How Much Does it Cost to Build a House in Salt Lake City?

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Aside from being the capital of Utah, Salt Lake City is also the central core of the larger major urban area in the Great Basin. The city was dubbed “The Crossroads of the West” because of its railroad tracks that aided the city’s steel and mining operations. This brought an economic boom to Salt Lake City, along with its developing tourism sector based on skiing and mountain-based activities. Additionally, the city attracted international members of The Latter-Day Saints (Mormons) because of its peaceful and secluded ambiance. The church chose the city to be its religious center, which contributed to the city’s economic progress. Its temples and historical monuments became one of Salt Lake City’s most famous tourist attractions.

The Cost of Building a Home in Salt Lake City

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Purchasing a home is relatively common in the country, but since the COVID-19 pandemic struck the nation, housing inventory has dropped to an all-time low, making it difficult to find a home. Bidding wars are a common occurrence in the real estate market, and home values are steadily rising, approaching the cost of construction. As a result, many people are deciding to build new homes and personalize them how they see fit.

According to Home Builder Digest, the cost to build a new 2,600-square-foot home in the county is $400,000. This estimate is within the range gathered from numerous bids on the online contractor marketplace BuildZoom (BZ). The site reports that building a new custom home ranges around $140 to $320 per square foot — about $345,000 to $800,000 for a 2,500-square-foot home.

As for the home building cost in Salt Lake City specifically, the median price of $160 per square foot is also within the given range. Value-conscious homes are estimated to be around $100 to $160 per square foot, and mid-range homes are estimated to be around $160 to $215 per square foot. High-end homes, on the other hand, tend to cost more as project owners opt for more personalization and upgrades. These homes typically cost $215 to $500 per square foot. Aspiring homeowners will need to have an average budget of $250,000 to $1,250,000 to construct a 2,500-square-foot home in Salt Lake City.

Keep in mind that these figures are simply estimates and do not represent the exact costs of building a home in Salt Lake City. The total value will be determined by various factors, such as location, size, site complexity, and home design. Other costs that also contribute to the overall building cost are separated into two categories: hard and soft costs.

Hard Costs

The elements that go into the physical construction of a home are referred to as hard costs. Construction costs, materials, labor, and landscaping are all included alongside heating, ventilation, and air conditioning (HVAC), electrical, and plumbing systems. Additionally, this category covers extra amenities or home enhancements.

The average cost for basic home construction in Salt Lake City is $130 per square foot. It could cost as little as $110 per square foot or as much as $210 per square foot — around $275,000 to $525,000 for a 2,500-square-foot home. These prices, however, only take into account the finished livable spaces. Adding extra amenities, choosing higher-quality materials, and considering the home’s complex design and site difficulty will affect the estimate and may raise the total construction cost.

The estimated value for each house work is as follows:

Framing: $20,000 to $50,000
Foundation: $4,000 to $25,000
Finished Basement: $10,000 to $30,000
Flooring: $10,000 to $35,000
Plumbing: $7,000 to $15,000
Electrical: $20,000 to $30,000
HVAC: $1,500 to $13,000
Roofing: $5,600 to $11,500
Windows: $3,000 to $9,300
Exterior Painting: $1,800 to $4,400
Interior Painting: $4,000 to $11,000
Cabinets: $2,000 to $30,000
Countertops: $2,000 to $4,000
Doors: $5,000 to $20,000
Appliances: $3,000 to $15,000
Lighting Fixtures: $2,000 to $12,000
Fireplace: $1,000 to $10,000

Labor costs take about 30-60% of the building budget, depending on the location, size, home style, and design. These fees are frequently included in the contractor’s estimates. However, depending on the arrangement and negotiations, these personnel may bill project owners. If that’s the case, here’s a breakdown of how much each service costs:

General Contractor: 10 to 20% of total project cost
Construction Manager: $3,000 to $50,000
Concrete Contractor: $4,000 to $13,000
Roofer: $5,000 to $10,000
Landscape Architect: $900 to $4,000
Land Excavator: $1,500 to $5,300
Land Surveyor: $400 to $700
Electrician: $50 to $100 per hour
Plumber: $45 to $200 per hour
Framer: $7 to $16 per square foot
Drywaller: $1 to $3 per square foot

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

Soft Costs

The term “soft costs” refers to those charges that aren’t directly related to the construction of a house. Land acquisition, permit fees, and architectural or design expenses are all examples of these costs. The majority of these are agreed upon during the pre-construction stage, with some to be paid after the project is completed.

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

Cost of the Land

According to recent listings in the real estate marketplace Redfin, the median land cost in Salt Lake City is roughly $900,000 or $20 per square foot. The cheapest land available costs around $290,000 for a 58,506-square-foot plot of land — about $5 per square foot. It is situated close to the foot of Emigration Canyon, making it peaceful and private while being close to the city. The most expensive land, on the other hand, costs $650,000 for a 10,890-square-foot land — about $60 per square foot. This land has expansive views of the mountain and valley while being close to the airport, the University of Utah, and various recreational spaces, such as the Bonneville Shoreline trails and the Downtown area.

