How Much Does it Cost to Build a 700 sq ft House in California?

How Much Does it Cost to Build a 700 sq ft Single Family House in California?

When it comes to building your dream home, one of the first questions that comes to mind is, “How much will it cost?” This is especially true in California, where housing prices and construction costs are among the highest in the nation. If you’re considering building a small, 700 square foot house in the Golden State, it’s essential to understand the various factors that will influence your total expenses.

Building a house is a complex process that involves numerous decisions, each of which can significantly impact your budget. From choosing the right location and obtaining permits to selecting materials and finishes, every aspect of the construction process must be carefully considered to ensure that you’re getting the best value for your money.

One of the most significant factors that will determine your construction costs is the quality of the materials and finishes you choose. In this article, we’ll explore the costs associated with building a 700 square foot house in California across six different quality classes: Luxury, Semi-Luxury, Best Standard, Good Standard, Average Standard, and Minimum Standard.

By breaking down the costs for each quality class, we aim to provide you with a comprehensive understanding of what you can expect to pay when building a small house in California. We’ll also discuss the potential savings you could achieve by choosing to build the house yourself, as opposed to hiring a contractor.

Whether you’re a first-time homebuyer looking to enter the housing market with a modest, cost-effective home or a downsizing retiree seeking to simplify your life, this article will provide you with valuable insights into the costs of building a 700 square foot house in California. So, let’s dive in and explore the various factors that will shape your construction budget. You might want to read about residential building costs in CA of all single family houses in the state ranging from 700 to 5000 square foot in gross floor area.

Updated Building Costs with 9% Increase for Selected Quality Classes

Table of Costs According to Standard of Quality and Type of Materials Used

List of Updated Costs

• Luxury: $662.80 per sq ft
• Semi-Luxury: $402.81 per sq ft
• Best Standard: $258.01 per sq ft
• Good Standard: $190.11 per sq ft
• Average Standard: $154.12 per sq ft
• Minimum Standard: $121.66 per sq ft

Total Building Costs for a 700 Sq Ft House by Quality Class in California (2024)

• Luxury: $463,960
• Semi-Luxury: $281,967
• Best Standard: $180,607
• Good Standard: $133,077
• Average Standard: $107,884
• Minimum Standard: $85,162

Note: The building costs have increased by 9% in California in 2024.

Unique Aspects of the California Construction Industry

California’s construction industry is unique, characterized by its innovative approaches, stringent regulations, and focus on sustainability. These factors influence the cost and quality of building single-family homes across different quality classes from luxury to minimum standard.

1. Environmental Regulations and Sustainability:California leads the nation in environmental regulations for construction. The state mandates energy-efficient designs and sustainable materials, significantly impacting building practices. These regulations, while initially increasing costs, offer long-term savings and contribute to a healthier environment.
2. Seismic Safety Standards:Due to its high seismic activity, California enforces strict building codes to ensure homes can withstand earthquakes. These safety standards are crucial for protecting lives and investments and are a significant factor in the construction cost differences across quality classes.
3. High Land and Labor Costs:The cost of land in California, especially in urban and coastal areas, significantly affects the overall cost of building a home. Additionally, California’s labor market demands higher wages for skilled construction workers, contributing to the higher costs associated with building homes in the state.
4. Innovative Building Techniques:California’s construction industry is at the forefront of adopting innovative building techniques, such as modular housing and green building materials. These methods aim to reduce construction time, minimize waste, and lower costs, making them particularly relevant in the context of varying quality classes.
5. Water Conservation Measures:California’s approach to water conservation includes requirements for drought-resistant landscaping and efficient water fixtures. These measures are part of the state’s broader efforts to promote sustainability and resilience against drought conditions, impacting building practices across all quality classes.

Building a home in California is an investment that reflects the state’s commitment to safety, sustainability, and innovation. Despite the higher initial costs, the focus on energy efficiency, environmental protection, and resilience against natural disasters offers significant long-term benefits. The California construction industry continues to lead by example, providing innovative solutions that meet the state’s unique needs while setting trends that influence global building practices.

