Cost of Custom Home Construction


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Our essential guide to understanding all the costs involved when you decide to build your custom home in Calgary and surrounding areas.

Building a new home from scratch is no small undertaking. While it’s something that many people dream of, especially once they have been successful in their career and have the money to invest, the sheer size and complexity can put some off.

At Sunset Homes, we have a strong track record of working closely with our clients to help deliver the outcomes they are looking for and creating the home of their dreams.

One of the key areas before you decide to move forward, however, is to understand the true cost of your custom home construction.

A lot depends on the location you are hoping to develop, what builders and architects you use, the land you want to build on and whether you want to invest in new technologies, for example, for a built green, net-zero ready or CHBA net-zero home.

On average, if you are repurposing an existing urban space for an infill customized home, your cost starts around $250 per square feet for your main floor, $275 square feet for upper floor and $40 square feet for basement and garage development. Depending on your selections main and upper can go all the way up to $400 square feet. 

As you might expect, there are a lot of factors involved that will affect the final budget. There are hard and soft costs involved, including architect fees and labor and material costs.

If you want to move out to the suburbs, you may like to consider purchasing land in your ideal location. Building on an acreage, however, can bring higher costs, not least because you need to provide infrastructure for utilities, sewer outlets as well as navigating the rules and regulations of the local municipality.

Here we take an in-depth look at the costs you need to consider and how to get the most from your budget while still achieving your big dream.

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Understanding custom home construction vs buying

The main difference between buying a house and opting for a custom construction in Calgary is you have to do much less work with the former.

The building is already there. You may want to renovate it and add rooms but you don’t have to consider all the implications of creating something entirely new such as architect designs or installing infrastructure for utilities.

If you are planning to build a custom home, you have greater control of the building that you are going to finally live in. For instance, you’ll be able to choose finishing materials like flooring, baseboards, cabinets, etc. that are used in construction, add the rooms you need, be creative and innovative so that your property meets what you and your family are looking for.

Budgeting to buy an existing home and budgeting for a custom home construction are entirely different things. You should check out our blog Cost Analysis: Constructing a Custom Home vs a Traditional Build to find out how what each entails.

Of course, it will take longer to build your own home and there will be a number of hurdles that you will need to overcome. That’s why you should always build a strong relationship with a builder that can deliver the service which helps you move from the concept and planning stage to completion.

One thing is for certain, building your own home is an exciting and life-changing process.

Some common factors that will impact the cost of your custom build include:


1. Inner-city implications

If you’ve found a lot in Calgary’s inner-city there will be several challenges to building a new home. We will need to demolish the old building first. There will be city fees to pay and there can be numerous rules and regulations to take into account.

There are permits for demolition, development, and building, putting in utilities and for additional constructions like a pool. And that’s all before you begin building your new home.


2. Acreages

If you have found an acreage in an ideal location, there are still some challenges. You will need to understand the architectural guidelines that provide a design framework for your property. These may limit your choices and add to the cost of your custom construction.

The most important additional costs are going to come from connecting your new home to the rest of the world. This will include gas, electricity, telephone, and water. Installing a septic tank or sewer will depend on certain factors such as the location and current government regulations.


3. Lot characteristics

Choosing the right lot for your build is likely to take a good deal of time. This selection will have a big impact on what design choices you make and it’s worth taking things slowly. The location and dimension of the ground you purchase are important but so is orientation. At the time of choosing your lot, at Sunset Homes, we can help you by completing a constructability study to make sure the lot is a good match with your vision for your custom home.

There are different zoning rules that may come with design restrictions for the location. For example, R-C2 zoning in the inner-city means that you are able to redevelop your lot into one or even two homes. In other areas, land use may be more restricted.


4. Energy efficiency

Most custom constructions now incorporate energy-efficient measures that, while they will reduce the cost of utilities in the future, may have a cost implication in the short term. This can include options such as solar as well as more efficient but expensive material choices used in the construction.

At Sunset Homes, we are members of the Built Green certification scheme and are focused on sustainable building. That means we can adapt your green build to meet your budget and can include everything from energy-saving lighting to programmable HVAC systems. At Sunset Homes, our building standards are above building code as we aim all our homes to be energy efficient.

To ensure you get the best value for your investment when undertaking a custom construction, it’s important to have the right strategy in place. Check out our post Cost Analysis: Constructing a Custom Home vs a Traditional Build for more information to get you started.

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Understanding who is involved in custom home construction


Whether you want to be heavily involved in managing your custom home construction project in Calgary or prefer to take a back seat, you’re going to need a team of experts that you can trust 100%.

Each of these will have their own cost implications, of course, but it’s important not to cut corners simply because you want to save money.

The expertise you will need includes:

  • Architectural design
  • Interior design
  • A builder
  • Engineering consultants
  • Energy efficiency consultants

How to select a builder

By far the most important step comes when you select the construction company that is going to undertake the major building work for you. Ideally, they should be the right fit for your design. You don’t want a builder that specializes in traditional styles if you want an ultra-modern home, for example.

