Santa Fe, meaning “Holy Faith” in Spanish, is the capital city of the state of New Mexico and the oldest state capital in the U.S. It is also the highest capital city, situated 7,000 feet high, nestled in the foothills of the southern Rocky Mountains. The city is generally known as one of the world’s greatest art cities celebrating its cultural identity and embodying its rich history of Hispanic, Anglo, and Native American cultures. These cultural influences are apparent in the city and can be seen in almost everything, from architecture to food. In fact, the city is home to over 5,000 artists, numerous art institutions, and year-round art events. Additionally, the United Nations Educational, Scientific, and Cultural Organization (UNESCO) recognized Santa Fe among the cities wherein the creativity and arts sector contributes the most to the city’s urban development.
The Cost of Building a Home in Santa Fe
A 2,600-square-foot home in the United States will cost around $400,000 or $155 per square foot, according to Home Builder Digest. Fixr estimates a $360,000 quotation, which is somewhat lower. At either price point, homeowners can build a standard-built home with mid-grade materials. The cost structure increases in proportion to the size, quality of materials, and level of finish as the house is modified further.
The average cost of constructing a home in Santa Fe is roughly $450 per square foot. Adopting a value-conscious approach might cut the price from $200 to $400 per square foot. A more luxurious approach, on the other hand, will boost the value from $500 to $800 per square foot. To develop a 2,500-square-foot home in Santa Fe, aspiring homeowners need a budget between $500,000 and $2,000,000. This estimated price could increase even more depending on the factors that will be discussed later.
It can be challenging to give a specific figure for how much it costs to build a house in Santa Fe. The owner’s preferences and needs will influence the final building cost. An issue to be noted is the several challenges in the construction industry that still remain unsolved, most notably the unpredictable state of material pricing. Aside from that, there are a few more factors to consider, as they can significantly impact the overall construction cost. These are separated into two categories: hard costs and soft costs.
The term “hard costs” refers to all the fees associated with the actual home construction. Materials used, labor fees, additional amenities, and landscaping are examples of these.
In Santa Fe, building a house typically costs around $300 per square foot. A 2,500-square-foot home could cost as low as $200 per square foot or as high as $400 per square foot — about $500,000 and $1,000,000. These costs reflect the overall cost of building a home as well as the costs of finished living areas. The total cost of construction may rise even further as more amenities and other house improvements are made. The complexity of the site and the type of house will also significantly influence the ultimate cost.
The cost breakdown is as follows:
Material and labor prices have a significant impact on the entire cost of construction. The materials’ quality, quantity, and type determine this, which is generally about 50% of the construction budget. On the other hand, labor costs vary from 30 to 60% depending on the location, size, style, and structure of the home.
Average labor fees per assignment, as per ZipRecruiter:
- Construction Manager: $38 per hour
- Framer: $18 per hour
- Roofer: $21 per hour
- Electrician: $24 per hour
- Plumber: $23 per hour
- HVAC Technician: $24 per hour
Soft costs are fees that are not directly related to the actual building of the physical home. Typically, these costs are estimated and settled prior to the start of construction. Fees relating to land acquisition and development, local government authorizations, and the overall design and layout of the home are included in this category.
Cost of the Land
According to recent listings in the real estate marketplace Redfin, the median land cost in Santa Fe is around $270,000 or $5 per square foot. The cheapest land available costs only $45,000 for a 34,848-square-foot plot of land — about $1.30 per square foot. It is located along Calle Abeja by Highway 285. On the other hand, the most expensive land costs $1,650,000 for a 31,528-square-foot plot of land — about $52 per square foot. It is located within walking distance of the city’s historic plaza and downtown Santa Fe. Additionally, the land offers expansive views of the enveloping mountain ranges.
The local government implemented a regulation that states that each dwelling unit should have land with at least 4,000 square feet, provided that the area has already reached the maximum gross density. Following this regulation, land acquisition in Santa Fe will cost roughly $5,200 to $210,000.
Permits and Other Fees
Before starting any construction, project owners must secure a permit from the local authorities. Board members will review the plans and determine whether or not the project is feasible. If the request is approved, the project owners will be issued a permit that will act as a green light for the project. If it is rejected, it must be modified, and the plan must adhere to the regulations. This is an important step since it guarantees that the structure and property are safe for the homeowners and the surrounding community.
Each building permit issued in Santa Fe is settled with an administrative fee that costs $40, as per the fee schedule of the city’s Planning and Land Use Department. In terms of the actual building permit fee to be settled, it will be calculated based on the total valuation of the proposed project. The following are the fees for each valuation:
Suppose it will cost $750,000 to build a 2,500-square-foot home in the city. The total building permit fees to be settled will be around $5,000. There will also be an additional fee for reviewing every proposed residential plan, costing 50% of the total building permit fee. If the building permit fee costs $5,000, the residential plan review fee will cost $2,500. In total, the payments to be settled costs about $7,500.
