What did the builder attribute the price increase to?

You aren't being gouged. It's nuts out there. I was so happy I closed 5 of 6 jobs on Monday even after raising my rates. Got a be-back call this morning. 6/6. Two complaints that I can't get to them for a month. Bought a truck, hired a guy, raised rates, backlog won't budge.

We have a line item review this weekend of the budget so we will know more of the specifics then. it was a combination of septic and the rising cost of lumber and materials.

thanks Joseph! so are builders having to compete with each other over trades and labor so they're jacking up the prices?

Likely fair and only tip of iceberg. Prepare to jade a contingency of at least 10% likely more and be ready to need it.

Why are you asking anyone other than the builder??

Most manufacturers of building components (windows, doors, etc.) announce annual price increases in January or February. Most lock them in for the remainder of the year. Not so in 2021. Building material prices have skyrocketed for a variety of reasons. However, in our market, trade labor prices have been fairly stable.

I'd estimate the overall impact to be a 15% to 20% increase in the total price of a home in our market compared with pre-pandemic prices. A 25% increase from a December 2020 estimate suggests the estimate was not produced with much accuracy.

Ouch! We just completed a 3200 heated sf house with a full basement (unfinished) and lots of porches and were all in around $430K. We are in southern KY. Thankfully, most of our lumber package was purchased prior to the Covid surge and would likely cost $50-60K more now but not $200K more. My guess is that there is some legitimate increase due to trades and lumber pricing but that the builder really didn't give an accurate estimate early on and is blaming it all on that now. If your area is anything like ours, there are so few people in the trades right now that they can charge what they want but I doubt that comes to a $200K difference.

I'd do some serious soul searching before proceeding. If financing is involved, you definitely need to think about appraisal value vs final cost. I wouldn't want to have $900K, which is where you'll be once said and done, invested in a 2500sf house unless there was a 95% chance I could ever recoup that cost when/if sold. (Basement square footage is not equal in value to above grade square footage.)

We’ve met with several architects about building in Western NC and they say it is crazy out there - shortage of labor, lumber prices and even things like concrete. They say the builders are having to spend so much more time just thinking about and finding various supplies (driving far to multiple building supply companies instead of just getting what they need through their regular/ local channels). And some are importing labor from other regions (GA, mid-NC, TN) which is also more expensive. I’m not surprised to hear your price keeps going up.

Wait for the review.

Lumber, framing, foundation, roofing, etc costs don't care whether the structure is conditioned or not. Including your basement the structure is 4700 sf plus garages, covered patios, etc. For example I've found interior courtyards cost more than conditioned space due to added exterior walls, windows, doors, etc.

We've had multiple lumber cost increases since mid Dec, probably double your estimate. If their numbers weren't completely fresh at that time, there was more in the last 6 months of 2020. Concrete, steel, insulation, labor, solar, windows, metal roofing, appliances, anything imported. There is significant competition for labor. My California fuel costs/gallon are up about 1/3 since December which will flow through all materials. Unemployment insurance rates are rising.

While I advise clients in design, it's difficult to get precise numbers (bids) until plans get to engineering stages with some detail. "cost per foot" is a bit of a wag in custom home building once we get away from a traditional box with predictable ceiling heights and finishes.

I’m sorry, but it simply isn’t professional to change the quote from $600k to $800k in a few months for something like building a residential structure. This isn’t bitcoin.

Anyone here who justifies a 33% increase “because it’s crazy out there” totally disregards the fact that it was crazy back in December 2020 (4 months ago) too and no, it’s not 33% crazier now (and yes, I am building right now so I have an idea) and even if it were, that builder better try to figure out how to honor the original quote or something close to it otherwise I would simply tell him to get lost.

A quote is just that. You still have to pay real world prices. If you are given a quote and more than 30 days go by all bets are off. Also I would guess this is more of an estimate and no one would be held to it. A builder is not able to give an exact number DP a build based on no plans. Even with plans there are surprises. You can’t honour a ball park figure for building. You must go with reality.

"Our builder provided a high/low estimate between 550k and 615k (mid December 2020). Our design hasn't changed since then but now (March 2021) the pricing is coming back at $800k+ (over 200k difference)."

The key word here is "estimate". An estimate is just that, especially when speaking about a "price range". To me that means everything was not and still is not picked out to the model numbers and exact sizes.

"...even if it were, that builder better try to figure out how to honor the original quote or something close to it otherwise I would simply tell him to get lost."

Yeah, because the new builder you find has an exemption from the laws of supply and demand. He'll be able to keep to the original deal, I'm sure.

I do think by December 2020 an experienced builder should have been well aware of the volatility of the building material pricing and been able to be a bit more specific when putting together his budget so that now he'd be able to explain exactly where the increase is coming from.

I think too many builders were watching the market and counting on prices falling and giving estimates accordingly. That sadly hasn't happened.

Did you ask for breakdown of why the price is so much higher?

If he's got nothing to hide, I would think he'd be willing to give an explanation for his substantial increase?

Do you know what is included in either of these quotes?

