Real Estate Costs: How Much to Build a House in California

California boasts some of the best beaches and surfing in the United States. All along the Golden Coast, you can find hidden gems everywhere. From beaches to metro city life, from the glitz and glamour of Hollywood to beautiful mountains and endless outdoor adventures, California has it all. 

Now it’s time for a change. You’re ready to relocate to California, or to a different home within the Golden State. The possibilities are endless, but before you get to the point of signing on the dotted line and packing boxes, you’re probably thinking “how much does it cost to build a house in California?” Let’s answer your question.

 

What Are the Costs of Building a House in California?

Forbes says that the average cost of building a house in the United States in 2021 is $300,000 ($150 per square foot). However, they say that average cost of building a house in California is higher at $405,440 (or $202.72 per square foot). Keep in mind that this is an average across the entire state, so you will find places in California where it costs more or less to build a house. 

Of course, these statistics do not apply to the entire state. The cost of to build a new home per square foot in, say, El Centro is 23% higher than the national average, compared to San Francisco at 420% above the national average. Location, location, location!

The average cost of land in California is $39,092 per acre. However, you can find land at a much higher price, like the 1.43-acre empty lot in Silicon Valley that sold for $6.9 million in 2017. 

Solar panels are now required in California on all new homes, which can add an average of $8,400 in construction costs. Permits for other structures on the property, such as pools or porches, can also add to the costs.

Materials account for about 50% of the total cost of construction. Depending upon the type—such as luxury or good standard—the availability of materials can play into the fluctuation of costs. A home with modest square footage with good standard materials might be able to have easier access to materials, as well as drive down labor costs.

 

What Is the Cost Per Square Foot to Build in California?

Before we get into numbers, let’s clarify housing costs as they are related to the type of materials. Housing standards and average price per square foot are sorted by type, from the most expensive being luxury to minimum standards:

  • Luxury $445+/sq ft
  • Semi-luxury $270/sq ft
  • Best standard $175/sq ft
  • Good standard $165/sq ft
  • Average standard $105/sq ft
  • Minimum standard $85/sq ft

Luxury will obviously be the most expensive option due to the cost of the land in more desirable or exclusive areas, the cost of materials, and labor costs. The average cost per square foot to build a house is $240. The tier moves down in price as the material standards go lower. Imported Italian marble for the three master bathrooms will cost more than standard tile in a single shower stall.

The average home in California is 1,625 square feet. If you build a house with semi-luxury standards, you can estimate the cost of the house to be around $438,750. Of course, this doesn’t paint the entire picture. Land acquisition, solar panels, permits, and materials all factor into this number and add costs.

 

How Much Does a House Cost in California?

It has also been reported that the average home sale price in California for 2020 was $659,400. The price went up 20.3% in 2021 for an average sale price of $793,100 and is projected to go up another 5.2% in 2022 with an average price of $834,400.

These figures, however, only show the state as a whole. There are some different numbers when comparing sale prices by county. Orange County, for example, ranks number one with a medium price of $1,120,000.

Location plays the greatest factor in these costs. The most expensive place to build or buy is in San Francisco and the bay area, with Los Angeles taking a close second. Other areas such as Oakland, San Mateo, Sunnyvale, and Richmond have higher costs as well. On the flipside, Fresno and Redding have below-national-average building costs. 

Southern California has its amazing draws, and if this is where you want to settle down, here are some figures on the SoCal housing scene.

For the Los Angeles area, costs are estimated to be about $200/sq ft for modest budget homes, $350/sq ft for mid-range homes, and $450/sq ft for luxury homes. Southern California price trends are within the higher range of the state’s price averages, with more affluent areas and desirable neighborhoods hovering near-luxury prices.

 

Build or buy?

