New Home Building Costs in California

18 Replies | Sacramento, California

Hello BP! This is for the home builders out there. I'm looking to purchase land and build six houses in the Truckee, CA area. When I built our last house in 2013, I managed the construction (not including the land) at $125 per sq foot. I can only imagine it must be $200 plus in our current times (increased material costs/lack of contractors/and lovely CA building requirements). In California or not what is your cost per sq foot? Please include the City and State. 

Thanks in advance BP community!!!!!

Originally posted by @Steve Morris:

I build in Truckee and its now around $600 a sq ft. 

Wow! That’s a budget blower! I’m working on my budget now. I’m going to get some contractors out of Reno/Sacramento to help reduce the costs. Thanks for the input. 

I am about 75% through a 6 unit townhouse development in Oakland, CA and my hard costs are going to be about $400sf.  My all in project cost with land, fees, architect, etc is about $500sf.

Building anywhere in the Truckee area with wood IMO is dangerous!!! If the homes aren't burnt down eventually

insurance cost will make homeownership impractical. Light weight cold steel is the best option. Homes 

can be erected fast and the labor costs can be cut because the homes can come from out of state like TX.

Volstrukt  is located in Austin, TX. Framing of a 3,000 sqft home can cost around $13/sqft. 

A 1300 sqft home was erected in one day. See their youtube videos. 

Carlos - thanks for the feedback on your project. I spoke with a contractor in Truckee and he is at $600 a sq ft. He said the price of lumber has really impacted his budget. Sounds like you have a great project. How are you funding the project? 

Paul - I hear you on the insurance and the building materials! Steel seems to be the way to go in the mountains and I will check out Volstrukt. I really appreciate the feedback. 

Originally posted by @John Quiroz :

Carlos - thanks for the feedback on your project. I spoke with a contractor in Truckee and he is at $600 a sq ft. He said the price of lumber has really impacted his budget. Sounds like you have a great project. How are you funding the project? 

Thanks John. Been scary and exhilarating at the same time haha. 

I am being funded with a construcion loan from Community Bank of the Bay. 

One thing I have learned is if you have a construcion loan the banks do tremendous amounts of oversight on the project. This is a good thing I think even if it’s lots of overhead. 

They also make sure you have plenty of cash on hand before they lend. I would count having about 15% to 20% of liquid cash as a percentage of the project cost. So if your project is $1M to build the banks will want to see $150k to $200k in liquid assets on your end. Maybe even more. These projects are risky for the lender as there is no real collateral except the raw land so they want to make damned sure you can see it through to completion. 

My understanding from other developers is that bank money is the best way to finance a ground up project if you can get it because the money is relatively cheap (I am paying about 4.5% interest on my loan). 

But bank money is the hardest to qualify for as well although 6 houses should be something banks would like since it's a straightforward housing build and SFH are desireable.

The banks seem to really weigh previous ground up experience heavily so if you’ve done that before which sounds like you have then that will work in your favor. Your general contractor will get scrutinized by the bank pretty closely too. Esp wrt to financial health and previous ground up experience. 

Yes. I've built a few homes already and have dealt with construction loans. The banks really keep you on task and the deadlines help with the completion of the projects. I would like to check out your project. I'll send you a PM. 

I'm going to back Steve Morris here.  As a remodeling contractor in the Truckee/Tahoe area, current pricing of $600/sf is accurate.  This area has the same issues that the rest of the nation has with material prices.  But we also have a shrinking labor pool, heavily engineered structures that need to withstand snow loads and earthquakes at the same time, an extreme climate on top of high costs for land, and BMPs and fire codes to protect the beauty of the area.  

Good luck with out of the area contractors, I have seen and heard many hilarious stories of blown budgets and awful construction from contractors that supposedly do good work at low elevations.  Plus call-backs are not so easy with out-of-area companies.

As with the idea of light gauge steel:  Wood structures can burn- true. But light gauge steel framed homes will withstand fire up to a temperature point, then they simply melt and collapse.  Additionally steel structures are much more difficult to construct in a thermally efficient manner which can lead to many issues over the short and long term.  The best option is a wood framed house with fiber cement siding and a steel roof.  All current WUI codes apply to currently built homes and with the added protection from fire-resistant siding and roofing, along with proper defensible space, wildfires will most likely skirt around and cause only minor damage to that home.

I think in short- it is very difficult to build cheaply in the Truckee area, or really any mountain resort community at this time.  Things were much different in 2013.  

I don't mean this to come off harsh, this is just the reality of the current times.  

Good luck

 

Things are indeed crazy here. Me and my fiance "scored" last year, got into a 3 bedroom house in Truckee for $600k that we are house hacking (renting out the master bedroom). Our goal in the next 1-3 years was to build a new master bedroom and convert the one we are renting into an ADU. At $600 a square foot that will put building the new master bedroom at around a quarter million dollars (400SF x $600/SF= $240,000). We are both employed in the local workforce with healthcare jobs, and there will be no way we can afford that. But as stated above the labor shortage is real. Local fire departments, hospitals and helthcare jobs, police dept. (all of which make over $100k/year) are still unable to meet staffing needs.

I’m very fortunate to be in the same boat as @Jameson Schwab and bought my primary residence in Truckee a year ago with the opportunity to turn a previously converted garage into an ADU. I'm doing some things myself but not much and the build out to change an already permitted interior living space to fully separate rentable studio is projecting to shake out closer to $160/sq ft. after putting in tons of time vetting dozens of contractors and getting turned away by many more local teams. I would be happy to talk through what my project looks like and pass along any helpful information. @John Quiroz are you married to the idea of a new build in Truckee or would you consider buying and adding value to something existing?  

Jeff and Jameson - congrats on the purchases and sounds like they are both good projects. It's definitely a challenge finding good contractors in the mountains and I'm networking the heck out of the locals to find good people. I'm also reverting to doing improvements myself on another property up that way, which I need to stop doing:) 

Currently, our build is on hold as we are working on obtaining a large primary remodel with 3 additional units. It's a game-changer property that we hope to secure soon.    

I'm more than willing to share my resources and check out your projects.