Can You Afford to Build Your Dream Retirement Home?

Many people dream of building the perfect house, from the ground up. Here’s what it costs.

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While house prices have been up and down as of late, they’re still at near historic highs. Instead of forking over a fortune for a new house, many people are choosing to build to their specifications instead. If you are in the mood to build, here’s what creating a dream retirement home could cost.

Per-square-foot costs can increase depending on the lot location, type of materials used, and the addition of custom elements such as built-ins, custom cabinetry and other interior and exterior features. You could be looking at $300 or more per square foot.

Find a nook

First, start by finding the right location. In some major cities, such as Toronto where the average price for a detached home is about $1.3 million, you may have to pay up to buy the perfect plot of land. It may be cheaper to build on an existing property and avoid real estate and land transfer fees.

Or, if you want to build the mansion of your dreams, consider land in a rural area, or in a smaller city like Winnipeg. The lower land price will allow you to spend more on the house itself. “It’s certainly cheaper to build in a smaller town or rural area but often, those people are building luxury, custom homes,” says Krista Hulshof, an architect based in Seabringville, Ont.

If your plot is in a more remote location, there could be extra costs if there’s no existing infrastructure. “A septic system will cost $30,000 to $50,000, a well adds $10,000 to $20,000, and getting hydro connected over what may be a long run is also very expensive,” says Bruce Cromie, a Mississauga-based builder. Consider a new subdivision, where surveys and approvals are already in order.

Cromie says tearing down a house on land you buy or already own could be cost neutral – if the market stays steady. “Your new home will be appraised for more and you’ve gained equity that can offset the overall costs of the rebuild,” he adds.

However, doing a teardown could lead to extra time and costs for permits. “Some neighbourhoods have site plan control and that can add at least three months to the build time, meaning your carrying costs for financing will increase,” says Cromie.

Draw it up

Jason Schilstra, lead designer at Rijus Home Design, a Dunnville, Ont.-based company that designs custom homes, says that once you’ve acquired the land, the next step is finding the right style of house. Bylaws may limit how close you can build to the property line, the building’s height and where features like windows can be placed. You can apply for a zoning variance through the city for some of these changes.

You could purchase pre-drawn or stock plans for a home that meets your needs or get custom plans. Schilstra’s company prices its plans at $1.25 per square foot.

You can also hire an architect and work from scratch. According to Hulshof, architect’s fees for a project can vary from 7.5 percent to 15 percent of construction costs. “It depends on the complexity and scope of the project,” she says.

Ready to build

Next, shop around for a builder. Typically, construction estimates are provided on a price-per-square-foot basis. The average cost to build a new house in Canada is about $200 per square foot – meaning a 2,000 square foot home would come in at nearly $400,000.

Per-square-foot costs can increase depending on the lot location, type of materials used, and the addition of custom elements such as built-ins, custom cabinetry and other interior and exterior features. You could be looking at $300 or more per square foot.

According to Cromie, building up or out can also affect costs. “Bungalows are the most expensive to build on a per-square-foot basis,” he says. The excavation and foundation and the roof and rafters come with high costs, so low, spread-out homes run pricey.

Meanwhile, if you want a full basement and are close to neighbouring homes, you will need additional shoring so you don’t cause damage to these other houses. That can cost between $50,000 to $100,000, says Cromie.

Dress it up

If your design plans don’t cover details such as faucets, cabinetry, flooring and window coverings, an interior designer can help select these finishes and help with furniture choices. Toronto-based interior designer Lori Howard says design could be a flat fee, or hourly rate. Fees are typically between $100 and $200 an hour.

Make a move?

Of course, if you don’t want to wait for your place to be built – and there may be extra costs of living in one place while spending money building another – you can just move to a new abode. However, expect some additional costs: A 5 percent real estate commission on the sale price of your house, land transfer fees, potential renovations if the place isn’t perfect and other unforeseen costs. Do the math on building and buying to see which might be better for you.

Ultimately, the cost of your dream home depends on what you want and what you can afford. Set a realistic budget, look ahead to possible extra costs and get firm, signed quotes. Expect some big decisions and a few delays before your dream home becomes a reality.

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