There is never an easy answer as to whether you should build or buy. It depends upon several factors: where you want to live, what is your budget, do you want to live close to the city or in a smaller, more rural area? Single-family home or multi-unit housing? What type of house–luxury or best standard? Do you have time and resources to wait for construction, or do you need a home right away? An experienced real estate professional, such as Fisher Real Estate, can help you determine your needs.

Building a home in California has its pros and cons, just as buying a home does. 

Building pros: the ability to pick exactly what finishes go into your house, controlling the architectural design, and building equity into the house. 

Building cons: you can be waiting on a construction timeline, and having that timeline be dependent upon the materials market and availability. Also, there may be limited land availability in desirable areas, and the land itself can be expensive. In 2018, a 1.43 acre of land near Palo Alto with no home on it sold for almost $7 million. While this is on the higher end, it shows the value of the land can be significant.

Buying pros: immediate move-in, less hassle, and knowledgeable agents can help you find what you want, where you want it, quickly and efficiently. 

Buying cons: you may not get to choose the exact floor plan and finishes in the house or any other customizations or upgrades that don’t already come with the house.

To sum it up, for reference’s sake:

Building costs (not including the cost of land, which can be substantial):

  • Average total cost: $405,440
  • Average cost per square foot: $202.72

Buying costs:

  • Average purchase cost: $793,100
  • Average cost per square foot: $448 (using average square footage divided by purchase price)

 

Takeaway

You have a little more know-how about how much to build a house in California. You’ve decided to go ahead and make the move. Where do you go from here? You aren’t sure whether to start looking for available plots of land to purchase and build on, or whether to search for available homes. That’s where a knowledgeable real estate agent can make all the difference.

Fisher Real Estate has the experience and service to help you find the perfect place in SoCal to call your own. 

We specialize in South Bay Cities in desirable areas such as Hermosa Beach, Hawthorne, Palos Verdes, Long Beach, and Inglewood. In addition, we have listings available in West Side cities such as Santa Monica, Los Angeles, Westchester, Playa Vista, and Pacific Palisades.

Whether it’s a move into luxury or looking for a place to build your dream home, Fisher Real Estate can help you find exactly what you’re looking for. Contact us today!

About the Author

What sets you apart from the competition?

“I love real estate! It is both my profession and hobby, and I am constantly studying my market space and new strategies to keep ahead. I offer my clients personalized service based on integrity backed up by a track record of success. I bring a great balance of creative and analytical skill sets while applying an intuitive and assertive approach, as each opportunity is unique.”

How did you become so good at what you do?

“Since I was a child growing up in El Segundo, I was naturally drawn to the changing built environment. I was fascinated by new construction and how over the years certain areas transitioned more quickly than others. Once I decided real estate was my calling, I already had a jump-start on the Westside and South Bay markets. By furthering my education with a boots-on-theground approach, I have become an expert in my field.”

How did you become so good at what you do?

“Since I was a child growing up in El Segundo, I was naturally drawn to the changing built environment. I was fascinated by new construction and how over the years certain areas transitioned more quickly than others. Once I decided real estate was my calling, I already had a jump-start on the Westside and South Bay markets. By furthering my education with a boots-on-theground approach, I have become an expert in my field.”

Real estate is highly competitive; how do you maintain a code of ethics?

“Disclosure is non-negotiable. Transparency is vital. In this highly competitive, saturated market the temptation to make a deal may give way to compromises by some agents. I am keen on building relationships that support future recommendations and referrals. I am only as credible as my last deal, so my ethical standing is all I have at the end of each day.”

What has been the highlight of your career so far?

“The relationships I have built with so many great people over these past 12 years. Great relationships have forged the trust needed to grow into additional business and investment opportunities. These in turn have resulted in a growing network of valued clients.”

How do you manage volatility in the market?

“Are you buying a home to live in or investing in residential or commercial property? Each class of real estate offers different methods to reach your goal. I provide added value to my clients by helping them define their goals, protect their interests and meeting— if not exceeding—their expectations. Each transaction requires being well-versed in the particulars that drive the deal.”