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

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On the north-central Gulf Coast, the city of Mobile is nestled along the Mobile River near the mouth of Mobile Bay. It is Alabama’s sole saltwater port and is vital to the city’s economic health. This earned the city’s nickname “The Port City.” Additionally, it is also one of the Gulf Coast’s culture-rich cities. It became a melting pot of culture after adopting various international influences, including French, Spanish, Creole, African, and Catholic heritage, as well as the British and American influences. This allowed the city to produce and showcase various art forms and entertainment. A large concentration of historic architecture, a professional opera, a symphony orchestra, a renowned ballet company, and numerous art museums are only a few examples. Additionally, Mobile is recognized as the birthplace of Mardi Gras celebrations. The city is behind the United States’ oldest organized carnival celebrations dating as early as 1830.

The Cost of Building a Home in Mobile

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Although it may appear like buying a house is a simpler procedure, this does not mean that all of the items on the checklist will be fulfilled. A customized home allows families to design it exactly how they want it to be and to match their family’s needs. Owners can set a budget and focus on fitting their goals and requirements into their future dream home. This will enable them to stay within their budget and avoid going over.

The National Association of Home Builders (NAHB) estimates that a new single family home in the United States will cost around $300,000 to build. Value-conscious homes are usually between $100 and $200 per square foot, whereas luxury residences are priced between $200 and $500 per square foot. The cost is directly influenced by the project’s customization, complexity, finish quality, size, and location.

The cost of building a home in Mobile ranges from $100 to $500 per square foot, which is within the NAHB’s estimated range. Value-conscious homes cost between $100 and $150 per square footmid-range homes cost between $150 and $300 per square foot, and high-end homes cost between $300 and $500 per square foot. Thus, to build a 2,500-square-foot home in Mobile, aspiring homeowners will need an estimated budget of roughly $250,000 to $1,250,000.

Keep in mind that the values above are simply estimates. Depending on the owner’s customizations, prices may still decrease or increase. They decide what can be added and what can be removed. However, various elements must be considered as they directly influence the total cost. These are separated into two categories: hard costs and soft costs.

Hard Costs

Hard costs pertain to the factors involved in the physical building of the home. This includes the construction costs, materials, labor, and landscaping. Extra amenities or home additions are also included in this category, alongside heating, ventilation, and air conditioning  (HVAC), electrical, and plumbing systems.

Mobile’s median cost for basic home building is around $115 per square foot. This estimate may decrease to $90 per square foot or increase to $200 per square foot, depending on the quality of material used. Basic construction costs for a 2,500-square-foot home will cost between $225,000 and $500,000 to build, excluding site work, land, and other expenses beyond construction costs.

The cost breakdown is as follows:

Labor fees, as per ZipRecruiter:

  • Construction Manager: $36 per hour
  • Framer: $17 per hour
  • Roofer: $19 per hour
  • Electrician: $21 per hour
  • Plumber: $23 per hour
  • HVAC Technician: $22 per hour

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest.

Soft Costs

Soft costs refer to the fees that go beyond the actual building of the physical home. Usually, these expenses are planned and settled before the construction begins. This category includes fees associated with land acquisition and development, authorizations from the local government, and the overall appearance and layout of the home.

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

Cost of the Land

According to recent postings on Zillow and Redfin, the average size of land available in Mobile is 15,787 square feet or about 0.4 acres. In terms of price, the average listing price is $73,300, or $5 per square foot. The most affordable property costs $19,000 for a 37,984-square-foot land — about $0.50 per square foot. It’s in Hillsdale Heights and is within a 3-to-5-minute drive from the University of South Alabama. On the other hand, the most expensive land costs almost $300,000 for an 11,848-square-foot land – approximately $25 per square foot. It’s in the heart of the city’s vibrant downtown along Church Street and is within walking distance of nearly every establishment.

The minimum dimensions required for each single family dwelling are determined based on the usage of water supply and sanitary sewerage systems, as per the city of Mobile’s Subdivision Regulations. Each property should have at least 60 feet wide dedicated for drainage easements. The minimum lot required and its respective conditions are as follows:

Following the regulations set by the local government, residential land acquisition in Mobile is estimated to be around $36,000 to $200,000.

Permits and Other Fees

The Permitting and Predevelopment Office requires a permit for every home construction project. This ensures that homes comply with the building code’s requirements, guaranteeing everyone’s safety. This will also be used as a signal to begin construction activities. Project owners should call the Inspection Services office if they have any questions or concerns before starting any work.

