When it comes to the cost of building a house in California, it’s common knowledge that the city continues to be one of the most expensive real estate markets In the United States.
Known as the Golden State for many reasons: diverse geography, fantastic weather, lucrative technology and entertainment industries, and its general charm — all contribute to the state's enduring appeal. it’s clear that this is a city most people are adamant to make the move to — and in recent years, home construction has drastically skyrocketed.
As you go through the process of building a custom home from the ground up in California, whether it’s to live there and/or invest, the best place to start is with financial estimations in mind. Each home is unique, but it’s crucial to understand the main variables that affect the cost of building a luxury home: land costs, labor costs, building materials, etc.
Building a custom luxury home is not simple figure to calculate; however, we’ll share average costs associated with a new build in California, some of the key expenses involved during the process, and how these numbers come about to give you a better picture of what to expect if you’re looking into investing in your dream home.
Costs involved in building luxury custom home in California
The beauty of designing a one-of-a-kind upscale home from the ground up is that you can tailor-fit unique features to suit your needs — anything from a gourmet kitchen to a nice porch and garage. A custom residential property offers you total control over the design of the home and the freedom to incorporate artistic details and architectural styles which are different from all other homes.
When it comes to the cost involved in building a house, most homeowners spend roughly $400 per sqft to build an average 2,600-square-foot single-family home according to the U.S. Census Bureau’s 2021 information — with mid-grade materials, garage, and deck. According to Terner Center, the average cost to build custom home in California hovered at $222 per square foot in 2018 — a 25% increase from 2008-2009’s $177 per square foot average cost. Luxury home cost per square foot in urban settings like San Francisco can reach $400 per square foot or more when everything is tallied up.
Meanwhile, other necessary costs to be considered include labor, which according to HomeAdvisor, makes up roughly 40% of the build cost, with permits, design fees and materials making up the rest.
Single-family homes can be classified in 3 categories, with each presenting an average cost per sqft in California:
Class 1: Luxury Home - The construction cost per square foot for a luxury residence in California with high quality material specifications (floor, walls, ceiling and roof, internal fixtures, sanitary fittings and amenities) with the average being $600 per sqft.
Class 2: Semi-Luxury Home - The construction cost per square foot for partly-customized private property in California with luxury upgrades with the average being $500 per sqft.
Class 3: Best Standard Single-Family Home - The construction cost per square foot for the highest quality home that you can get among stock plan architectural templates in California with the average being $400 per sqft.
Building a luxury custom home in California may be the most significant investment you make in your lifetime. As you prepare to make that investment, one of the first questions that probably comes to mind in the early stages of building is the cost factors involved. Here are a variety of factors that will significantly contribute to the cost of your new home.
Size and shape
When deciding on a luxury custom home, one of the initial decisions to make is its size and general structure. Size covers square footage, number of stories, wall and ceiling heights, and number of rooms — factor which when combined, considerably influence the costs involved in building a house. The more unusual, complex, and bigger, the more expensive. In most cases, simple layout with a simple square geometry will be the most economical to construct — however, foundation work and specification not size and layout, can drive costs higher. A smaller house built to luxury standards could easily contribute to a large swing in building price. Meaning, the term “luxury” has a lot to do with creativity, artistry and design than it does size.
Location
There are numerous location factors that directly impact the cost of construction in California. Critical factors such as low crime rates, quality of local schools, lush gardens, amazing attractions, as well as proximity to other amenities are all things that command steep construction costs for a new residential property. Variations in the costs of materials, labor, and building permits and services where construction is to take place can be more expensive or affordable. Because California is a major state with a dense urban area, home construction costs can be 9% to 23% more expensive than the national average.
Land characteristics
The land characteristics where your new home is to be built can have a big impact on the costs involved in a custom home. Size and shape of the site, its topography, soil condition and geology all play a significant role when budgeting for construction fees. For instance, if you are building your house in a remote location, away from available utility connections and resources, you may need to work out the figures for setting up basic utility systems such as electricity, gas, communication and security, water, and sewage.