For the other permits required, such as mechanical, electrical, and plumbing, the fees for each are as follows:
Architecture and Design Fees
Architects and designers charge in a variety of ways for their services. The percentage method is the most used approach. When project owners and architects negotiate, other techniques are adopted, such as the hourly method or a hybrid of the two. The cost of a design project is also determined by the designer’s experience, expertise, and reputation. Reputable designers are more likely to charge greater design fees than newer designers.
Architects in Santa Fe typically charge 7 to 12% of the total construction cost in percentage terms. Depending on the workload, complexity, intricateness of details, and the size of the residence, this rate may change. Suppose a $750,000 basic construction charge for a 2,500-square-foot home in Santa Fe. A new single family home’s total architecture fee will range from $52,500 to $90,000. Any additional services are usually charged hourly.
How do Santa Fe’s custom home building costs compare to nearby cities?
Average home building costs across major cities in New Mexico range from $120 to $135 per square foot, or roughly $300,000 to $340,000 for a 2,500-square-foot home. This price mainly accounts for the basic construction of the house and the finished living areas. As mentioned, house improvements, such as material upgrades and adding more space and amenities, will come at a cost and raise the overall cost per square foot. The median price of a new home in each city is shown below:
- Albuquerque: $126 per square foot
- Carlsbad: $117 per square foot
- Las Cruces: $124 per square foot
- Los Alamos: $135 per square foot
- Roswell: $118 per square foot
What Leading Custom Home Builders and Architects that Serve the Santa Fe Area Say
According to Greg Reid of Plan A Architecture, Santa Fe’s current housing costs is a significant increase compared to two years ago. This is generally brought by multiple industry issues, mainly material costs, labor shortages, and lead time delays.
William Prull, president of Prull Custom Home Builders, further confirmed the skyrocketing building costs. He explained that pre-covid prices have an average of 6% annual increase. During the pandemic and the current inflationary period, the annual growth doubled. The issues mentioned by Reid also forced Prull and his firm to order products and materials earlier than usual. Glass doors, window packages, wood flooring, and other materials are being purchased as early as possible. It usually costs them to store these materials but lock in the price and make it available when needed. To help aspiring homeowners that are uncertain and nervous about starting a home building project, Prull gave a piece of helpful advice. He explained that the firm cannot provide a guaranteed home building cost. They can only guarantee that it will cost project owners more if they wait for another year; thus, it is better to build now. Manufactured goods have been increasing multiple times in a year now, and those prices will never go back down.
The Future of Santa Fe’s Residential Construction Industry
Home values typically appreciate yearly. However, this rate has rapidly increased in the past few years. For Santa Fe specifically, single family homes are currently valued at almost $700,000, which is a 23% increase from last year’s $560,000. The median price for single family homes also increased to 10%, according to the Santa Fe Association of Realtors. This was brought about by multiple issues in the housing and construction industry. These problems include high demands for housing, inventory shortage, and construction delays.
According to Kelly O’Donnell of Homewise, a nonprofit organization that helps aspiring homeowners in Santa Fe, the city is becoming less and less affordable. With the skyrocketing home prices surpassing the average increase in hourly wages, it is becoming a troubling combination for the residents. O’Donnell and Homewise’s CEO Mike Loftin expressed their concern that this combination may jeopardize Santa Fe’s ability to remain one of the most vibrant cities, as it wouldn’t be able to retain workers and attract employers like before. Rent prices are also bringing the city further complications. With historically low inventory, numerous residents opt to rent, which drives up the rent prices as demand for apartment occupancy increases. In fact, rent prices have gone up by 30% in just one year.
Fortunately, the city and state governments are actively eyeing a more affordable Santa Fe and are exploring various ways to solve these issues. The city council recently approved multiple affordable housing projects amounting to $3 million. They aim to support both low-income renters and prospective homebuyers. Adding to its roster of affordable projects is the Tierra Contenta, a mix of low and moderate-income housing. Alexandra Ladd, Santa Fe’s director for affordable housing, said that the expansion of this community will potentially add about 1,200 units. Calle La Resolana, another affordable housing complex, has also started letting residents move in.
Further helping with the housing demands is the Santa Fe City Council’s approval to loosen casita restrictions. This regulation allows property owners to build two accessory dwelling units. Many consider this a great help to the industry as it increases the number of rental properties in the city. Additionally, over 29 new accessory dwelling units were built a year after the regulation change.