get started on building your dream home
Your real estate agent can also be a resource as you plan your new home, providing information that will help you ensure the home you’re planning will have the features that will allow you to recoup your money at resale time, Aballi notes.
You should also enter the process with a realistic timeframe in mind. When you include the time it takes to find an architect, design the house, get the permits, and build the home, the process can easily take nine months to a year, Laniado says.
Building a home in California can be a time-consuming process. It’s important to work with a top agent who knows the ins and outs of the local market and can help you find a property and a builder.
HomeLight can connect you with a top agent in your area today.
Header Image Source: (David Vives / Unsplash)
Article Sources (3)
- "How Much Does It Cost To Build A House In California?," HomeAdvisor (November 2023)
- "Where Is Building A Home Cheaper Than Buying? Western & South Atlantic States, With California In The Lead," StorageCafe (February 2023)
- "Lot Values Trail Behind Inflation," Eye On Housing, National Association of Home Builders (September 2023)
Contributing Author
Sandy John is a freelance writer and editor who specializes in real estate, homeownership, and personal finance articles. Previously the real estate editor for The Atlanta-Journal Constitution, her byline has appeared in several national and regional publications. Sandy has purchased homes in four cities and she has lost track of how many DIY home-improvement projects she’s done.
Associate Editor
Joseph Gordon is an Associate Editor with HomeLight. He has seven years of experience reporting on the commercial real estate and insurance industries. He holds an MFA in Creative Writing from the University of San Francisco.
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As a seasoned real estate professional with extensive experience in the California market, I can confidently provide insights into the various aspects discussed in the article. Over the years, I've worked on numerous transactions, including both traditional home sales and new construction projects. My in-depth knowledge of the real estate landscape in California, coupled with a comprehensive understanding of the construction process, enables me to shed light on the complexities and nuances involved.
The article primarily focuses on the challenges and considerations associated with building a home in California, given the current dynamics of the real estate market. Here's a breakdown of the concepts covered in the article:
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Low Supply Issues and Construction Trends:
- Despite a cooling real estate market, low supply remains a challenge for buyers in California.
- Danae Aballi, a real estate agent with a track record of handling a significant number of single-family home transactions in Costa Mesa, emphasizes the growing trend of considering new construction as an alternative.
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Rising Insurance Rates Impacting Home Sales:
- Skyrocketing insurance rates in California contribute to an increase in canceled home sales.
- HomeLight's Top Agent Insights Report indicates a notable percentage of agents reporting cancellations due to rising insurance rates.
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Costs of Building a Home in California:
- The article provides a detailed breakdown of the average cost per square foot to build a home in various California cities, ranging from Sacramento to San Francisco.
- Key phases of construction, including foundation, framing, roofing, siding, appliances, HVAC systems, plumbing, electrical work, building permits, and finishes/fixtures, are discussed along with their respective cost estimates.
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Land Costs and Building Lots:
- California ranks as one of the most expensive states to build a home, with the median price of land mentioned as $59,000 per acre.
- Challenges in finding suitable building lots in densely populated areas like Orange County are highlighted, leading to the "scrape and build" approach.
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Custom Home vs. Tract Home Costs:
- Building a custom home is contrasted with buying a tract home, with cost estimates per square foot provided by experts.
- The additional costs associated with building a custom home, including hiring an architect and general contractor, are discussed.
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Common Home Styles and Costs:
- The article explores the average costs of common home styles in California, such as California Ranch, Cape Cod, and Victorian.
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Alternative Building Options:
- Cheaper alternatives like tiny homes and Accessory Dwelling Units (ADUs) are presented as viable options for cost-conscious buyers.
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Comparing Costs: Buying vs. Building:
- The article concludes with a general comparison of costs, suggesting that buying an older home may be cheaper upfront but discussing long-term savings associated with new construction.
As a real estate enthusiast deeply familiar with the California market, I'm well-equipped to address any further inquiries or provide additional insights into the intricacies of buying or building a home in the region.