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How Much Does it Cost to Build a House in Durham?

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With an economy mostly known for its healthcare and pharmaceutical companies, Durham is nicknamed the City of Medicine. The city also has strong information technology and biotechnology industries. Durham companies have shown remarkable adaptability to the effects of the COVID-19 pandemic, with increased job opportunities at the beginning of 2022. The local real estate and construction industries are also seeing more chances of recovery compared to the period following the 2020 economic slowdown.

The Cost of Building a Home in Durham

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Much like the rest of America, Durham is also seeing the effects of the housing boom. Demand for available houses picked up mid-2020 and has only risen since then. It has become something of a norm to expect high demand and low supply, which is causing people to move towards having homes built from the ground up. 

Fortunately for the construction industry, its employment rate has improved close to pre-pandemic levels which will aid it in meeting demand. Most material costs have also reportedly gone down due to restrictions easing up. Builders and project owners will be glad to know lumber prices have dropped 27%, which dropped from $1,515 per square foot to $1,113.

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest. Image Source: National Cost Guide.

Compared to the national average of new home construction costs at $100 to $155 per square foot, Durham’s new home construction cost average is $128.92 per square foot. The specific cost per square foot will depend on the type and quality of the project, ranging between $135 to $241 per square foot. A basic home project would be priced differently from a mid-value and high-end home. Some factors like location and contractor experience will also affect the pricing.

There are also hard and soft costs to take into consideration. Hard costs are understood as the physical aspect of the house, which includes framing, foundation, plumbing, roofing, and flooring. Softs costs, meanwhile, are things like architecture and design, permits, and additional custom features. Home project owners should keep in mind that these costs will fluctuate independently.

Hard Costs

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New home construction projects in the Durham area will cost an average of $280,924 to complete. Prospective homeowners can expect to see prices ranging from $135 to $241 per square foot, although contractors who work for $135 to $138 per square foot are uncommon. Most firms will instead offer their services for anywhere between $139 to $160 per square foot for budget-friendly projects. Mid-value homes, meanwhile, are priced at $161 to $241 per square foot. Anything starting at $242 per square foot and above are luxury or high-end custom homes.

On top of the construction costs, project owners will have to consider the costs of foundation, roofing, HVAC installation, electrical installation, labor, and other hard costs.

Roofing costs differ depending on the type of roof. The table below shows the typical pricing range available for Durham:

In some cases, new roofing will cost about $350 to $500 per square foot, including materials and labor.

HVAC installation prices will also differ depending on type and weight. The table below provides figures project owners can expect to pay: 

Electrical panel costs will range between $1,500 to $3,000. Wood flooring installation can cost anywhere from $6.92 to $9.71 per square foot, including mid-grade solid hardwood. Vinyl flooring, meanwhile, costs about $3.30 to $4.19 per square foot, which includes labor and a mid-grade tile.

Soft Costs

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Soft costs are the aspects of construction that are not physically part of the project itself. These include land, permits, architecture, and design.

Figure 2. Soft cost percentage and average price range of additional fees, determined from the overall cost of custom home building in Durham.

Cost of the Land

Durham is currently undergoing positive population growth. Its population is expected to increase by 2.5% in 2022. With more people moving into the city, the price of land is likely going to go up.

Zillow shows lots with an average cost of $138,654.95 and an average size of 16,062.75 square feet. The cheapest available lot is $40,000 for 20,908.80 square feet, located in Twin Oaks Drive. The most expensive available lot, meanwhile, costs $400,000 for 14,810.40 square feet and is located on Oakland Avenue. 

Redfin, on the other hand, has lots that are priced much differently. The cheapest available lot is $4,000 for 6,011 square feet, located on Joe Louis Boulevard. The most expensive available lot is $7,000,000 for an 80-acre lot on Patterson Road.

Permits and Other Fees 

Durham’s local government has several pages on its local website dedicated to the construction permitting process. Application forms are available as several PDF files on the application page. The application status may also be reviewed through the local government’s Land Development Office software.

The total permitting costs will depend on the specifications of each project, including but not limited to square footage, the number of floors, permit type, and overall project valuation. Below are several tables featuring costs from Durham’s different fee schedules:

Architecture and Design Fees

Durham architects typically charge based on the total cost of construction costs, charging between 10.48 to 11.01% for different services and project complexity. In comparison, nearby city Raleigh’s architectural costs are about 10%.

It is also possible to find architectural firms that charge by the hour or based on square footage. The pricing will differ depending on several factors, including the work request, project location, and the architect’s position, experience, training, and reputation. Some of the common services being offered are layered drawings, project management, concept development, consultation, and site visits.

What Leading Custom Home Builders and Architects that Serve the Durham Area Say

Ken Combs, the owner, and Ray Orzulak, the estimator, at CQC Home, shared figures for different projects. Value conscious homes can be constructed within the price range of $140 to $175 per square foot, while mid-range projects will cost about $225 to $250 per square foot. A more customized and high-end home will be at least $350 per square foot.

According to them, the Research Triangle Park area is undergoing a wave of high demand for homes and a low supply of inventory and labor. Project managers are also ageing out, which exacerbates the shortage of skilled workers. Additionally, there is low interest for construction work in millennials. Both demand and cost of skilled labor will continue to rapidly increase. Cost trends have changed due to both demand and the effect COVID-19 has on the shipments of materials. The fluctuating material costs has affected the estimation process, especially since the fluctuation is week to week. 

The Future of Durham’s Residential Construction Industry

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Market experts are foreseeing a continued increase in real estate prices. Demand will remain the same, with supply struggling to meet it. Homebuyers will eventually shift into beginning new home construction projects, which comes as a relief to the construction industry. The shift is mostly attributed to millennials reaching the homebuying age. 

On top of more projects coming to construction firms, the drop in material costs is expected to make business easier. Lumber prices, which have risen 300% over the course of the pandemic, have dropped 27% as a result of certain restrictions easing up. Having an easier time ordering some of the more common materials will make the construction process easier. However, there are still other important materials that remain costly.

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