Building Cost Breakdown for a 700 SF Single Family House in California – Wood Frame House

1 – Excavation and Foundations: 9% of Total Cost

• Luxury: $41,756
• Semi-Luxury: $25,377
• Best Standard: $16,255
• Good Standard: $11,977
• Average Standard: $9,710
• Minimum Standard: $7,665

2 – Substructure (Floor Construction): 12% of Total Cost

• Luxury: $55,675
• Semi-Luxury: $33,836
• Best Standard: $21,673
• Good Standard: $15,969
• Average Standard: $12,946
• Minimum Standard: $10,219

3 – Wall Framing and External Finish: 14% of Total Cost

• Luxury: $64,954
• Semi-Luxury: $39,475
• Best Standard: $25,285
• Good Standard: $18,631
• Average Standard: $15,104
• Minimum Standard: $11,923

4 – Roof Construction: 10% of Total Cost

• Luxury: $46,396
• Semi-Luxury: $28,197
• Best Standard: $18,061
• Good Standard: $13,308
• Average Standard: $10,788
• Minimum Standard: $8,516

5 – Floor Finishes: 5% of Total Cost

• Luxury: $23,198
• Semi-Luxury: $14,098
• Best Standard: $9,030
• Good Standard: $6,654
• Average Standard: $5,394
• Minimum Standard: $4,258

6 – Internal Walls and Finishes: 8% of Total Cost

• Luxury: $37,117
• Semi-Luxury: $22,557
• Best Standard: $14,449
• Good Standard: $10,646
• Average Standard: $8,631
• Minimum Standard: $6,813

7 – Ceiling: 5% of Total Cost

• Luxury: $23,198
• Semi-Luxury: $14,098
• Best Standard: $9,030
• Good Standard: $6,654
• Average Standard: $5,394
• Minimum Standard: $4,258

8 – Built-in Bathtub, Shower: 4% of Total Cost

• Luxury: $18,558
• Semi-Luxury: $11,279
• Best Standard: $7,224
• Good Standard: $5,323
• Average Standard: $4,315
• Minimum Standard: $3,407

9 – Built-in Kitchen Cupboards, Countertops, and Bars: 8% of Total Cost

• Luxury: $37,117
• Semi-Luxury: $22,557
• Best Standard: $14,449
• Good Standard: $10,646
• Average Standard: $8,631
• Minimum Standard: $6,813

10 – Plumbing: 12% of Total Cost

• Luxury: $55,675
• Semi-Luxury: $33,836
• Best Standard: $21,673
• Good Standard: $15,969
• Average Standard: $12,946
• Minimum Standard: $10,219

11 – Electrical Installation: 10% of Total Cost

• Luxury: $46,396
• Semi-Luxury: $28,197
• Best Standard: $18,061
• Good Standard: $13,308
• Average Standard: $10,788
• Minimum Standard: $8,516

12 – Special Appliances and Installations: 3% of Total Cost

• Luxury: $13,919
• Semi-Luxury: $8,459
• Best Standard: $5,418
• Good Standard: $3,992
• Average Standard: $3,236
• Minimum Standard: $2,555

13 – Building Permits: 1% of Total Cost, Minimum $200

Please be advised: Permit fees for most wood-frame residences typically fall under Group R3 and Type VB classifications. This estimated 1% fee encompasses plan check fees, building, plumbing, HVAC, and electrical permits, as well as GIS mapping and the issuance of a certificate of occupancy. Additional permits mandated by planning authorities will incur separate charges.

• Luxury: $4,640 (or $200, whichever is higher)
• Semi-Luxury: $2,820 (or $200, whichever is higher)
• Best Standard: $1,806 (or $200, whichever is higher)
• Good Standard: $1,331 (or $200, whichever is higher)
• Average Standard: $1,079 (or $200, whichever is higher)
• Minimum Standard: $852 (or $200, whichever is higher)

Note: The values are based on the total cost of building a 700 sq ft house in California for each quality class, with an applied 9% increase in 2024. The percentages for each building element reflect the distribution of the total cost across different construction phases and components.

Analyzing the building cost breakdown provided for different standards of buildings, from luxury to minimum standard, we can deduce several trends, relationships, and insights about the construction industry and how costs are allocated and perceived. Here are some key observations and the information gained from the breakdown:

1. Cost Spectrum and Quality Relationship

There’s a clear gradient from luxury to minimum standard builds, reflecting a direct relationship between cost and the quality of materials, craftsmanship, and architectural design. As the standard of the build increases, so does the cost, indicating that higher quality and customization come at a premium. This trend underscores the value placed on unique designs, superior materials, and specialized labor in constructing more luxurious buildings.

2. Economies of Scale and Scope

The breakdown suggests that as buildings move towards the luxury end of the spectrum, the scope for customization and unique features increases, which may not directly follow economies of scale. In contrast, average and minimum standard builds, which likely involve more standardized designs and materials, can benefit more from economies of scale, where costs per unit decrease as the quantity of materials or standardized labor increases.

3. Baseline Costs and Variable Expenses

The mention of “$200, whichever is higher” across all categories indicates a baseline cost or a minimum fee that might be related to permits, basic services, or administrative costs that are invariant of the build’s standard. This suggests that regardless of the project’s scale or luxury level, there are fixed entry costs to begin construction, emphasizing the regulatory and foundational expenses inherent in any building project.

