Construction Secrets: Builder Grade Finish Inflation

Rough estimate time, it’s pretty wide knowledge that it costs about $150 a square foot to build a house. However that’s not really true any more. Beyond some other complicating factors like slopes and floorpan most of that comes down to finish grade inflation. What was standard for a home 20 years ago just isn’t standard anymore. People just have higher standards than they used to. There’s nothing wrong with that but I think it’s important to take a moment and add all those extras up! I also think it’s important to reconsider at least some of those have to have items and think about some smarter upgrades too. So let’s dive in, put a dollar amount on all those upgrades and make sure you’re spending smart on that new build!

What is finish inflation

Not that long ago our homes were finished very differently than they are now. 20 years ago a builder grade home probably had linoleum floors and carpet upstairs. It definitely had laminate countertops and pre-made cabinets. The windows were wood and the siding was vinyl. Homes certainly didn’t ‘come with’ stone patios, stone anything or custom doors. You got ‘boob’ lights, basic facets and electric baseboard heaters. Basically builder grade meant all the cookie cutter stuff that was always on hand at the building supply center. That $150 a square foot price is based on these sorts of finishes. I think now you could probably include some basic ceramic tile and laminate flooring in ‘builder grade’ finishes. However for a time it did include wood trim so there is that.

Our tastes have certainly changed since then. Pretty much everyone now wants stone counter tops, hard wood, vinyl windows, dramatic light fixtures and facets. No one wants colonial doors anymore and a bold entrance door is pretty standard. When it comes to the guts of the house most people here want a whole home heating (or cooling) solution, taller ceilings and many jut outs which makes for a more interesting roof line. All of those things cost a lot more and I’m pretty much ready to declare that $150 a square foot dead at this point and it NEVER applied to renovations in the first place!

How high can it go?

Well let’s take a look at some estimates on a typical 2000 square foot home for add ons:

  • Stone counter tops $4000 – $5000
  • Custom cabinets $ 7000
  • Side panel entrance door $1200
  • Special order interior doors $720
  • Upgraded light fixtures $ 2500 (just do the living spaces)
  • Luxury appliances $2000
  • Hardwood floors $4000
  • Porcelain tile $ 1500
  • Vinyl windows $10000
  • Furnace or heat pump $ 5000 -$10000
  • Uninterrupted power supply $10000
  • Smart home technology $4000
  • Dramatic plumping fixtures $1100
  • Ten foot ceilings $5000
  • Composite decking or stone patio $3500
  • 40 year shingles $1500
  • Custom shower $5000
  • Wall mounted toilet (I really want one of these!) $500

FYI the price estimates I used on this are just upgraded and in no way top of the line. It’s also based on the added cost for a build and not for a renovation. That cost would be much higher. I’ve made the ones I’d be careful about red and the ones I at least consider worth it green. The grand total for all that (minus the power supply and the toilets) is over $61 000 or over $30 per square foot. In my opinion these are all pretty standard now but that means a more realistic cost per square foot is about $185. Of course you can go north of there too. That means your 2000 square foot home will come in with a price tag somewhere around $370 000 and not a cool $300 000.

But why does it happen?

Three things what we see online, in the model home and in our parents homes. Actually it doesn’t just have to be your parents homes. But let’s start with all those pretty online images. You can blame Pinterest or instagram or the influencers themselves but it’s not their fault really. We’re constantly bombarded with images of $60 000 dollar kitchens, $25 000 master spas and mudrooms full of custom cabinetry. And while we all might get that we won’t quite be at that level we also don’t realize all those things are just ads. The goal is to make you want those things that you didn’t just a moment ago just like a Hagen Das commercial. If you start looking at these things like ads then you see them for what they are.

