Dreaming of building a custom home in North Idaho?
So, you are dreaming of buying raw land and building a custom home in North Idaho!
Someone once said, “I sleep among ravishing illusions and wake to their burden.”
Before we get too deep into the dream of building we need to know of the “burdens or challenges”
Here are some of the “burdens” or challenges to be aware of as you consider building a custom home in Idaho, specifically, the greater Coeur d’Alene housing market.
1) Lack of Inventory- The lack of buildable and affordable land is thinning fast, and as Roy Rogers once wisely stated about land, “…they ain’t building anymore of it!” We detail the lack of buildable land in North Idaho in our video, “Land Mass Breakdown.” Good properties have been picked through and what is left is generally due to one or more of the following reasons – distance from town, on a steep hill, high cost to bring utilities in, won’t perk for septic, poor cell/internet service, or sketchy access in winter time. If you find a great deal on a piece of property because it is more than a half-hour from town, you may very well pay the difference to have contractors and materials come to you
2) Foundation, Foundation, Foundation – This is perhaps the most forgotten item when considering the up-front cost of building. North Idaho is a mostly mountainous and hilly topography. Most of your “affordable” lots in North Idaho are not flat. Engineering and building a foundation for a slopped lot could add 10K to 100k to the cost of a home. The cost of excavation to clear trees and make flat land out of slopped land (if even possible) is no less expensive. Foundations are perhaps the most expensive variable and they are non-negotiable…you have to have a firm foundation!
3) Funding- Keep in mind raw land purchase is generally cash only, unless the seller will fund the loan. Seller funded loans require large downs, balloon payments and higher interest rates in general. Most Banks do not fund raw land unless they can attach a construction loan to it. When they do fund, the banks generally want you to start and finish the build on a schedule they set and some may want a firm bid from a contractor up front.
4) No “Economy of scale”- Tract home builders typically build homes with floorplans designed to save costs…from foundation to framing to finishing! They typically build those homes on flat lots and leverage their resources by building several homes close together so they can “batch” material drops, equipment and labor centralized to the several building sites. These factors allow tract home builders to build under 200K per square foot. Don’t expect your custom home to be built at a tract home price! There is no such thing as “semi-custom.” There is custom home and there is tract home.
5) Cost of materials – wood and metal are up over 25% since January of 2018 due to tariffs and reconstruction demand in areas affected by fires, floods, and hurricanes. Bids may be inflated to protect contractors from under-bidding.
6) Well drilling- can start at 30K for drillers to drill for water. Drill companies in North Idaho have waiting lists, some upwards of 50 clients deep. 80% of raw land inventory need wells drilled.
7) Lack of skilled labor – North Idaho contractors struggle to find enough skilled subs to fill demand and when they do, they pass the cost of keeping them loyal on to client.
8) Finding an available Builder - Reputable builders have more than enough work to choose a higher cost build than one where the client is trying to “nickel and dime” costs on everything. Put yourself in the Builder’s shoes…would you want to build for you? Find a “cheap” available builder in North Idaho and you found a poor builder!
9) Extended Build time- what should take 4-6 months, takes 9-12 months due to all of the factors listed above. This pushes builds into winter, which can lead to more time delays, poor concrete pours and potential mold issues.
10) Realistic Expectations – In May 2019- Zillow reported the median price per square foot for a pre-existing home in the Couer d’Alene area was $175. To save costs by building, one would have to build for under $175 per square foot. So that begs the question…
“What is the cost per square foot to build a home in North Idaho?”
Ask a reputable builder this question and the answer will be, “It depends on what you expect in the home.” Reputable builders will not even answer this question until they know what they are building and where.
For the purpose of our discussion we will use the “ballpark figure” of $200.00 per square foot. This is the number we hear most in our current custom home building environment in North Idaho. Obviously… your cost per square foot could be more, or less.
Cost per square foot: $200.00 for 2500 square feet = 500K
Now here are the parts of the building process generally NOT included in the price per sqr foot:
Cost of five acres without utilities: 100K
Cost to drill well: 30K
Cost to add Power: 20K
Site clear, prep and road excavation: 10K
Foundation: 20K (this WILL go up with the degree of sloped land …DON’T OVERLOOK IT!)
Landscaping: 15K (Don’t need it? Think erosion of all that dirt work you just paid for!)
Fencing: 5K (got dogs or kids???)
Really Rough Estimate: 700K
Add 10% “fudge factor”: 70K
Rough estimate: 770K (for a 2,500 sq foot home on 5 acres)
Same property in a move-in ready, pre-existing home can be found 100-200K less expensive in its comparative market…without the challenges and unknowns of building!
We recommend anyone considering buying raw land to build, FIRST talk with several reputable builders and lenders (if seeking a loan) to get their opinion on the cost and challenges of building in the area. We have a list of builders and lenders upon request.
So, what is the realistic expectation?
You build new to get what you want… NOT to save costs!
Written by: Kory Martinelli Owner/Realtor of Martinelli Realty Team