Discover the cost of building a home in Florida, including materials, labor, and permits. Get a breakdown of expenses to plan your budget.
When you browse the market in search of a new home, chances are you have quite a few boxes you hope to check. It has to be the right size, the right number of bedrooms and bathrooms, in the right neighborhood near the right schools, and, especially in the Sunshine State, it would be great if it had a pool.
With a statewide housing inventory of nearly 200,000 homes, finding this perfect property can be like hunting down a needle in a haystack.1 It makes sense, then, that many Florida homebuyers are choosing to build the home of their dreams rather than search for it. But what is the cost of building a home in Florida and is it actually cheaper to build a home from the ground up than to spend months looking for one? Read on as we explore the costs of building a home in this increasingly popular state and how our sell-and-stay transaction can add flexibility to either process.
The average cost to build a home in Florida ranges from $270,000 to well over $500,000, with the gulf between these amounts due to the various factors that can drive up the cost of building a new home.2 While there are many variables to consider, let’s take a closer look at the ones that have the most significant impact on price.
Location, location, location. The old real estate saying is much more than a cliché when it comes to building a home, as this factor alone can determine whether your build falls on the low or ultra-high end of the range listed above. Even different parts of the same city can vary dramatically, as is the case with Tampa.
In Hillsborough County, home to downtown Tampa and the Tampa Bay area, a half-acre lot alone can cost anywhere from $145,000 to well over $200,000. But just 30 minutes west, in Polk County, the same plot can be had for $65,000 or less. As you approach the process of home building, carefully consider how important location is to you, as even a 30-minute drive could equate to six-figure savings.
When building a home from the ground up, there are typically two major types of builds: spec homes and custom homes. The difference between these two types of homes is significant, and your chosen path can have a dramatic impact on the home construction cost in Florida.
Spec homes often have established floor plans and design aesthetics set by the designer, with buyers getting to choose between specific layouts and styles. In many cases, spec homes are already partially completed, which allows buyers to make minor design decisions toward the end of construction and move in sooner.
Custom homes, on the other hand, are a more tailor-made experience (with an elevated total cost that reflects the added level of personalization). Layouts, finishes, hidden quirks, and personal touches are all up for discussion with a custom home, allowing buyers to remain involved through every stage of the design and construction process.3 From start to finish, building a custom home generally takes longer than a spec home might. This can come with hefty hidden costs, which we’ll discuss later.
Last but certainly not least, material costs and labor expenses can heavily influence the cost of building a home in Florida. Further, these home building costs are not always fixed. And the greater the demand for housing, the higher these building costs will be. This price elasticity means that the labor cost to build a home in Florida can be as low as $34 per square foot or it can well exceed $100, depending on current demand. Some patient aspiring homebuilders may be able to wait out the current wave of demand, but those in the process of selling a home may not have the same luxury of time.
If the thought of spending $500,000 to build a home is making your eyes water, consider the fact that the costs of building a new home and buying an existing Florida property are more similar than you might think.
To buy a home in Tampa, you’re looking at an average of around $300 per square foot. Those choosing to build will likely pay closer to $280 per square foot, saving money but waiting longer to move into their new homes.
Considering the similarities in price between these two pathways, building a home may seem like the better option, especially for those looking for an added level of customization. But before you decide to go all in on building a home, be mindful of the added costs that come with this approach.
First up is permitting fees, the price of which can surprise many aspiring homebuilders. To secure a building permit, you can expect to pay around $4,000 in permit fees that go directly to your Florida city and municipality.4
Another fee to consider is the overall cost of getting your land ready for home construction. See, not every plot of land will be initially suitable for building. Surveys, soil testing, and site clearing will have to be done before new construction can begin. Surveys and soil testing will likely be completed before you purchase your plot to be sure it’s the right fit for your future build, but site clearing may be done after and for a cost: between $1,500 and $6,000, on average.5
Building permit fees and costs associated with preparing a plot of land may be expected by those familiar with the home-building process, but several costs can come by total surprise. Here are some hidden costs of building a home in Florida to look out for.
Despite its reputation as the Sunshine State, Florida’s weather can be pretty temperamental. To make matters worse, it only takes a few days of heavy rain to significantly impact a home building timeline. Seeing as the summer months are known for semi-regular afternoon storms, choosing to build during this time can mean an extended timeline and the additional costs that weather delays can incur: like overtime fees and rescheduling costs. Fortunately, there’s a chance these costs won’t be your responsibility—just consult your construction contract to be sure.
Financing a new home build is different than a traditional mortgage. Generally, borrowers will use a construction-to-permanent loan, which is meant to finance the construction process before converting to a standard mortgage when the house is complete. During the construction phase, borrowers are only responsible for interest payments. However, the longer the construction process takes, the more interest accrues.
This is another reason why construction delays can be so costly, even if you aren’t responsible for the increased labor costs that can stem from delays.
The last hidden cost of building a home in Florida is one that many don’t even consider: housing and storage costs while construction is underway. While you don’t have to sell your existing home before moving into a new one, waiting to sell can be a costly decision, resulting in a mortgage payment in addition to out-of-pocket construction costs. Selling your home before beginning construction can be nearly as costly when you factor in where to live between selling and buying and having months (or even a year) of storage unit rent.
In the Tampa area, the average monthly price of a two-bedroom apartment currently sits at $1,968.6 A single storage unit can be an extra $100 a month, meaning Tampa residents who choose to sell before building are still effectively paying an additional mortgage throughout the construction process. Plus, with temporary housing, you’ll end up moving twice, which is not only inconvenient, but also incurs extra costs for labor.
For this reason, temporary housing is perhaps the most significant hidden cost of building a home in Florida, but there are ways to avoid this unwanted expense.
See related: Average Homeowners Insurance in Tampa, Florida
Selling your home to finance your new build can mean a year of unwanted housing costs. Choose to wait, and your hard-earned home equity won’t help fund your build. Both approaches have their tradeoffs, only our Tampa sell-and-stay transaction affords you the convenience of each.
When you sell your home to Truehold, you receive your valuable home equity in return. This equity can be used as a downpayment for your construction-to-permanent loan or to fund your house build. But unlike in a traditional sale, you then have the ability to continue living in your home as a renter while your project is completed. This means you don’t have to move out only to move again in a few months, nor do you have to stress about construction delays impacting your lease. You can stay as long as you continue to pay rent, then move out whenever your dream home is ready for you.
When you plan to spend years or even decades in the same home, you want to be sure it’s perfect. And in many cases, building a new home may be the only way to do so. But whether you choose to build your dream home from the ground up or devote your time to finding a move-in-ready version, Truehold’s sell-and-stay option can give you the carefree flexibility you need.
Want to learn more? Connect with one of our trusted representatives today to see how freeing up your home equity while remaining under the same roof can make a world of difference to your home-building (or home-buying) journey.
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