Thinking of building a custom home or purchasing an existing property is a major decision to embark on.
And if you’re thinking about this decision in BC, this becomes even more complex due to the provincial building regulations, high costs for land, diverse changes in local markets, and more that can substantially impact costs.
This comprehensive guide will help you understand the true costs of both options, so by the end, you’ll be able to make an informed decision of what will be best for your budget.
Table of Contents
Key Summary
In short, building typically costs 10-30% more than buying comparable existing homes, but the decision involves far more than simple price comparisons.
The decision to buy land and build is typically determined by the desire to have a home built how you want it to be built. From each rooms dimensions and layout, to the finer details like baseboards and window stylings.
When it comes to buying an existing home, financial factors, location, and timelines are usually major deciding factors.
| Category | Building a House | Buying an Existing House |
| Total Cost Range | 10-30% more than buying | Baseline comparison |
| Timeline | 10-18 months construction + 3-6 months planning | 30-90 days to close |
| Predictability | Low (10-30% cost overruns common) | High (fixed purchase price) |
Direct Cost Analysis: Building vs. Buying
When deciding between building a new home or purchasing an existing one, understanding the direct costs involved is essential.
The direct costs encompass the immediate, upfront expenses tied to each option, such as land purchase and construction fees when building. Or the sale price and closing costs when buying.
Let’s break this down a bit further…
Building a House – Primary Expenses
Land Acquisition
The foundation of any building project starts with securing the right piece of land. In BC, land prices vary by region, here are some rough numbers across major parts of BC:
- Metro Vancouver: $800,000 to $2.5 million for a buildable lot.
- Victoria: $400,000 to $1.2 million depending on proximity to downtown.
- Interior regions (Kelowna, Kamloops): $150,000 to $600,000.
- Northern BC: $50,000 to $200,000 for rural properties.
Beyond the purchase price, you’ll also need to budget for land preparation costs. Site development typically runs $15,000 to $50,000, depending on terrain and existing infrastructure. Utility connections can add another $20,000 to $60,000 for water, sewer, electrical, gas, and internet services.
Don’t overlook the preliminary costs. Soil testing and environmental assessments range from $2,000 to $8,000, while surveys and legal fees add $3,000 to $7,000 to your initial investment.
Construction Costs
Building costs in BC typically range from $150 to $400 per square foot, with luxury finishes pushing costs even higher. For a 2,000-square-foot home, expect to budget:
- Foundation and structural work: $40,000 to $80,000.
- Framing and roofing: $50,000 to $90,000.
- Electrical, plumbing, and HVAC: $35,000 to $70,000.
- Insulation and drywall: $20,000 to $40,000.
- Flooring, fixtures, and finishes: $60,000 to $120,000.
- Kitchen and bathroom installations: $40,000 to $100,000.
- Exterior work: $30,000 to $70,000.
Professional Services
Architect and design fees typically cost 8-15% of your total construction budget. For a $500,000 build, that’s $40,000 to $75,000. Engineering consultations add another $5,000 to $15,000.
You’ll also need to factor in building permits, which vary by municipality but generally range from $5,000 to $25,000. Legal fees for contracts and closings typically run $3,000 to $8,000.
Buying an Existing House – Primary Expenses
Purchase Price
The median home price in BC varies significantly by city/region and property type, but some averages are as follows:
- Metro Vancouver: $1.2 million to $2.5 million for detached homes.
- Victoria: $800,000 to $1.5 million.
- Interior regions: $400,000 to $900,000.
- Northern BC: $200,000 to $500,000.
Property age and condition significantly impact pricing. Newer homes command higher prices, while older properties may offer better value but require more immediate investment and fixes.
Transaction Costs
When buying an existing home, you’ll encounter several costs beyond the purchase price. Realtor commissions typically amount to 7% of the first $100,000 and 2.5% on the remainder. Legal fees range from $1,500 to $3,000, and home inspection costs run $400 to $800.
BC’s Property Transfer Tax (PTT) is a major expense that many buyers overlook. You’ll pay 1% on the first $200,000, 2% on the portion from $200,001 to $2 million, and 3% on amounts over $2 million. First-time homebuyers can claim exemptions on properties under $500,000.
Other closing costs related to the transaction can include:
- Title insurance and search fees: $1,000 to $2,500.
- Home inspection fees: $300 to $600.
- Appraisal fees: $300 to $700.
Learn more about Closing Costs in BC and what to prepare for.
Hidden and Indirect Costs
Hidden and indirect costs can catch homebuyers by surprise, as they often go unnoticed during the initial stages of purchasing a property. These expenses, which include things like moving costs, utility setup fees, and ongoing maintenance, can quickly add up and impact your overall budget.