4. Market Demand and Consumer Preferences

The existence of various standards from luxury to minimum suggests a diverse market with varied consumer preferences and financial capabilities. This diversity implies that the construction industry has adapted to cater to a wide range of needs and desires, from functional and economical buildings to exclusive, high-end constructions. This segmentation also hints at the potential for targeted marketing strategies and product differentiation within the industry.

5. Regulatory Compliance and Safety Standards

The fact that even the minimum standard builds have a cost associated with them higher than the baseline suggests that there are certain non-negotiable standards and regulations that all buildings must meet, regardless of their luxury level. This emphasizes the importance of safety, habitability, and compliance with local building codes, ensuring that even the most economical constructions are deemed safe and fit for purpose.

The building cost breakdown reveals several key trends about the construction industry, including the relationship between cost and quality, the impact of economies of scale, the presence of baseline costs, diverse market demands, and the importance of regulatory compliance. These insights can help potential builders, investors, and policymakers understand the dynamics of construction costs and the factors that influence them, leading to more informed decisions and strategies in the construction sector.

Cost of Building Versus Buying a House in California

As of  April 2023, we can provide a general comparison between the cost of building a 700 square foot (sf) house based on the standards provided in our earlier discussion, and the cost of buying a similar house in California, using market trends and available data. However, please note that real estate prices fluctuate frequently, and for the most up-to-date information, it’s advisable to check current listings on real estate sites like Zillow, Realtor, or Redfin.

Cost of Building a 700 sf House

The cost breakdown provided earlier does not specify costs per square foot directly but gives us a framework to estimate the cost categories from minimum standard to luxury. For the sake of simplicity, let’s assume the cost per square foot for construction falls within a range that can be inferred from the categories:

• Luxury: $200+ per sf
• Semi-Luxury to Best Standard: 150−150−200 per sf
• Good to Average Standard: 100−100−150 per sf
• Minimum Standard: Below $100 per sf

Given these ranges, the cost of building a 700 sf house could range from:

• Luxury: $140,000+
• Semi-Luxury to Best Standard: 105,000−105,000−140,000
• Good to Average Standard: 70,000−70,000−105,000
• Minimum Standard: Below $70,000

These estimates do not include the cost of land, which can significantly vary across California, nor do they account for permits, fees, or the potential need for site preparation and utility connections.

Cost of Buying a 700 sf House in California

As of early 2023, the real estate market in California remains one of the most expensive in the United States. The cost of buying a home varies widely depending on the location within the state, with metropolitan areas like San Francisco, Los Angeles, and San Diego commanding premium prices. For a 700 sf house, the price can range significantly:

• In high-demand areas, such as San Francisco or parts of Los Angeles, prices can easily exceed 1,000 per sf, making a 700 square foot house potentially cost $700,000 or more.
• In less expensive areas, particularly in the Central Valley or more rural locations, prices may be closer to 300−500 per sf, suggesting a 700 sf house could range from $210,000 to $350,000.

Comparison

Comparing the costs, building a new house might seem more cost-effective, especially if aiming for a minimum to average standard build and if the land cost is reasonable. However, in high-demand areas of California, the cost of land and construction combined can quickly approach or even exceed the cost of buying an existing home.

Moreover, the time and effort involved in building a new home—securing permits, managing construction, and the potential for delays—should also be considered. Buying an existing home offers immediacy and the convenience of moving in sooner but might come with higher upfront costs, especially in premium locations.

The decision between building and buying in California depends on various factors, including budget, location preferences, and the value placed on customization versus convenience. While building a home can offer cost savings and customization, the high cost of land and construction in California can narrow the gap between building and buying. Prospective homeowners should carefully consider their options, taking into account current market trends, personal preferences, and long-term plans.

What Salary Do You Need To Afford a 700 Square Foot House in California?

To determine who can afford to build a 700 SF house in California across the provided quality classes using the 30-year fixed APR mortgage rates from one of the specified institutions, we will calculate the monthly mortgage payment for each class using the CALHFA rate of 6.250%. This will help us understand the required annual income to afford each house type.

