Cost per square foot for new homes: Can I shrink a house plan to make it less expensive?

    Early in the process of building a custom home, many people will look around online at a range of house plans to start getting some ideas of what they want. That's a good thing, really, because it helps define your priorities so you can discuss them with your builder during the actual design process.

    But all too often, someone falls in love with a house plan that's well beyond their budget. And then they ask, "Can I shrink this house plan and make it less expensive?"

    The answer? No, you can't.

    The last square foot you build on a house is the cheapest. That's also the first square foot you take out if trying to shrink a house plan.


    We’ll use another example to demonstrate what I mean. Let's say a builder quotes you $200,000 for a 2,000 square foot home. That's $100 per square foot to build.

    Now let's say your budget is only $180,000. If you cut 200 square feet out of the plan and build it for the same $100 per square foot, the house now fits your budget, right? Wrong.

    Here's why.

    That $100 per square foot is the average cost of all the square feet in the house. Let's say the house has a $1,200 oven in it. An oven takes up about six square feet, so it actually costs $200 per square foot. When you shrink the house, are you going to take out the oven?


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    Let's say the air conditioning equipment costs $8,000. Will you put a smaller air conditioner in a house that's only 200 square feet smaller? Nope. So the cost of your air conditioner just went from $4 to $4.44 per square foot.

    The square footage you take out isn't going to be the expensive stuff, like light fixtures, appliances, cabinets, countertops, toilets, heat and air, or the land the house is built on. You're going to take out stuff like lumber, concrete, carpet, and shingles. You're going to take out living space that doesn't cost much to build.

    Plus, a design you shrink isn't going to work the way the original did. Designers don't create elements of a home in isolation and then stick them together to create a house.

    When you randomly shrink rooms, you're probably creating new design problems that will need to be solved.

    If you're budget-conscious and want to build a new home, start with a design that's smaller than what you can afford. Making a plan bigger is less expensive per square foot, since you're adding inexpensive living space typically. The math now works in your favor.

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