The house itself
This factors in the costs of the main architectural features: foundation, framing, exterior work, not forgetting land and site work for your plot. For example, HomeAdvisor reveals that the average cost for land and site work amounts to $5,000-$38,000 (3-8%) — foundation work costs between $16,600-$72,000 (10-15%) — while framing work can reach $16,600-$95,000 (10-20% of the total costs).
Quality of finishes (interior and exterior)
The materials, fixtures, and finishes you select to see your home in the most beautiful state possible will also affect the cost per square foot. It’s worth noting that nearly half of the construction estimations will go to the exterior and interior finishes — for a good reason since it’s the material quality that will ultimately define your home’s distinctive aesthetics and personality. What’s more, cost of high-quality finishes may be more during construction, but the upkeep will be less expensive in the long run.
Additional home features
Installing optional features can cause building price to skyrocket. For instance, adding a pool, a lanai, an outdoor kitchen area, extra storage buildings, additional dwelling units, or even a large deck can cost up to hundreds of thousands of dollars as building these involves either working around or manipulating the surrounding land.
Expensive places to build in California
The Golden State is home to some exclusive (and expensive) real estate. It makes perfect sense, too. California offers an enticing blend of good weather, exceptional dining and world-class retails, a strong economy, and a great culture. So, which are the most high-priced areas to build in California?
1.Santa Monica
Located right on the Pacific Ocean in western Los Angeles, Santa Monica is one of the most expensive places to build a new home in California. This coastal city is best known for its laid-back life, breathtaking beach vistas, and the famed Santa Monica Pier.
2.Los Altos
Los Altos is a small suburban city in Santa Clara County that consistently ranks as one of the most expensive cities. The city sits right between San Francisco and San Jose, offering many picturesque neighborhoods as well as a small commercial district with notable restaurants and cafes.
3.Los Angeles
If opportunity, inclusive culture, rich history, a spectacular weather year-round, sweeping beaches and soaring mountains is what you’re looking for, you’ll find it all in Los Angeles. Of course, all these come at a price; and if you’re looking to build from scratch in the City of Angels, make sure you’ve got the pockets for it. The most expensive homes in Los Angeles can be found at Bel Air, Beverly Hills, Hollywood Hills, and Holmby Hills.
Despite its humble origins as a lima bean ranch, legendary Beverly Hills is now world-renowned for its exclusive, gated communities, posh mansions, lush green parks, exclusive shopping on Rodeo Drive, and high-end restaurants.
And on the north of Los Angeles lays Hollywood Hills, with many enclaves and neighborhoods offering the perfect respite from urban living and yet remains closely connected to LAs' creative energy. The famous Playboy Mansion worth $200M is the most expensive house in Hollywood Hills, maybe all of California. Other expensive luxury homes include Greystone Mansion, Spelling Manor, and Palazzo di Amore.
4.Palo Alto
Right up the road from Los Altos, this sizable city Palo Alto is known worldwide as the birthplace of Silicon Valley and the home to Stanford University. It presents many exclusive neighborhoods as well as a thriving downtown area. Just like Los Altos, its strategic placement between San Francisco and San Jose makes it a highly sought-after community to live in.
5.Santa Barbara
Quaint and serene, Santa Barbara is nestled between the Pacific Ocean and Santa Ynez Mountains. It is probably one of the most relaxing coastal cities in California and features amazing weather all year round, making it an ideal place for outdoorsy people.
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6.Montecito
The secluded hillside estates in Montecito features dense lush forests on one side and the Pacific Ocean on the other. This small city, which lies 80 miles west of Los Angeles, is a natural enclave for those looking to live in splendid isolation. Chic, yet somewhat under the radar, the area has hiking trails so breathtaking and serene, a mellow and tranquil beach vibe, a Mediterranean climate and stunning natural settings.
7.Malibu
Thanks to the stunning ocean views, chill vibes, and year-long Mediterranean climate, the Malibu is a getaway that has attracted the wealthy who eagerly look to settle down along its rugged coastline. It a haven for nature lovers and the diversity in architecture is oh so fitting, which makes it one of the most recognizable and expensive cities.