Updated Building Costs for a 700 Sq Ft House by Quality Class in California (2024):

1. Luxury:$463,960
2. Semi-Luxury:$281,967
3. Best Standard:$180,607
4. Good Standard:$133,077
5. Average Standard:$107,884
6. Minimum Standard:$85,162

Mortgage Payment Calculation:

Using the formula for a fixed-rate mortgage payment, we can calculate the monthly payment for each quality class. The formula is:

P = (r * PV) / (1 – (1 + r)^-n)

Where:

• P is the monthly payment
• r is the monthly interest rate (annual rate / 12)
• PV is the loan amount (cost minus down payment, assuming 20% down)
• n is the loan term in months (30 years * 12 months)

Let’s calculate the monthly payment (P) for each quality class:

1. Luxury ($463,960):
   • Down payment (20%): $92,792
   • Loan amount: $371,168
   • Monthly payment: approximately $2,295.33
2. Semi-Luxury ($281,967):
   • Down payment (20%): $56,393.40
   • Loan amount: $225,573.60
   • Monthly payment: approximately $1,396.11
3. Best Standard ($180,607):
   • Down payment (20%): $36,121.40
   • Loan amount: $144,485.60
   • Monthly payment: approximately $893.58
4. Good Standard ($133,077):
   • Down payment (20%): $26,615.40
   • Loan amount: $106,461.60
   • Monthly payment: approximately $658.47
5. Average Standard ($107,884):
   • Down payment (20%): $21,576.80
   • Loan amount: $86,307.20
   • Monthly payment: approximately $533.85
6. Minimum Standard ($85,162):
   • Down payment (20%): $17,032.40
   • Loan amount: $68,129.60
   • Monthly payment: approximately $421.38

Affordability Based on Annual Income:

The guideline is that your monthly mortgage payment should not exceed 28% of your gross monthly income. Let’s calculate the required annual income for each quality class based on this guideline:

1. Luxury:
   • Required Monthly Income: $2,295.33 / 0.28 ≈ $8,197.61
   • Annual Income: approximately $98,371.32
2. Semi-Luxury:
   • Required Monthly Income: $1,396.11 / 0.28 ≈ $4,986.11
   • Annual Income: approximately $59,833.32
3. Best Standard:
   • Required Monthly Income: $893.58 / 0.28 ≈ $3,191.36
   • Annual Income: approximately $38,296.32
4. Good Standard:
   • Required Monthly Income: $658.47 / 0.28 ≈ $2,351.68
   • Annual Income: approximately $28,220.16
5. Average Standard:
   • Required Monthly Income: $533.85 / 0.28 ≈ $1,906.61
   • Annual Income: approximately $22,879.32
6. Minimum Standard:
   • Required Monthly Income: $421.38 / 0.28 ≈ $1,504.93
   • Annual Income: approximately $18,059.16

The required annual income to afford to build a 700 SF house in California, depending on the quality class and using the CALHFA 30-year fixed mortgage rate, ranges from approximately $18,059.16 for a minimum standard house to $98,371.32 for a luxury house. These calculations provide a guideline based on mortgage payments alone and do not account for other homeownership costs such as taxes, insurance, and maintenance.

How much can I save by building a 700 sq ft house myself in California compared to hiring a contractor?

Comparing the Costs of Building a 700 sq ft House in California: DIY vs. Hiring a Contractor

To compare the costs of building a 700 sq ft house in California – DIY versus Hiring a Contractor, let’s assume that the costs provided in the previous section are for hiring a contractor. We’ll estimate the costs for DIY by reducing the labor costs.

Typically, labor costs account for about 30-40% of the total construction cost. For this comparison, we’ll assume that labor costs are 35% of the total cost. By choosing to build the house yourself, you can save on these labor costs.

DIY Building Costs for a 700 Sq Ft House by Quality Class in California (2024):

1. Luxury: 463,960∗(1−0.35)=463,960∗(1−0.35)=301,574
2. Semi-Luxury: 281,967∗(1−0.35)=281,967∗(1−0.35)=183,279
3. Best Standard: 180,607∗(1−0.35)=180,607∗(1−0.35)=117,395
4. Good Standard: 133,077∗(1−0.35)=133,077∗(1−0.35)=86,500
5. Average Standard: 107,884∗(1−0.35)=107,884∗(1−0.35)=70,125
6. Minimum Standard: 85,162∗(1−0.35)=85,162∗(1−0.35)=55,355

TABLE: Comparison of Costs:

As you can see, the potential savings by choosing to DIY range from $29,807 for a Minimum Standard house to $162,386 for a Luxury house.

However, it’s important to note that these savings come with significant trade-offs:

1. Time: Building a house yourself will take much longer than hiring a contractor.
2. Skill: You need to have the necessary skills and knowledge to ensure the house is built correctly and safely.
3. Permits and Regulations: You’ll still need to navigate the permitting process and ensure that your work meets all local building codes and regulations.
4. Tools and Equipment: You may need to purchase or rent tools and equipment that a contractor would already have.
5. Financing: It may be more difficult to secure financing for a DIY build.

So basically, while DIY can offer significant savings, it’s crucial to carefully consider your skills, time, and resources before deciding to build a house yourself. For many people, the benefits of hiring a professional contractor outweigh the potential cost savings of DIY.