Every residential building permit fee for new constructions is charged with a minimum fee of $200, as per the local government. As for the expenses to be paid, the permit for one- and two-family dwellings is determined based on the project’s total square footage. Each square foot costs $0.42. Assuming a new home project has a size of 2,500 square feet, the total building permit to be settled for this project costs $1,050. This only applies to air-conditioned spaces, and the estimate already includes fees for building, electrical, mechanical, plumbing, roof, and other miscellaneous permits.

Keep in mind that these permits are subject to be invalid unless building operations start within six months after issuance. Additionally, the permit may be suspended if the project is abandoned for 180 days after construction has already begun.

For the other fees to be settled, the local government also collects property tax from its residents. They solicit an average of 0.5% of the property’s assessed fair market value, one of the country’s lowest median property tax rates. Residents in the city pay an average of almost $700 annually for their property taxes — the fifth-highest average in the state and nearly 270% cheaper than the national average of $2,580.

Architecture and Design Fees

Architects and designers quote in a variety of ways. Percentage and hourly are the most frequent methods. When project owners and architects negotiate, other strategies, such as a hybrid of the two, are adopted. The value of a design also depends on the designer’s experience, expertise, and reputation.

Architects often charge between 5% and 15% of the total building cost for new home construction. Depending on the details, complexity, and scope of work, this estimate may still increase or decrease. Renovations are more expensive — typically 15% to 20% more — because they must work around the existing structure of the house. Suppose a 2,500-square-foot home in Mobile costs $287,500 to build. The total architectural fees for this project ranges from approximately $14,400 to $43,150.

The hourly rate is a less commonly used method than the percentage. According to ZipRecruiter, architects in Mobile charge an average of $37 per hour. A basic architectural service will take between 480 and 600 hours to complete and cost between $17,800 and $22,200. On the other hand, a complete architectural service may take up to 1,095 hours and cost around $40,520.

How do Mobile’s custom home building costs compare to nearby cities? 

Alabama is located in the country’s southern region, specifically the Southeastern part. The state is one of the lowest-costing states in the Southeastern area, ranking 9th out of 12 states with an average listing price of $105 per square foot, as per Business Insider. This estimate is in parallel with the region as a whole. Records show that the median building cost in the south is only $110 per square foot, which is around 14.5% cheaper than the national average and is the cheapest among the four main regions.

Home construction costs in Alabama’s major cities are generally consistent, ranging from $110 to $122 per square foot — roughly $275,000 to $300,000 for a 2,500-square-foot home. As mentioned earlier, the median cost for basic home building in Mobile is $115 per square foot. The following is the average home building value for each city, including the percentage difference from Mobile:

  • Anniston: $112 per square foot, 2.7% cheaper
  • Auburn: $122 per square foot, 5.7% more expensive
  • Birmingham: $112 per square foot, 2.7% cheaper
  • Decatur: $110 per square foot, 4.5% cheaper
  • Huntsville: $112 per square foot, 2.7% cheaper
  • Montgomery: $116 per square foot, 0.9% more expensive
  • Tuscaloosa: $116 per square foot, 0.9% more expensive

The Future of Mobile’s Residential Construction Industry 

The city of Mobile is known for its affordability. Single family homes in the city are currently valued at roughly $190,000, 114% cheaper than the national median value of approximately $400,000. Despite the city having a faster home appreciation rate than the national average — around 7.2% and 5.7%, respectively — Mobile is still more affordable than most cities. Experts also believe that the city is heading in the right direction as both the real estate market and residential construction industry remain active and steadily increasing.

An outcome of Mobile’s affordability is that it continues to draw attention to aspiring homeowners, first-time buyers, and those who are interested in investing in real estate. Although high demand for housing is usually good news, this may not be the case for this period. The sudden influx of prospective home buyers and builders has put a strain on the market and the construction industry. Various issues in the sector, such as the plummeting of home inventories, supply chain issues, and lack of labor workforce, made it challenging for the industry to match the demand. According to Mobile’s Comprehensive Housing Market Analysis, the U.S. Department of Housing and Urban Development is expecting demand for 1,975 new home units over the next three years. Currently, at least 340 homes are under construction and are expected to meet part of the demand upon completion. Additionally, new home constructions are concentrated in the city’s southwestern region. A subdivision is also in the process of completion and is expected to produce about 90 homes. With the economy and borders slowly opening up after the global pandemic, experts forecast that home listings will gradually increase and new home constructions will be rampant. These will further combat Mobile’s difficulty in matching the demand for housing.

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