What specific details do you know about what was bid in each of the following categories:

• Foundation Insulation
• Damproofing
• Wall Construction
• Wall Insulation
• Wall Sheathing
• Air Barrier
• Roof System
• Roof Sheathing
• Roofing Materials
• Siding Material & Color
• Masonry Material & Color
• Window Brand, Series, Exterior Color, Interior Color, Type, Sizes, Install Specs
• Exterior Door Brand, Series, Exterior Color, Interior Color, Type, Sizes, Install Specs
• Soffit & Fascia
• Gutter & Leaf Guard
• Exterior Concrete layout, color, stamping
• Deck
• Paver Patio
• Retaining Walls
• Surface Landscaping
• Seed/Sod
• Additional Grade Work (Beyond dig & backfill)
• Utilities Hookups
• Electrical Outlet Details
• Lighting Locations & Fixtures
• Drywall finish
• Misc. Wall Finishes (I.E. Shiplap)
• Floor Coverings
• Interior Base & Casing
• Interior Railing & Stair Treads
• Misc. Trim Details (Wainscot, Ceiling Beams, Crown)
• Interior Doors
• Kitchen Cabinets
• Bathroom Cabinets
• Other Cabinets (Built-ins, laundry, ect.)
• Kitchen Countertops
• Bathroom Tops
• Misc. Tops
• Backsplashes
• Custom Showers
• Plumbing Design
• Heating & Cooling Design
• Ventilation Design
• Humidity Control
• Wall Paint Colors
• Ceiling Paint Colors
• Faucets
• Toilets
• Sinks
• Appliances
• Home Automation
• Security System
• Home Audio/Entertainment
• Permits
• Expected Timeline

I'm not asking you to post answers to these. But ask yourself, do you know what is ACTUALLY being bid? Very well drawn plans will only dictate about half of the list above.

For example: Sinks: "He has an allowance for $2,200 for all the sinks". Ok.. Are they stainless? What style? What thickness of material? $2,200 is a nice allowance if he's marking them up 15%, but at 40% it could be really tight for what you want.

Look at the items I've listed and ask yourself if you really know what is included. 95% of what I see (both here on this forum and in my job) the homeowner doesn't dig into these details until after the contract is signed. If you do it before, you won't get change-ordered to death, and you will know what you are getting. The builder has an easier time too since he doesn't have to wait for you to make as many decisions.

So to the original question: "Am I getting gouged?" The answer is maybe. You need to dig-in and find out. The bid from December isn't relevant anymore, see what's included in the current bid.

**Note** I probably missed a category or two. Didn't write this from a list, just memory.

Best of luck

It's not just me apparently. This is from www.contractortalk two days ago:

"Stopped taking new bids a couple of weeks ago because we're booked out until July and that's all I care to think ahead. I threw out a bunch of bids with higher prices than I've ever charged and have pretty much gotten every one of them. People are frickin' DESPERATE around my parts for a contractor to even just call them back."

So HU, I doubt you're being gouged, but if you are it's because he can.

@DB -- yes we actually just spent 4.5 hours on the phone walking through the line item budget. before the call over the past few months we had been picking out all the plumbing, counters, cabinets, appliances, tile, decking, siding, soffit materials, porch ceiling materials, etc. so we have a pretty intimate knowledge of most of the homeowners side of the game and are ahead of that part. those quotes were directly included in the budget walkthrough.

So where are the increases? If you’ve gone through it and have it all itemized it should be very easy to see where the costs have shifted and then you can decide if you are being gouged or if there are other factors at play that are outside of your builders control.

On a very small scale example, my husband, a retired contractor, went out to buy some 2 x 4’s to renovate our laundry room. He came back from the store, shaking his head. One 2x4 that used to cost $2.50 - $2.90 each are now selling for $6.00 each. This COVID wasn’t just a medical virus, it’s an economic one too.

Did your personal selections increase the number from what he had guesstimated?

In our case, our first estimate included a cabinet allowance of $30,000, but once we went to the cabinet place to do our selections the number went up substantially. We've settled at $65,000, but could have actually spent more on some of the items we wanted.

I think that was the worst allowance estimate number he gave us, with windows a close second. The rest were definitely doable, but again our final choices raised many of them as well, to the point that between those selection increases and the unending rising material/labor costs associated with lumber and framing and even other trades on a smaller scale, our home came back way under on our appraisal. Even though resales are increasing quickly as well, the comps. just haven't had enough time to catch up to the new construction cost increases.

So if you aren't paying cash or need a large loan, be prepared for that hurdle as well.

Following

My response in the thread below examines a sampling of finish & selection questions that could easily create and exceed a $200K difference in a home the size you are proposing.

https://www.houzz.com/discussions/6098246/custom-build-getting-quotes-what-do-i-need-to-bring#26710560

It only takes a few upgraded items..... 20 x $10K items, 10 x $20K items. This does happen often between those preconstruction meetings and the bid set.

Usually starts with the magic words:

"it's only a few dollars..."

Example $10-20K items

BI refer

Cabinets upgraded to rift white oak

Taj Mahal quartzite

Branded quartz

Outdoor kitchen

$50 psf bath floor tile

An extra room of cabinets (office, etc)

1 master closet system

Nice garage doors

Steel + glass interior door systems - a 10' wall

Shower upgraded to slab

Pivot door system

Upgrade from standard slider to slightly oversized stacking door.

Really big fireplace

1 extra fireplace

a little more retaining wall

that back stairway addition

An entertainment center

Slightly higher ceilings

Changing main floor from LVP to Hardwood

Changing main floor from hardwood to tile

Upgrading all bedrooms from carpet to LVP, etc.

A few ceiling beams

There are no predetermined standards of what goes into a custom home.

Jeffrey OP implied above thread they’ve made their specific selections thougu

Example: a home that is estimated at 550-615K isn't going to have $65K of cabinets in the budget. We have that budget in construction budgets beyond $1 mil.