Cost of Building a New House vs. Buying a New Home: Factors You Can’t Afford to Ignore

Building a New House vs. Buying a New Home | Levi Design Build

We have all been there, everyone in the family is super excited at the idea of moving into a new house. However, as you drive through Los Angeles and begin shopping for a new home, you can’t stop but notice, that most of them are over 50 years old. Which is a truth worth considering; finding new houses in LA is very improbable. There are very few of them, and like everything in this city, whether new or used, it is usually expensive. So why not consider rebuilding your current home? As you will learn ahead, the cost of doing so could be 50% less than purchasing a new home.

There are many benefits to either option, so we will briefly explore the cost differences between purchasing a new home and building your own home. We do want to clarify that the cost of making a new home is also considering a complete home rebuild.

Buying a New Home

We clarified that finding an entirely new home in LA is not something familiar, so the chances are that you will be purchasing a home with several decades of use. In most cases, you will find yourself moving into a house built to attend the needs of the original builders, not yours! And the real benefit of it lies only in the process, not the cost. Sure, purchasing a home requires some credit checks, a lot of paperwork and finding the home you desire. Meaning, that within a month or two you could be moving into your new home.

Apart from the facilities provided by the logistics of acquiring a new family house, when we look at the costs here in Los Angeles, we realize that they are not as friendly as the process. Without a doubt, the price depends significantly on the location of the home; the neighborhood will play an essential role in determining how much you will have to pay. So we are going to look at average costs for purchasing a home in LA based on square footage.

The average cost of a new house is at $600 per square foot. In some areas, it could go as low as $400 per square ft while in areas like Hillside, West Hollywood, and Beverly Hills the cost could go over $1000 per square foot.

The process could be fast. However, this is a hefty price for a home that you have not designed to meet your style preferences or your particular family needs. So let’s take a look at the other of side of the coin.

Rebuilding or Building a New House

If you ask me, there is nothing that makes me feel better than the word custom. It resonates with personalized and VIP treatment. When I hear such a word, I know that the product or service I am receiving is tailored to my specific needs, and as many may consider this a luxury, it is not, especially if you are about to invest over 750k in a new home. Why not spend half that price and get that personalized attention that will place you in your dream home? With the design and functions that will make of your house a paradise.

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Before we look at the costs, let’s make a necessary distinction. There is a vast difference between building from the ground up and building a new house or custom one, which in most cases means completely rebuilding your current home, and the main difference between both lies in city fees that ultimately jack up the price, but we will talk more about that later.

Another crucial aspect to consider before calculating the cost of building a new house is the different variables that will determine the final price. The main variables are:

  1. Design, engineering, architecture and construction cost = avg of $225-$275 per square foot
  2. Cost of finished materials = avg $40 to $50 per square foot (Depends on the quality of the materials).
  3. City fees and permits = roughly around $5000 +/-.

Once these aspects are taken into consideration, you must also factor in variables that depend on the landscape, size of the project, number of stories, shape, type of roof, fixtures/finishes, appliances and design features. Let’s say that the first three variables we considered are pretty standard. City permit costs will usually be around the price range specified before, while labor costs, finished materials and machines use will also be pretty fixed. The other aspects cannot be standard, since each project is unique, and the final price will depend on all these factors we previously mentioned.

What factors determine the labor cost?

These costs will be calculated by determining the scope of the project in the following aspects:


This cost will include: excavation, pouring and backfilling. If the project needs to implement retaining walls, or additions to landscaping to optimize flooding and other foundation-damaging problems, will carry out extra expenses.


Your home’s frame will dictate many determinant factors like the size and location of the roof.

Exterior Finishes:

This part of your home building project will include exterior walls, roofing, doors, and windows. These prices will vary depending on the quality of the materials.

Major Systems Installation:

The types and quality of these systems will affect the total price, and they include plumbing, electrical and HVAC systems.

Interior Finishing:

Interior finishing will bring the desired comfort and feel of your new home. Drywall, painting, lighting fixtures, appliances, flooring, plumbing fixtures and many more of those exquisite details that will make your home unique are also incredibly relevant when calculating the cost. For further information, you can receive a free personalized assessment of your project here!

Like we have stated before, each project is unique! Therefore, you must be very conscientious that the style and taste will determine the type of finished materials. Marble or concrete countertops may increase the price, for example.

Your property land elevation will also mark how sophisticated the engineering work will be, affecting the foundation and framing; this is very true for neighborhoods such as Hillside, where construction costs will rise due to the neighborhoods location and the complexity of the landscape.

If you are not satisfied with your current layout, then you may need to restructure framing and foundation. Or if only certain aspects of the present arrangement need to be changed, then the price will be lower, than for example a complete layout remodel.

This is why it is imperative always to seek the most personalized service. At Levi Design Build we always aim to personalize our attention towards your project needs. From the design process to the final construction, our team will comprehensively tackle all your design/build needs without the need to go elsewhere for further work or assistance, just contact us and start building a new house today.

As you can tell, the difference between buying a new home vs. building one is abysmal! We are looking that it is more than 50% cheaper to make your own home than purchasing a “new” house in the Los Angeles area.

The prices will undoubtedly rise if you are building your home the ground up. Since you have to consider many other different fees, such as the implementation of new power lines, new sewer lines, new water lines, new gas lines and the necessary city permits.

To view some of our excellent reviews, don’t hesitate to visit our Houzz profile

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So what are the main recommendations so that you can have an accurate estimate and that ultimately your project will be on time and budget?

  1. Never do a set of plans without considering your initial budget.
  2. Don’t have an architect work on your ideas without the help of a team of contractors, engineers, builders, and designers.
  3. Not considering the complexity of the reconfiguration, for example, a new foundation.
  4. Have a contingency budget! Not having one could have you compromising your full project or even worst, having an incomplete building. Usually, we recommend a contingency budget of at least 10% of the total to handle any surprises. Trust me, every project has surprises, and you want to be ready for them.
  5. Always work with a complete team! Outsourcing each element of your plan, design, architecture, construction, etc. will only increase the prices and will reduce the effectiveness of your team. It is always harder to have different organizations working on a rebuild. While having one group will increase efficacy and minimize unexpected mistakes that will cost you time and money.

Our team at Levi Design Build is a full-service design/build firm that can handle every aspect of building a new house without the need to consult external sources. We can never highlight this enough: never, ever work without a complete team! Receive a free personalized assessment of your project!

Whether your family should invest in a new home or build one is a decision that we can help you make; it is clear that the primary benefit of building one radicates on the more accessible price and the luxury of having a custom home specifically tailored to your taste and needs. This is a luxury that is more affordable than purchasing a new home, especially if you love the neighborhood you currently reside. But we must be honest, and the truth is that every building project requires time and patience because its complexity is higher than that of purchasing a home, but who wouldn’t want to have a home that they can call their own in every aspect of the word?

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