Huntsville is the county seat of Madison County and is located in the Appalachian region of Alabama. With more than 215,000 residents as of 2021, Huntsville is Alabama’s most populous city, overtaking Birmingham. Nicknamed “Rocket City,” the metro is known for its critical role in the space race by housing the Marshall Space Flight Center (MSFC). It is the largest National Aeronautics and Space Administration (NASA) center and has supported the said agency for over six decades as the lead branch for the development of rocket propulsion systems and technologies.
With the COVID-19 pandemic affecting every city across the globe, the nation’s national, city, and state governments are focused on moving towards pre-pandemic numbers or even better. While other cities are still struggling with labor shortages after the early era of the Great Resignation, Huntsville was able to recover to its pre-pandemic economy by the third quarter of 2021. With the great response to the COVID outbreak, while still being affordable, people from bigger and more expensive cities are choosing to move and settle in the area. It is reported that the Huntsville metropolitan area ranks fourth among the “magnet for millennials” cities and sixth on the tech hub for growth potential list. Ranking and review website, Niche, also places Huntsville in sixth place on the list of Best Cities to Buy a House in America, and 31st place in Best Places to Live in America.
With that being said, prospective residents and developers ask: how much does it cost to build a home in Huntsville?
The Cost of Building a Home in Huntsville
Nationally, building a 2,000-square-foot home costs an average of around $300,000 according to Forbes. Homes of the same size in Alabama would cost $267,620, or around 10.8% lower than the national average. The current home inventory of Huntsville is the lowest in 20 years according to the Huntsville Association of Realtors. The problem with this is that home buyers are getting outbid by investors and are pressured into building homes instead. However, even with the improving state of the construction industry, there are still the issues of delays and long waiting lists for certain materials and appliances. Realtors also saw a surge in out-of-state investors from bigger cities in California and New York, most of whom will purchase the property, build a home, and then rent it out.
The price of a custom single family home in Huntsville varies with the materials, labor, and professional services required to complete it. New home construction usually includes factors that fluctuate independently from each other, such as framing, foundation, plumbing, interior, and exterior finishes. There may also be city-required documents to fill out before starting the construction. All of these can fall into either the hard or soft costs of building a home.
The hard costs are expenses that fund the physical structure and construction of the house. These include the materials, landscaping, labor, and even the total building value. In Huntsville, standard-construction homes may start at $170 per square foot, while middle-range single family homes cost around $199 per square foot. As for luxury or high-end homes, these may cost $218 per square foot or higher.
Starting with the framing, Manta shares that the average installation costs around $4,415, and can go as high as $7,949. For exteriors, Huntsville-based contractor, Advanced Roofing & Construction, shares that the price of asphalt roofing costs anywhere from $3 to $7, while metal roofing is priced from $5 to $14. Generally, the price of roofing in new construction depends on the materials, roof accessibility, home square footage, size, and complexity of the overall design. Exterior finishing in Alabama can cost a project around $37,000 to $54,000 according to HowMuchly.com, depending on the complexity of the design and the materials available.
Systems such as electrical, plumbing, heating, ventilation, and air conditioning (HVAC) usually include the cost of labor in addition to the materials and appliances. For electrical services, Manta reports that the average cost is $367 and can go anywhere from $95 to $770, while plumbing services cost anywhere between $96 and $697. The cost of HVAC systems depends on the size of the home, the habitable space, and the model and type of system to be used. For central air conditioning, 5Estimates shares that the system may cost from $4,740 to $12,315, while the installation labor of a technician ranges between $90 and $150 per hour.
Over the last year, the price of raw materials, especially those used in construction, skyrocketed. The price of lumber reached $1,700 per thousand board feet at its highest around May 2021 and eventually dropped to 47% of that price a month later. Raw commodities like aluminum, copper, and steel, which are still widely used in construction, are also affected by shortages. With that, builders had to compromise. Instead of choosing the type of material that they would want to use, they had to choose what was available due to the short supply and the long waiting times. Project owners are advised that if a project involves lumber or new windows, they would have to be patient since even the most basic materials needed to have months of waiting time.
Soft costs are the expenses that go beyond the actual construction of the home, such as architectural design, land development fees, building permit fees, engineering fees, and other miscellaneous expenses.
Cost of the Land
In constructing your new home, getting the best lot is crucial for the process. Generally, prices may vary due to factors like proximity to metropolitan areas, views, amenities, and land topography. In Alabama, land prices range from $90,000 to $100,000, but in Huntsville, the average lot price is $370,629 as per real estate listing sites. This value may still increase depending on the development status of the lot since some of the listed properties may be undeveloped for residential construction.
