Los Angeles is a city synonymous with Hollywood, affluent neighborhoods, and good weather all year round. With the combination of great things this city has to offer, it has consistently graced the list of the most expensive places to build a house in the world. In the last ten years, housing and construction costs in the city have risen to bring down the affordability of homes. Several factors have affected this rise, from increased hard construction costs to the global pandemic, which have also impacted the residents’ sources of income.
Recently, California experienced an influx of building permits aiming to create move-in-ready homes to recover from the dip in home building in the last three years. However, this made housing prices soar up to over a million dollars each. Building a home from scratch suddenly sounds a lot better than buying one. Considering all these factors, residents and developers have one thing to ask, how much does it cost to build a house in Los Angeles?
The Cost of Building a Custom Home in Los Angeles
The cost to build a house in Los Angeles comes out to about $200 for a value-conscious home, $350 for a mid-range type, and $450 or more for a highly customized one. The national average building costs range from $150 for low-end and $400 per square foot or more for high-end. As one of the most expensive cities to build a home, Los Angeles residents may spend an additional 8% of the national average to complete their house.
From 2008 to 2018, the cost of building a home in California has risen to an all-time high number of $222 per square foot. In Los Angeles, where energy efficiency is a leading trend, home construction is expected to land anywhere near $250 to $450 per square foot for a high-end custom home.
Every home starts with a great plan, and this plan includes different factors such as building permits, types of land, construction and design fees, as well as electrical costing. In Los Angeles, building a home is priced higher than the national average, which means building and owning a custom average-sized home here can start at $500,000. The numbers may seem big yet this is further broken down into land & site work, foundation, framing, exterior work, major systems, and interior finishes.
Hard costs refer to anything that contributes to the physical building of the structure as well as labor costs. Some of the hard costs include electrical, plumbing, HVAC, roofing, foundation, and interior detailing. In building a safe and durable dwelling, contractors in Los Angeles put great focus on these parts of the home:
- Electrical Costs for newly-built homes are around $2 to $4 per square foot on average. Added to this amount are the wiring costs that can range from $6 to $10 per linear foot.
- On average, residents in LA have spent $6,000 to $8,000 for their roofing. The most common materials used are asphalt shingles which range from $0.96 to $1.8 per square foot and composition shingles that cost between $0.8 to $2.45.
- Plumbing a newly-built 2,300-square-foot home will cost around $11,500 or $5 per square foot.
- HVAC costs for a 2,500-square-foot home are priced at around $2.4 to $4 per square foot, but this still depends on the HVAC unit that you and your contractor choose to use.
- The concrete foundation of a new home costs around $4 to $25 per square foot.
- While framing will cost around $2 to $12 with an additional material cost of $3 to $12 more per square foot.
- Labor cost ranges from $100 to $250, contributing $200,000 in the total expense
Here’s a sample computation for the hard costs for a mid-range [3,000-square-foot] custom home:
Soft costs in construction refer to indirect construction costs or the intangible parts of the home. These often include taxes, design, equipment, land, and permit fees. It can happen anywhere within the construction process from concept to completion. While soft costs seem less intimidating, these can be problems later on in the construction if overlooked. When computing the cost of construction, one will typically find that soft costs take up as much as 25% to 75% of the whole construction budget. Listed below are some of the soft costs that are necessary for building a home:
Cost of the Land/Type of Land to Buy
As the second most populous city in the US with an increasing 3.8 million residents, you might be wondering, where do I build my home? Luckily, Los Angeles is home to a vast variety of lands from city to hillside. And as you might have guessed, these locations also vary in size and permits. Choosing the location of your home in Los Angeles is a crucial decision. According to Zillow, buying of land can start from $3 per square foot for empty lots where the land is more of a neighborhood. But for hillside locations with impressive views of the cityscape, prices can start from anywhere near $20 to $30 per square foot.
When looking for a lot to build a home, Curbed LA shares that “shovel ready” is the best way to go. Shovel Ready lands are also known as “permit ready” lands that have been developed with premade plans for a home which often come at a premium price of about $100,000 excluding the cost of the land itself. However, if you’re looking to build a custom home with unique specifications, you will have to scour the city for lots that can accommodate your plan in mind. These are usually called unfinished lots that require an additional cost for connecting to city sewers, connecting to the city electric grid, and connecting to city water lines.
Architecture and Design Fees
Choosing the right architect and designer for your dream home is the next step after finding the perfect lot to build on. On average, professional architects, engineers, draftsmen, and general contractors work by the hour. Here’s an estimated range or hourly rate of architects and designers in Los Angeles.
These fees are just estimates and exclude materials used by the professionals as well as the type and scope of the project being designed. It is expected that a more detailed or complex home will cost more in terms of hours, materials, and labor used. Ready to get started? Talk to an expert for free ➜
Permits and Other Fees
Permits are an essential part of building a home. These permits will help local authorities track projects and ensure that safety codes are being followed. Permits, like any other services, vary costs/fees depending on the area of construction. In Los Angeles, permits usually cost around $3,135 to $7,400. These include building, garage conversion, electrical, roofing, fence, plumbing, HVAC, and construction fees among other things. It is essential to remember that these are permit fees and not labor fees, which were discussed in the earlier part of this article.
When applying for different types of permits, it is important to understand that these may take a while to get approved depending on the project. Luckily, a few contractors and architects in the city like Kavin Construction, Joel & Co. Construction, Gallo Builders, Inc., and Pacific Green Homes offer clients a one-stop-shop service by taking care of permits and other documentation needed to facilitate the construction.