8.San Diego
South of LA, San Diego, also known as "America's Finest City", boast undeniably magnetic shorelines, vibrant nightlife, unique attractions, and beautiful architecture. San Diego is an idyllic place to live, with most expensive houses located in areas like Rancho Santa Fe, Del Mar Mesa, Carmel Valley, Torrey Pines, and Torrey Hills.
9.Atherton
An idyllic town centrally located in the Bay Area, Atherton is the epicenter of Silicon Valley money and it only has ultra-high-end properties. The town's prestige privacy and proximity to major tech giants like Google, Facebook and Tesla draw ultra-rich luxury home buyers and builders. Every block is filled with mega-mansions beloved by many high-earning professionals.
10. Ross
Ross, California’s’ small town, is located 36-minute drive north of San Francisco across the bay in Marin County. Known for its quaint, rural atmosphere, it mainly features a residential community and a small main street that offers a handful of restaurants and cafes. The city is bordered by hills, lakes, and various gardens and parks for discerning tastes. If you need to work in San Francisco but want some extra space along with a strong school system, this is the perfect town to build a new custom home.
Expensive taste means a more expensive home
Building your dream home from the ground up grants you the freedom to meet your exact design and usability requirements. The catch lies in how elaborate your taste is. The more complex and non-standard the plan, that is, a home with specific functionality and aesthetic flair, the more you’re going to spend in terms of money and time invested.
All other things being equal, the total cost and value of a luxury home built with high-end features versus a new home with basic features can vary drastically. For example, on the average $20K for basic cabinetry, expect to spend about $100K for top-of-the-line custom cabinetry that is often found in expensive houses in Los Angeles. A myriad of possible items that fall into this category that can make it easy to lose control of the total cost include:
•hand carved fireplace mantles
•custom cabinetry and countertops
•uniquely designed stairway, trims and moldings.
•backsplashes and floor surfaces, bath surrounds, exterior walls, roofing, patios, drywall, glass/mirrors, etc.
•lighting and plumbing fixtures
•superior appliances and systems
While expensive taste can have a considerable impact on the overall cost, these luxury durable options can certainly increase the value of your residential property in the future, which has more positives in comparison to buying a more expensive house.
Questions to ask your luxury home builder
One of the most crucial decision you’ll have to make when building a custom luxury home is selecting a custom home builder. The ideal custom luxury builder is one that meets your meticulous list — but it all starts with interviewing several expert companies to find a fitting match. Below are few questions to ask a custom home builder:
1.How much does it cost to build a 2,500 square foot house?
Generally, the size of your custom home will influence how much you spend. According to HomeAdvisor, most new homes in 2021 measured between 2,500 and 2,700 square feet. Homeowners spend between $250,000 to $500,000 for a 2,500 square foot house.
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2.Are you licensed and insured in this area?
Some states in the U.S require custom home builders to have licenses, while others don't. it’s important that you hire a luxury custom home builder who has proper building license and insurance in your state — a sign that this is a reputable, open, and honest company.
3.What standard features are included in your luxury custom homes?
Standard features are common even in custom homes. Getting hold of these details shines light on what can be upgraded and downgraded to meet your vision, ultimately impacting your building budget.
4.Can you give me a list of references from recent luxury home building projects?
An honest and reputable luxury home builder will present homes you can tour and a list of references of which you can call and find out how the building process went, if they felt comfortable with the builder, and if they ended up with the home they desired.
5.How many luxury homes do you have under construction?
The more homes under construction the less attention you may get on your home building project. An engaged and busy home builder will lightly run into scheduling delays while they complete other projects. It’s therefore important to check how active the builder is and if they would be available to complete your dream home as per schedule.
Final thoughts
Your home is where you spend a huge portion of your life, so you want it to last and serve both your aesthetic and functional needs. When deciding to build the house of your dreams, it’s important to understand that construction costs are unique depending on what you are looking for.
If you’re looking to build a custom luxury home in California, a lot of planning, research and, of course, the right building experts to guide you right from the pre-construction stage to project completion is necessary. The city continues to be one of the most desired places to live and invest in, which means building from scratch can be expensive. Working with an excellent luxury home builder who knows and understands your needs and priorities can significantly help keep your newly built home well within your price range.
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