New house construction costs in Los Altos, California

By
Real Estate Broker/Owner with Intero Real Estate CA BRE #01191946
https://activerain.com/droplet/4KHL

It's very popular to buy an old Ranch-style home or raw land (if you can find it) in Los Altos and build a new luxury home.  Homeowners and speculators alike benefit from the fact that in most cases, the new home will be worth more than the cost of the land and construction.  If you're considering building a new luxury home in Los Altos, regardless of the neighborhood, it's essential to understand the cost of actually building and what is "normal" versus overboad.  This article outlines the primary ranges of new construction costs and what to expect when you try to resell down the road.

$200-225/s.f. - "The Home Depot Job" because this is the kind of quality it looks like.  These are often times not really new construction but major remodels but done at a very low level of qualty.  The result is cheap, poorly installed features, more in line with a bargain tract home than a luxury home in Los Altos.  These are done here but rarely.

$226-250/s.f. - I've seen homes in this range that were actually quite nice and they had many of the attributes you expect in a Los Altos luxury home including very nice hardwood floors and top quality kitchens.  What is often lacking are the extra details (moldings, heated floors, etc) and higher-end brands you usually see.

$251-300/s.f - This is the sweet spot for speculative builders.  At this price point you're getting the starting end of the quality market and it all really depends on how many features you have.  What typically drives up prices is the use of more exotic hardwoods, fancy tile work, more electronics (speaks in every room, whole-house audio, etc), and other perks.  You will also see a bump from major features such as steam showers, heated floors in multiple rooms, and theater rooms.  The more of these things you seen, the more likely you are to get to the next couple of levels.

$301-350/s.f. - This is where many very nice luxury homes in Los Altos are being built.  When you do the math on many new luxury homes in Los Altos, you'll notice that the land cost is often times about $1.4-$1.5 million and construction is $1-1.25 million for a 4000 s.f. home.  That's where this price point sits.  The finished home is usually about $3 million on the open market.  The features include almost everything you expect but not necessarily all top-of-the-line.  There's a lot of personal touches and craftsmanship including better finishes on walls (alabaster, etc), more tile and stonework inlays, more woodwork, and other features.

$400+/s.f. - This is a price point you see for really high-end homes with "green" features, extraordinary architecture (Cape Cod-style, Georgian revival, etc) that require more details than something easier like a Mediterranean.  It's possible to go over this cost point as well but within Los Altos it's rare that new construction goes over.  For the few homes that hit this point and more you can expect features such as below grade living space (which requires more expensive foundation work), luxury exterior trim such as copper drains, exterior treatsments such as slate roofing and marble columns, plus a wide range of interior upgrades.  When hitting this price point the home is usually not built for speculation as it leaves little margin in the current market for profit.

These are guidelines to work within and by no means the absolute standard.  The value you invest in building a luxury home in Los Altos will vary by neighborhood and lot size.  There are several neighborhoods that will support the higher price points and others that can't.  Be sure to review recent sales in the area to get a better gauge of what is ideal in your neighborhood.

CALL ME FOR MORE DETAILS!  I get a lot of readers on this article wanting to learn more.  I can introduce you to builders with experience in Los Altos (that's important) in all these price ranges.

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San Francisco Bay Area Real Estate
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Lori Bowers
La Quinta, CA
The Lori Bowers Group

Wow - those prices seem pretty low for construction in Los Altos. Thanks for sharing.

Apr 06, 2011 06:37 AM #1
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1 ~Judi & Don Barrett & Chassy Eastep - Integrity
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

Bryan,

It is amazing to me to learn about different areas.  Our area labor costs are so much lower that new nice home construction comes in, in the $75 per sq ft cost.  You can build a super nice home in the $100 per sq ft price range. 

Love this blog because I've never seen an agent spell it out in a blog for their reading public.  Nicely done.

Apr 06, 2011 01:17 PM #2
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Bryan Robertson
Intero Real Estate - Los Altos, CA
Broker, Author, Speaker

Lori - The first two are but the latter two are the prices you'll see most often.  It's rare for new construction to run less than $250/s.f. these days and most is running slightly higher.  What's missing from this is additional costs that some people quote as part of the price per square foot including financing costs, permits, fees, and architect costs as well as decorating.

On a 4000 square foot home, it's easy to spend tens of thousands of dollars on window treatments alone.  So, when I say it costs $250/s.f. to build it's possible to add another 15% to that with those extra costs which makes the effective price per square foot closer to $300.

Thanks for making me think about that a bit more and expanding on the details.

Judi - Thanks for the compliment!  Keep an eye on my blog because I'm going to be really stepping it up a notch.  Anyway, I've heard of construction costs being much lower in other areas.  What's funny is that even in California it is substantially cheaper to build in the central valley than it is here.

Apr 07, 2011 03:30 AM #3
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Gary Frimann, CRS
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Bryan.  I like the way you broke it down, and used some wit as well.

Sep 12, 2012 02:19 AM #4
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