How do the custom home building costs in Los Angeles compare to cities in the Bay Area?
The state of California generally has 9% higher building costs compared to the national average home building rates across the US. And within the state, different cities have varying construction estimates. If you’re looking to build a home in the state, US News gave a recent list of the best places to live in California. Included on this list are San Francisco, San Jose, and Los Angeles. Building a custom home in Los Angeles will typically cost one to spend $200 to $400 per square foot, while a more detailed home can start from $450. When comparing this to the rest of the Bay Area, this number seems reasonable for the plethora of good things the city can offer. In another cost guide article of Home Builder Digest, different construction prices around the Bay Area were also discussed. Included in the cities mentioned were San Jose, Menlo Park, Oakland, and Brisbane where home constructions are estimated to land anywhere between $143 to $400 per square foot.
Major Custom Home Building Trends Across the Web for Los Angeles
When it comes to home building costs found across the web, prices in Los Angeles vary from one site to the other. Sites like Quora, ProMatcher, Redfin, HomeAdvisor, and other contractor websites offer an estimate of the total construction costs of home building in the area. According to the information provided on public websites and from contractors based in L.A., different home sizes and specifications are a big factor in prices. For example, an entry-level single-family home may range from $150 to $350 per square foot. A mid-range custom home is priced from $350 to $450, and a more elaborate high-end custom home will start from $450. These prices are based on the recent increase and demand for building materials such as lumber, paint, and higher labor costs. In addition, according to REAL RocknRoll Movers, the average budget for building homes in LA typically range from $500,000 to $900,000 to complete an average-sized [2,000-square-foot] home. While a more detailed and exorbitant [30,000-square-foot] home can land anywhere from $13,500,000 and up.
What Leading Custom Home Builders and Architects that Serve Los Angeles Say
We asked home builders and architects who have extensively served Los Angeles about their hands-on experience in the cost of the home building throughout the years. Firms in the area shared their price observation in the last few years with the current trend in labor and materials surge. Want to hear first-hand from these builders? Schedule a consultation ➜
Michael Kavin, CEO of Kavin Construction, said that construction costs before the pandemic for high-end homes were averaging from $375 to $450 per square foot. It can also go up to $700 per square foot for highly customized ones. Broadly affecting the price per square foot is the foundation system, especially those founded on unstable soil. It can cost over $1,000,000 alone for a single residence, which is why he advises all those intending to build to have a Geologist review their properties.
Joel Portillo of Joel & Co. Construction agrees with Kavin that top-tier custom homes cost near $450 per square foot. This type of project involves thorough pre-construction planning to ensure the integration of clients’ lifestyles and future-proof features. The mid-range homes he built start from $350 to $420 per square foot, a value sufficient to include a few extra perks, such as a Wifi mesh network, security camera, speakers, and semi-custom work. For an entry-level home, he mentioned allocating a $275 to $300 budget per square foot would be enough to handle all the basic necessities of a homeowner.
The Future of Los Angeles’ Residential Construction Industry
Prior to 2019, Los Angeles’ construction industry has already been experiencing ups and downs in volumes of people wanting to build residential homes. Ironically, when the pandemic hit, 2020 ended with a pretty strong number of 20,592 market volume, an 8.7% increase from 2019’s 18,940 market volume.
According to Cumming, a leading cost consulting firm in LA, its forecast predicts a rise in annual volume for residential construction for 2021 to 2022 and a dip by 2023. As seen in the graph below, from 2020 there will be a 17.8% increase in the total construction market by the end of 2021.
Additional information from the Public Policy Institute of California’s 2021 report reflects a continuous upward trend in residential construction in California from 2019 to 2021. The increase, specifically in Los Angeles, suggests that builders are looking to attract buyers with ready-to-move-in homes. Although the population has taken a dip and people lost jobs from the recession, there is a growing demand for home construction in the area. According to the Los Angeles Times, the surge in built homes across Los Angeles and Orange County has brought the prices of homes up to $1 million each.
Value Conscious Home and High-End Home
With all the numbers mentioned, you might wonder, where will my allocated budget take me? What kind of home can I look forward to after the long process of home building? To answer these, we featured residential properties that briefly show the difference between a finished home that costs hundreds of millions and a home that costs hundreds of thousands.
Developer Nile Niami teamed up with architect Paul McClean and designer Katie Rotondi in designing this 105,000 square-foot home in Bel Air. Currently priced at $340 million or approximately $2,300 per square foot, this home is second to none. The master suite alone spans 5,000 square feet and features its own panoramic view of the cityscape of Hollywood and a pool upfront. One of the challenges faced during the eight-year design and construction of this home is making an eight-acre space still feel like a home and providing a seamless connection between all areas. To resolve this, the team integrated a balance of high-technology features and customization opportunities that the homeowner can adjust according to his liking. McClean mentioned that the technology package cost is around $8 million to $10 million, a price enough to obtain and install the finest lighting, cameras, network, and sound systems. Other features of this one-of-a-kind home are a commercial-level cinema room, a nightclub, a 50-car garage, a four-lane bowling alley, and outdoor infinity-edged swimming pools.
Although LA is known as an expensive city, some suburbs in the town still offer an affordable lifestyle. When you search which location has a low cost of living, Lancaster is usually on the top of the list. It is where our next featured home is located. With a value of $170 to $200 per square foot, this home unpretentiously serves its sheltering purpose with four bedrooms and three baths. This 2,600 square foot single-family residence also includes a covered patio and in-ground pool/spa.