As a prospective new homeowner, you need to decide if you are going to purchase a previously built home or if you are going to have your home custom built according to your personal specifications. If you decided to build, building construction cost estimating will become a very important part of your overall cost needed to get you into your dream home.
There are a lot of variables that are taken into account with new building construction. Building construction cost estimating is largely speculative and is determined by not only local conditions but also national trends. The first thing to do once you have decided to build your custom home is talking to a few local contractors or home construction cost estimating firms.
Using a local contractor is very important because they will know all of the local nuisances when it comes to building a home. There are permitting fees, impact fees, and environmental requirements that a local contractor will know to add into their building construction cost. Estimating done by non-locals may underestimate these fees and you may end up spending more than the estimate you were originally given. Get several building construction cost estimates to determine a reasonable estimate of costs.
How the new housing market is going in the area you are building it will also influence your building construction cost. Estimating is done by the volume of business that the contractor has. If they are extremely busy they will estimate the cost higher because they don’t really need the work and if they get your job then it is “gravy” for them. If the new construction in the area is slow then you will see the contractor’s bids go down some so they can get the job.
When the local building construction market is booming it also means that the contractors will have to pay their subcontractors more. The sub-contractors will also be much busier and be working lots of hours so they will want to be monetarily compensated for their time. This is especially true if there is a shortage of one particular trade. For example a few years ago after Florida was hit by four hurricanes it was virtually impossible to find a roofer, and if you did, you paid for it. Home building estimates can vary due to economic circumstances.
National trends will also have an impact on the way your contractors do their building construction cost estimating. For example in the last ten years, there have been two major supplies that were in high demand and short supply. When this happens you can expect the estimated prices to go up. It is just simple economics of supply and demand. The supplies at that time were concrete and plywood. Both affected not only the pace of completing the projects but they also added expenses to the building construction cost. Estimating projects became harder to do so the home improvement estimating contractors made sure that they added plenty of extra money to cover the rising costs. With the recent wildfires in California, you will see that estimates will rise nationwide to protect themselves from any supply shortages that may arise.
As you can see there are both local and national trends that can impact your building construction cost estimating that you receive from your contractor. In essence, it really comes down to the basic economics of supply and demand.
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