The city’s municipal code library states that the minimum lot requirement for single family detached dwellings ranges from 5,000 to 12,000 square feet. The lot area required is dependent on the neighborhood’s density. Following the regulation set upon by the city government, acquiring residential land in Salt Lake City will cost $100,000 to $240,000.

Permits and Other Fees

The building permit fees for new single family homes in Salt Lake City is determined based on the total construction costs, as per the city government. The respective fee for each valuation is as follows:

There is a plan review fee for every project draft. This cost is calculated by getting 65% of the total building permit fee. Suppose that building a 2,500-square-foot home costs $325,000. The total building permit fee for this project would be about $5,300.

Based on permits found in BuildZoom (BZ), homeowners in Salt Lake City paid an average of roughly $8,700 for their home building permits. The least amount for a permit fee would cost around $2,000 for a $300,000 valued project. The most amount paid, on the other hand, costs around $14,500 for a $1,000,000, two-story home.

Architecture and Design Fees

Architects and designers collaborate with clients to bring their ideas to life. They will create preliminary home designs that take into account the owner’s wishes and demands while staying within their budget. The next step is to draft a more complete plan, which will be offered to contractors for pricing and bidding, including being presented to the local government for evaluation. Finally, the architects and designers will work with the contractor and oversee the construction process to ensure that everything goes according to plan.

Most architects charge based on a percentage of the project’s overall costs, typically around 5 to 15%. For Salt Lake City specifically, architecture and design fees usually cost 10 to 11% of the total building expenses. Supposedly building a 2,500-square-foot home costs $325,000. The estimated architectural and design fees will land at about $32,500 to $36,000.

Architects that are highly experienced and have a stellar reputation charge more than others. Though it may cut into the homeowner’s budget, keeping their home safe while being functional and attractive is a wise investment. Owners can work out a flat charge with the architect, but it will still depend on the scope of work. Every additional task will increase the total architectural and design fees, which may be charged on an hourly basis.

How do Salt Lake City’s custom home building costs compare to nearby cities?

Salt Lake City is located in the state of Utah. It is situated in the country’s western region, which is reportedly the most expensive region to build a home in. The west has an average building cost of $160 per square foot — about 31.3% more expensive than the South, the cheapest region.

For Utah specifically, it is considered in the mid-range. It ranks as the sixth most expensive state in the west, with homes valued at around $190 per square foot, as per Business Insider. The state is 27.5% more expensive than the cheapest state New Mexico and is 175.7% more affordable than the most affluent state Hawaii.

Based on bids from BuildZoom, recently built homes in the Salt Lake City metro area — Salt Lake and Tooele counties — range from $115 to $225 per square foot — almost $300,000 to $565,000 for a 2,500-square-foot home. This depends on the aspects previously mentioned in the hard and soft costs.

Home Builder Digest estimates that median home construction prices in Utah’s major cities range from $135 to $150 per square foot or roughly $140,000 to $375,000 for a 2,500-square-foot home. For context, bids on BuildZoom report that recently built homes in Salt Lake City have a median cost of $160 per square foot. The following shows the median home building value for each city, as well as the city’s percentage difference from Salt Lake City:

Clearfield: $150 per square foot, 6.3% cheaper
Green River: $150 per square foot, 6.3% cheaper
Ogden: $135 per square foot, 15.6% cheaper
Provo: $140 per square foot, 12.5% cheaper

The Future of Salt Lake City’s Residential Construction Industry

Everything halted when the World Health Organization (WHO) declared the coronavirus disease a global pandemic. Everything and everyone suffered immensely, including the world’s economy. This produced numerous problems in every industry, with historically low home inventories, supply chain issues, and lack of labor workforce being the most significant ones in the construction industry. This caused a sudden surge in prices for almost everything as the sector could not keep up with consumer demands.

The National Association of Home Builders (NAHB) reported that the recent price increase in lumber, one of the most essential parts in home building, added more than $24,000 to the total home building cost. The executive director of the Salt Lake Home Builders Association explained that everything has been challenging as all aspects of housing are skyrocketing. Builders are doing their best to find a solution to keeping housing affordable and leveled despite being put into financial burden due to its volatile state. In fact, various housing groups, along with the NAHB, pleaded to the U.S. Department of Commerce to find effective ways to increase lumber production. While waiting for resolution, experts advised project owners to carefully review contracts. This will help them understand who is responsible for the rising costs, if they can cancel, or if builders can back out.

Currently, Utah’s housing market is effectively recovering. Bankrate.com ranked the state as the nation’s top housing market for the fastest job growth, low unemployment, low mortgage rates, minimal mortgage delinquencies, and low state and local taxes. This slightly decreased the state’s speed of price growth compared to 2021. Despite these improvements, Utah’s three major cities — Salt Lake City, Ogden, and Provo — are still included in the nation’s top 10 cities with overvalued home prices. Single family homes in these cities have increased by 23.7%, 34.8%, and 28.2% in the previous year — currently valued at $690,000, $405,000, and $555,000, as per Zillow Home Value Index.

Additionally, the Salt Lake City metro area experienced the most notable growth and is considered among the nation’s hottest housing markets. With a 28.1% year-over-year price surge, the metro area ranked sixth among the country’s top 100 metro regions in terms of year-over-year house price growth in the third quarter of 2021. Housing prices in this area are higher than 87% of all major U.S. metro areas.