Building-Specific Hidden Costs
Unforeseen Expenses
It’s easy for a construction project to pick up additional costs. This amount can range from a few percentage points, up to 15% of the purchase price if the budget or project is not managed carefully.
Temporary Living Arrangements
While your home is being built, you’ll still need a place to live. Rental costs in BC vary by region:
- Metro Vancouver: $2,500 to $4,000 per month.
- Victoria: $1,800 to $3,200 per month.
- Interior regions: $1,200 to $2,500 per month.
Storage fees for belongings add $150 to $400 monthly, along with any moving expenses from both to and from any rental units.
Project Management Time
Managing a construction project requires significant time investment. Many homeowners underestimate the value of their time spent coordinating with contractors, making decisions, and overseeing progress. This time commitment can impact your regular income or require hiring a project manager at 5-10% of construction costs.
Buying-Specific Hidden Costs
Immediate Renovations
Existing homes often require immediate updates. Essential repairs might include:
- Electrical system upgrades: $8,000 to $20,000.
- Plumbing improvements: $5,000 to $15,000.
- Insulation upgrades: $3,000 to $10,000.
- Cosmetic improvements: $15,000 to $50,000.
Ongoing Maintenance
Older homes come with deferred maintenance issues. Major system replacements can be costly:
- Roof replacement: $15,000 to $35,000.
- Furnace replacement: $6,000 to $15,000.
- Window replacement: $10,000 to $30,000.
Financing Considerations
Financing the purchase or renovation of an older home requires careful planning and consideration. Understanding your budget, exploring available loan options, and accounting for potential hidden costs are all critical steps in ensuring a smooth financial process.
Construction Financing
Construction loans differ from traditional mortgages. Interest rates are typically 1-2% higher than conventional mortgages, and you’ll pay interest only during construction. Most lenders require 25-35% down payment for construction loans.
The draw schedule means you’ll pay interest on disbursed funds throughout construction. For a $500,000 build taking 12 months, interest costs could reach $15,000 to $25,000.
Traditional Mortgage Financing
Existing home purchases use conventional mortgages with current rates. Down payment requirements are typically 5-20% depending on purchase price and buyer status.
BC’s First Time Home Buyers’ Program offers additional support, including shared equity loans and reduced down payment requirements.
Learn more about the Top First Time Home Buyer Programs For BC Buyers.
Timeline and Market Timing
When planning a home purchase or construction project, understanding the timeline and market conditions is crucial. Timing of everything will significantly impact costs, interest rates, and even the availability of a rental property. That’s why it’s important to align your plans with when you’re fully ready. Whether that’s building or buying in BC.
Construction Timeline: Building Your Dream Home
Building a custom home in British Columbia typically takes 10-24 months from breaking ground to move-in day. However, you’ll need to add another 3-6 months for the planning and approval phase.
BC’s climate plays a significant role in construction timelines. Winter weather, including heavy rain or snow, often slows down exterior work. The spring and summer months allow for faster progress, but unforeseen building permit delays or other timeline changes can drag on.
Purchase Timeline: Buying an Existing Home
Buying an existing home can often be completed within 30-90 days, depending on factors such as financing, inspection requirements, and market conditions. This speed advantage allows you to act quickly on market opportunities, especially in competitive real estate markets.
Location Considerations
Need to get downtown quickly? There may not be land to buy and build that close if you’re in a dense metropolitan area like Vancouver.
The choice between building and buying varies a lot across BC. In Vancouver, land scarcity makes building exceptionally expensive, often favouring existing home purchases. In suburban areas like Richmond, Surrey, or Burnaby, building lots may be more accessible and affordable.
Recommended Resource: Top 5 Most Affordable Cities In the Lower Mainland
Making the Right Choice for Your Situation
Overall, there are many factors that will go into the final decision to build or buy. Ultimately, you’ll want to consider building if:
- You want complete control over design and materials.
- You have flexible timelines and stable finances.
- You enjoy project management and decision-making.
- And are planning to stay long-term (10+ years).
Consider buying if you:
- Need to move quickly or have firm timelines.
- Prefer predictable costs and immediate occupancy.
- Want to avoid construction-related stress.
- Are comfortable with renovation projects over time.
Your decision should also factor in local market conditions and real estate trends, too.
Looking for Support?
Whether you’re looking for support in finding homes in your desired budget to compare to land and building, or you want advice on what’s right for you, we’re here to help. Contact us at Metro Vancouver Life.