You’ll also want a builder that is open about costs and will be transparent in their operation. Most new builds don’t go entirely to schedule. There can be delays for a variety of reasons. It’s important to have a strong relationship that you trust to deliver and an openness that benefits both sides.

You should also look to see if your construction company are members of the right industry bodies such as BILD Calgary Region, RenoMark, COR, Built Green, BBB and Progressive Home Warranty.

Cost should not be the only factor when hiring a construction company to do the work. The cheapest quote is not necessarily the best. Make sure that you take your time in picking the right builder and do your due diligence before entering any agreement.

Check out our blog post on the cost of choosing the wrong custom home construction experts.

When it comes to selecting a builder, having good communication becomes key for your custom home construction. At Sunset Homes, we use our online construction software that allows us to enhance collaboration with our clients and all the team working on the project. Through this software, you will have access to follow the most recent details of your project in real-time.

One of the main advantages this construction software provides is that you can connect to your building project from anywhere in the world and from different devices, meaning that you do not need a computer exclusively to have access to your building project that means that you have your construction information at your fingertips from selections, upgrades, financial decisions, questions, documents, photos, and more.

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Understanding the budgeting process

The budgeting process for constructing a custom home is complicated and it’s well worth doing your homework in this area. At Sunset Homes, we organize budgeting into three distinct stages to make it easier for our clients.


Class 3 estimate

The first estimate is based on historical data but, at this stage, there are no architectural drawings. The estimate is calculated on factors such as the style of your home and the overall result you are trying to achieve. It’s designed to give you a rough estimate of what the new build is going to cost and enable you to budget more effectively.


Class 2 estimate

This is a more detailed costing of what the custom home construction is going to cost and by this stage, you will have architect drawings and made some clear selections about what you see as the completed project and the scope of the builder.  


Class 1 estimate

The final estimate will have all your selections nailed down and take into account any adjustments that need to be made following an engineering review. This should give you a pretty accurate idea of your spending and the completion time for your new home.  

You can find out more about the budgeting process in our blog post: What does it cost to construct a custom home?

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Understanding custom construction costs

With any large project such as this, it can be easy to focus simply on the overall cost. Having a global view of your construction budget is fine but you also need to concentrate on individual costs. Taking this approach may help you shave a few significant dollars off your budget and give you a better ROI.

We normally think about soft and hard costs when it comes to a home construction:


Soft costs: These include your budget for the architect’s design, any city fees that you need to pay for, permits, as well as the cost of home insurance. These costs are not actually part of the building process itself but can mount up and have an impact on your budget. It's important to know that not many builders include this when they give you a "cost per square foot" cost, they usually only talk about hard costs.


Hard costs: This is the budget you devote to the construction of your home such as materials and labor, drainage, the interior and exterior of the building, and any equipment needed. It is the highest expense and can be complicated to understand.

Check out our blogs: A rough guide to costing custom home construction and Breaking down the cost of custom home construction.

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Understanding the effects of your selections

What will certainly have an impact on the final cost of your home are the selections you make concerning the design. While these may be ironed out in the initial stage of planning, you might need to make decisions later if, for example, you are in danger of going over budget for a particular aspect of the build.


Allowances vs selections

Construction projects normally have what are called allowances. This is basically the amount of dollars you put into a certain part of the project, for example, the kitchen, or the windows, or the flooring. If the work looks like it’s going to cost more for any reason, you may have to review your selections for other parts of the property to compensate.

At Sunset Homes, we prefer not working with allowances because we don’t want to limit your selections. On the contrary, based on your wants and needs, we establish estimated budgets for your selections based on historical data and with the help of our interior designer, we guide you through your selections to obtain the look your wish for your custom home and keep your budget on track.

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Mid-end and high-end selections


Essential items that you will need to select for your home can include kitchen counter tops, bathroom interior design, flooring and cabinets. The challenge is getting the right selections in place before the build begins and this can take a considerable amount of time. But fear not, with the help of our interior designer, we have made this step fully enjoyable.

It’s important to balance what you ideally want for your dream home and what standard you want to meet. For example, many people look to install solid wood floors which look fantastic but can be a lot more expensive. Engineered hardwood, however, can look just as great and comes at a lower cost.

Check out our blog: Why Choose Engineered Hardwood for Your Custom Home – Beyond Cost for more information.

Small changes in whether you make mid-end or high-end choices could make a substantial difference to your overall budget and give you room for adjustments if other areas of your project look like they are going to go beyond their cost allowance.

Check out our blog on 5 Ways to Reduce the Cost of Custom Home Construction to find out how to keep control of your budget. 

Designing the custom luxury home of your dreams is a big undertaking. It’s also an exciting one. Working with an experienced construction company that is able to help you navigate every little challenge is essential.

At Sunset Homes, we put you the client first and take you from the initial design process to full completion with all the expertise you need. If you are searching for a construction partner that really does deliver at every stage of your new build, contact us today to find out more.

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