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How Much Does it Cost to Build a House in Washington D.C.?

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Named after the first U.S. president and the founding father George Washington, Washington D.C. is the capital city and the only federal district. Besides being home to the Capitol Building and the world’s tallest obelisk, it also serves as a home to over 670,050 residents. More than 15% of its residents speak languages other than English, making the city one of the most diverse cities in the country.

Despite being one of the most expensive cities to live in, D.C.’s thriving economy makes it a breeding ground for numerous job opportunities. Various federal government agencies employ more than 140,000 people locally. Additionally, the median household income is 21% higher than the national average, making the city attractive to young professionals aspiring to grow their careers.

The Cost of Building a Home in Washington DC

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Building a new home in the U.S. typically costs $485,128, as reported by the National Association of Home Builders (NAHB). The U.S. Census Bureau suggests a lower value with an average of $397,800. Putting the values into square footage, home building costs may range from $100-$200 per square foot, sometimes reaching up to $500 per square foot. The price will depend on the materials used, size, and location.

Data from the online contractor platform BuildZoom (BZ) shows that recently built homes in Washington D.C. cost $189-$333 per square foot. More specifically, value-conscious homes range from $189-$287 per square foot, and mid-range homes cost $288-$332 per square foot. High-end homes are usually built with the finest quality materials, with the most customization done, thus costing $333 per square foot and more.

It isn’t easy to give a definitive answer to how much it costs to build a home in Washington D.C. The total building cost will depend on the owner’s wants and needs. Multiple issues in the construction industry are also yet to stabilize, especially on the volatile state of material costs. Besides that, several other factors are still to be considered as these may significantly affect the total building cost. They can be classified into two separate categories: hard costs and soft costs.

Hard Costs

Hard costs refer to all the fees involved in the actual building of the home. These include the materials used, labor fees, extra amenities, and landscaping.

Total home building costs in Washington D.C. typically cost $200,000 to $575,000 or $200-$300 per square foot. The details or value breakdown is as follows, according to Credible:

  • Foundation: $16,600 – $72,000
  • Framing: $16,000 – $95,000
  • Lumber: $25,000 – $65,000
  • Concrete: $1,000 – $10,000
  • Drywall: $10 per sheet
  • Flooring: $1 – $5 per square foot
  • Siding: $2 – $5 per square foot
  • Interior Finishes: $42,000 – $167,000
  • Major Systems installation: $17,000 – $72,000
  • Roofing Material (Asphalt Shingle): $120 per square (100 square foot)

Materials and labor fees are usually the biggest contributor to the hard costs. Materials take about 40-50% of the total building cost. With the recent shortages and price surge, this percentage may possibly increase or decrease until material costs stabilize. As for the labor fees, it varies depending on the location and work done. Typically, it is already included in the estimates given by the contractor. When it is not, the following is a breakdown of the costs for each service:

  • Construction Manager: $4,000 – $43,000
  • Electrician: $50 – $100 per hour
  • Roofer: $5,000 – $10,000
  • Plumber: $50 – $200 per hour
  • Concrete Contractor: $4,000 – $13,000
  • Framer: $10 – $20 per square foot
  • Painter: $35 per hour
  • Carpenters: $31 per hour

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.

Soft Costs

Soft costs cover all the expenses that go beyond the physical home building. These include acquisition of land, permit fees, and architectural or design fees. Most of these are settled on the pre-construction stage, and some are to be paid upon project completion.

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

Cost of the Land

Washington D.C. lands third in the top 20 cities with the smallest home lots in the U.S. With an average of 2,614 square-foot land, it is runner up behind Chicago and Philadelphia. Despite the small size, it has some of the most expensive lots because of its limited availability.

Recent listings in the real estate market site Zillow show that the median price of residential lots in the city is roughly $200,000, or $70 per square foot. The cheapest land available costs $120,000 for a 3,049-square-foot land — approximately $39 per square foot. On the other hand, the most expensive land available costs $300,000 for a 3,049-square-foot land, or roughly $98.39 per square foot.

According to the Zoning Policies of D.C., the minimum lot requirement for a detached single family dwelling is between 1,800-7,500 square feet, depending on the home density. Residential land acquisition in Washington D.C. will cost $126,000 to $525,000.

Land development must be done after acquiring the property. This ensures that the land is prepared for home construction, and that it is within the codes and regulations set by the municipality. This improvement ranges from $135,000 to over $200,000.

Permits and Other Fees

According to D.C.’s Department of Consumer and Regulatory Affairs (DCRA), project owners or contractors can file for new residential permits using the DCRA Permit Wizard. The system can identify all the necessary permits for the entire project and advise the applicants of the estimated total permits cost. Applicants would only have to fill out the forms, supply all the necessary information, submit the application, and then wait for approval before construction starts. This results in an easier and more efficient filing process as it won’t require applicants to go to the office personally; it is also very convenient and safe, especially with the pandemic. The system can be used for all new residential building permit applications, as well as trade, solar, raze, and demolition permits for residential projects.

As for the expenses to be paid, the permits necessary for new construction and its respective fees are shown in the table below, according to D.C.’s Building Permit Fee Schedule:

Recent building permits issued in Washington D.C. showed that homeowners had paid an average of $18,978 to construct their new homes.

Architecture and Design Fees

Architects and designers use various ways to charge their services. Two of the most commonly used methods are by measuring a percentage of the total, or charging by an hourly basis.

