Buyers Are Finding Creative Ways to Make Home Building Affordable
Home ownership in the US has always been challenging, but especially so in recent years — and home building along with it. Between rising construction costs, supply chain issues, and higher interest rates, affordability doesn’t look quite like it used to five or ten years ago. But while building a home has become more expensive, buyers aren’t just throwing up their hands — they’re getting creative. From smarter design choices to flexible mortgage solutions, many prospective home owners are finding new ways to make building their dream home financially achievable.
What’s Behind the Affordability Squeeze
So what’s pushing the cost of home building higher? A number of factors are at work:
Rising construction costs
Labor shortages and increased wages across the relevant professions have brought prices up. Materials like lumber, concrete, roofing, and electrical components are at a premium and may not come down any time soon.
Supply chain delays
Ever since the supply chain disruptions caused by the 2020-2022 COVID pandemic, delays have become a fact of life. Appliances, specialty materials, and custom components still take longer to get than before 2020, and longer timelines almost always mean higher costs for a project.
Increased Borrowing Costs
As mentioned above, higher interest rates makes financing new construction more costly. This affects both traditional mortgages and construction loans, which means higher costs and more difficult budgeting for prospective homeowners.
Put together, these three trends mean buyers need to think strategically and flexibly if they hope to build a home within their price range.
How Home Buyers Are Adapting
So how exactly are homebuyers compensating for higher costs and delays? How do they manage to stay on budget despite the market pressures at work?
Building smaller homes
One of the most efficient ways to bring down a building project’s cost is to reduce the square footage. Buyers are choosing to scale down into efficiently designed homes that prioritize open living areas and multi-use spaces. This often leads to lower materials and labor cost, faster construction times, and lower long-term expenses when it comes to utilities and maintenance.
Choosing more affordable areas
A cheaper neighborhood — somewhere beyond the major cities and high-demand suburbs — can also make a huge difference in price. Building in lower-cost regions can cut deeply into what’s usually the biggest part of the budget.
Choosing better builders
Everyone has a nightmare contractor story, or knows someone who does. Choosing a reliable and well-reviewed builder can help reduce costly mistakes, while choosing poorly can lead to delays, budget blowouts, and expensive redos or reworks that eat into contingency funds. When it comes to choosing a builder, it’s better to be choosy and pay more up front than lose far more in the long run.
Redesigning with cost-smart layouts
Design can make all the difference in a home, and a smartly designed layout can do a lot for affordability.
For example, flat roofs instead of pitched roofs can reduce framing and material expenses, while consolidated “wet” areas (i.e. bathrooms, kitchen, laundry) can reduce the cost of plumbing installation. Standard-sized windows, cabinets and doors mean no need for costly custom pieces, while simplified, open floor plans help reduce labor complexity and shorten construction time.
Choosing modular and pre-fabricated builds
Modular, prefab and panel-built homes are gaining traction. These types of homes offer shorter build times, less on-site labor, less waste, and lower overall construction costs. This can make a big difference for buyers who want a predictable budget and also want to be able to move into their homes faster.
Using cost-efficient materials
Top-tier materials have a lot of appeal, and everyone would choose them if they could. But most material doesn’t really have to be top-tier. For example, many buyers are picking luxury vinyl plank over hardwood, quartz-look composite over natural stone, and MDF trim instead of solid wood. Many of these have the same durability and visual appeal without the associated price tag.
Using flexible lending and mortgage options
An underappreciated component of bringing costs down? Smart financing. Researching your mortgage options to best meet your needs, such as exploring builder incentives, lender credits, rate buydowns, and comparing multiple lenders, can make a massive difference in your final costs.
Planning for Uncertainty
No matter how well you plan or how far ahead you look, any build can face surprises or hit obstacles, so many buyers are choosing to insulate themselves from risk. Ways to do this include:
- Starting with early and detailed financial planning
- Building a strong contingency buffer
- Choosing fixed-price building contracts whenever they can
- Requiring transparent, ongoing communications from builders
There’s no doubt home buying, and home building, is more complicated and expensive than ever before. But by rethinking a few traditional choices, choosing smaller designs, and planning for long-term stability over short-term gain, homeowners may find building that dream home is closer to reality than they think.