Next is the model home. Most people will hire a builder maybe even in a development if they want to build a new home. Again there’s nothing wrong with that but that home isn’t what you’re shown. Instead you’re invited to tour the model home with every single upgrade available. I don’t think I’ve ever heard of a developer building a bare bones just what’s included home for you to see in real life. Once you see those upgrades in the exact home you want to live in you’ll be shelling out for them too. Plus all your new neighbors will know if you didn’t because they to toured the same model home. Side note and a word of caution if your builder can’t accommodate upgrades (or even downgrades) you want (like insulation, better shingles or efficient heating systems) you might want to find someone else.

Lastly we get to other (older people’s) homes. If you’re looking at an older person’s house you’ve got to realize that they made all those upgrades slowly over time. About 10 years into owning your new home you’re going to have to start replacing things (like appliances, light and plumbing fixtures and maybe even some flooring. The lifetime of most of those other things is about 15-20 years. They probably leveled up slowly one thing at a time. It seems today that people expect to start off where their parents ended up. Building a brand new, turn key home is already an upgrade for most people so keep that in mind.

What to spend on instead?

When it comes to each and every upgrade you have to ask yourself what it adds to functionality. Many if not most of the things on this list don’t really make a space any more functional and a few even make them less so. A basic washing machine will still get your clothes clean and laminate flooring is a lot less likely to scratch than hard wood. Since things do wear out over time remember that this isn’t your only chance to get everything you’ve ever dreamed of. Plus honey often says “you gotta watch it with the fancy stuff, because that $hit just keeps on costing you!” And he’s right, more to buy, install and fix when it breaks.

Think about spending your money in places that will save you money in the long term rather than just for looks. Those ascetic finishes probably don’t add the value you think they do and might even work against you when it’s time to sell if they aren’t to someone else’s taste. Then you can save all that cash and upgrade later if you want. Here are my top considerations:

  • 40 year shingles, since they don’t last forever you’ll save yourself a whole roof replacement cost by installing these which is much more than the upgrade costs.
  • Efficient heating solutions like a ducted heat pump or hot water furnace but I really like the heat pump solution because it gives you cooling too.
  • Extra insulation, insulation is the first eco upgrade to pay you back on your initial investment. The gold standard is spray foam which means you don’t need vapor barrier but also has lots of other benefits like soundproofing and less bugs!
  • Same for energy efficient appliances especially the fridge, hot water tank and dryer. But a clothesline is your best bet!
  • Consider building to R2000 building standards or even better LEED standards for an overall efficiency upgrade.
  • Investing in solar panels can be a great option. But you get your best return on investment if you let the best solar return dictate at least some of the design of the house. A south facing shed roof is ideal! Imagine never ever paying a power bill or even having them pay you!
  • Build a smaller home you save money up front and in the cost of ownership every year going forward. Seriously think about it do you NEED all that space?
  • When it comes to smart home technology opt for devices that can easily be switched out since these gadgets quickly outdate themselves. Who wants the next generation of those terrible intercom systems stuck in their house years down the line?
  • Buy the best windows you can afford they are a major point of heat loss in your home. Also consider adding reflective window film to your windows it does wonders to cut down on air conditioner use.
  • Buy upgrades that use less water it lowers your bill or prolongs the life of your septic system. Either way you save money.
  • Harvest rain water in a cistern or at least install one when you’re digging. The cost to put one in the ground is just the tank when you’re building and with summers getting dryer and dryer you’ll always have the option to use it down the road. Drilling another or deeper well is way, way more!

Ultimately the home you build is up to you but build something you will be happy with and can afford. Don’t let what you see online and in other’s homes push your budget out of the comfort zone. One of the best ways to reduce the lifetime cost of your home no one talks about is borrowing less to build it in the first place or paying off your mortgage sooner. After all no one wants to pay extra in interest to the banks for the next couple of decades. Remember your house is your castle no matter if it has a custom kitchen or not. No matter what finishes you choose the memories you make there will last a lifetime. What upgrade would you spring for first? Did you pay for one you regret? Leave it in the comments below!

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