In terms of percentage, architects in Washington D.C. typically charge 12% of the total construction cost, as per ProMatcher. Assuming that building a 2,500-square-foot home costs $625,000, the total architecture fee will be $75,000. This fee is only for the agreed-upon scope of work; any services that go beyond that are usually charged hourly.

Design fees usually cost $125 per hour for the hourly rates, excluding the materials needed — printing/copying costs, historic and zoning fees, and engineering if required. Basic architectural work takes around 480-600 hours to complete, bringing the design fees to $60,000-$75,000. Full architectural services take about 1,095 hours to complete, sometimes more as it requires more work. Total design fees will result in roughly $137,000.

How do Washington D.C.’s custom home building costs compare to nearby cities?

Despite being situated in the country’s cheapest region, the District of Columbia was ranked by Business Insider as one of the most expensive states to buy a house in the U.S. The state currently is ranked second, running behind Hawaii.

Data from BuildZoom (BZ) shows that homes recently built in the Washington Metro Area — Washington-Arlington-Alexandria, DC-VA-MD — have an average cost of $200 per square foot. More specifically, value-conscious homes cost $135-$200 per square foot. On the other hand, mid-range homes and high-end homes cost $201-$295 per square foot and $300+ per square foot.

In terms of home values, data from Zillow’s Home Value Index further compares Washington D.C. to the other principal cities in the National Capital Region. Single family homes in D.C. are currently priced at $884,000. The value of each city and its comparison to D.C. is as follows:

  • Arlington, Virginia: $973,000, 10% more expensive than D.C.
  • Alexandria, Virginia: $733,000, 17% cheaper
  • Frederick, Maryland: $430,000, 51% cheaper
  • Gaithersburg, Maryland: $541,000, 39% cheaper
  • Rockville, Maryland: $655,000, 26% cheaper
  • Bethesda, Maryland: $1,310,000, 48% more expensive
  • Reston, Virginia: $676,000, 24% cheaper

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

Justin Sullivan, president of Impact Remodeling and Construction, shared that over the last 15 years, construction costs have increased 5-6% annually. This stable and progressive increase has been disrupted since the start of the pandemic. However, the price also increased in the previous years, reaching over 8-10%. Product shortages, shipping costs, raw material cost increase, and high demand are among the reasons for the sudden influx. Labor shortages are also considered a variable in this as it pushes the labor costs to surge. As for the firm’s services, they usually charge clients $275-$425 depending on the aspects mentioned in the hard and soft costs. Justin also explained that project costs are also determined by the unique scope requirements of each project.

Principal of Lawlor Architects, Steven Lawlor, said that residential projects are still booming. However, he also mentioned that the aforementioned issues are causing significant stress to the construction industry. They expect these to be resolved in the next 8-12 months and hope that the prices will stabilize to be in line with the historic trends. In terms of home building price range, Steven explained that the firm does not have set fees for projects as they charge at an hourly rate. They determine prices based on the work’s size, complexity, and location.

The Future of Washington D.C.’s Residential Construction Industry

Material Shortage

Construction costs have been steadily increasing over the past few years until the pandemic that pushed its number to an all-time high. This was accelerated by pandemic-related shutdowns that caused material shortages across the nation. Lumber shortage was one of the most prominent materials whose prices surged by almost 200%. Its elevated price adds roughly $24,000 to the price of new homes; that’s why homebuilder confidence fell in March, even with the high demand for single-family homes. Construction costs are expected to increase by 6.7% year-over-year. On the bright side, vaccine rollouts across the globe continue, prompting more lumber plants to reopen. This will help the price stabilize and possibly bring down the overall construction costs.

Labor Shortage

Pre-pandemic numbers show that Washington D.C.’s residential construction industry produces about 13,000 housing units annually. Although the city’s inventory is stable, its labor worker shortage is becoming a dilemma. The pandemic has also made matters worse with a delay of adding on new workers. As the economy slowly opens up, the demand for housing increases. COVID-19 also pushed the housing inventory into historically low rates putting the construction industry under pressure to build. Fortunately, everyone is adapting to the new normal. The U.S. Bureau of Labor Statistics (BLS) reported that construction jobs are showing signs of increasing, including D.C. with an overall 1% increase. As long as there will be no disruptions, BLS projects that there will be an average to greater-than-average number of job additions. Construction managers and laborers and helpers are expected to grow faster than average by 2029, with a growth of 8% and 5%, respectively. On the other hand, construction and extraction jobs are expected to increase by 4% through 2029.

Housing Price Increase and Low Inventory is forecasting progressively strong sales in the D.C. real estate market along with a rise in mortgage rates. According to Danielle Hale, the real estate company expects a price increase of 3.8% for D.C. alone. The year 2022 will still favor borrowers as the low mortgage rates are continuously neutralizing the increasing home prices for buyers. Although the recent price surge pushes first-time homebuyers out of the market, it was less felt in the city because of its higher-earning professionals. The company also predicts that the inventory issues will increase by 0.3% and will soon ease out. However, Washington Fine Properties realtor Daryl Judy says that inventory will remain limited possibly beyond 2022, as building new homes is not an easy option due to the city’s small area. Judy also advised hopeful buyers that waiting for the home values to drop might not be the best option. As home prices inflated uncontrollably, experts foresee that this trend will still continue into the following year.

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