The cheapest land available as of May 2022 is listed on Redfin and consists of three adjoined lots priced at $20,000. The cheapest property available per square foot is $0.28, from a 15.98-acre property listed at $192,000. As for the most expensive per square foot, it is a 5,662.8-square-foot property listed for a total of $299,900 or $52.96 per square foot.
Land site preparation is also important especially if the project owner is not familiar with the land topography or the area conditions. Knowing and addressing these before proceeding with the construction may help eliminate factors that may negatively affect the project and design, or even add unavoidable expenses. Some contractors charge $300 per hour for the consultation.
Permits and Other Fees
Permit applications can be submitted online through the Huntsville Inspection Department. The cost of new single family home permits depends on the total square footage of the home, and the total amount of space that is heated or unheated.
The total of each area type is to be added and when multiplied to 0.0055, will result in the permit cost of the home. For example, if a home’s heated area is 2,500 square feet, with 500 square feet of unheated space, like a porch or garage, then it will be $37,500 for the heated space and $3,750 for the unheated space. Adding those and multiplying by 0.0055 will give approximately $227 for the final permit fee.
Other building permits are to be calculated using the total project cost multiplied by 0.0055, while other work types such as electrical, gas, plumbing, and mechanical, are to be permitted by the appropriate contractor.
Architecture and Design Fees
Architecture and design fees vary with the size, scope, and complexity of a project. The needs and lifestyle of the client also contribute to the overall or final design. Some project designs may be simple and straightforward, while some may require extensive research and attention to detail. Typically, the cost of architecture and design is computed using a percentage of the total construction cost, but some firms and professionals may charge a fixed rate. Nationally, architect rates range anywhere between 5 and 20% of the project cost. For Huntsville, HomeYou reports that hiring an architect in the area costs around 2 to 15% of the total construction cost. A Huntsville-based contractor offers an $8,000-floor-plan package that already includes land preparation costs, soil tests, design advising, and a fully-drafted floor plan set.
How do the home costs in Huntsville compare to other nearby cities?
Home prices in Huntsville are increasing so much that experts are advising prospective homeowners to purchase one immediately instead of waiting for another housing market crash. Compared to 2021, the average home price in the city is higher by $55,000. According to Realtor, the median home price in Huntsville is $315,000, which lies in the middle of these other two nearby cities. This is an increase of 16.7% year-over-year, with the median sold price being $409,800. On average, homes spend around 75 days on the market before they get sold.
Athens is the seat of Limestone County in Alabama and shares a boundary with Huntsville. The median home price in the city is higher than Huntsville at around $324,900, or $157 per square foot. Realtor reports that this year’s median home price is 30% higher than the previous year.
Decatur is the largest city in Morgan County, Alabama, as well as its seat. The city is known for the Alabama Jubilee Hot Air Balloon Classic, held annually on Memorial Day. According to Realtor, homes in the area are listed for an average of $230,000 or around $125 per square foot. With a year-over-year increase of 21.1%, the median sold price is $173,500. On average, homes spend around 45 days on the market before they get sold.
The Future of Huntsville’s Residential Construction Industry
Huntsville is currently focusing on the rehabilitation and development of the city. Last April, the Huntsville’s Community Development Department (HCDD) and a team of volunteers helped restore the homes of senior residents to livable conditions. For non-residential upgrades, concrete structures in around 50 streets, including curbs, gutters, sidewalks, and driveways, will be improved this year as part of a $6,900,000 resurfacing contract. For new developments, reports show that Huntsville has approved more permits in 2021 than in the prior years. With more people moving in for work and the low cost of living, the city government needed to satisfy the increasing housing demand. Early this 2022, a $73,000,000 multi-family dwelling was approved to be built on 17.55 acres of land and will feature over 300 apartments. The project will be led by the Michaels Organization, which is known to have owned and operated affordable apartment complexes all across Alabama. Another project, which is set to be completed by the end of 2022, is a $200,000,000 mixed-use property and will include over 800 residential units.
Despite the efforts to improve affordable housing, major projects are set to either start this year or end around the last quarter of 2022. Some prospective homeowners may opt to instead purchase existing homes, and for that, the Alabama Housing Finance Authority (AHFA) recently launched its assistance programs for first-time homebuyers. This includes downpayment assistance of up to $10,000 and 1% of the loan amount in grants. The HCDD also has its own local first-time homebuyer program, which also offers downpayment assistance of up to $7,500. The other problem if homebuyers do purchase homes with the intent to renovate is that there may be some delays. Homeowners back in 2020 saw the pandemic as an opportunity to remodel their homes, and up until now, some projects are still unfinished. With smaller projects battling for priority with new home construction, project owners are advised to look for niche contractors instead.
Considering building a home in Huntsville?
Contact us for a free consultation