How to Build a House in California

California has long held an allure like almost no other state in the U.S. People dream of living by the Pacific Ocean, in the desert or in the mountains to enjoy year-round sunshine and a healthy outdoor lifestyle. But all that physical beauty comes at a premium. The average cost to build a house in California is the second highest in the nation, according to GoBankingRates, with only Hawaii having higher costs to build a home.

More than 39 million people live in California, which stretches for 900 miles along the Pacific coastline from Mexico to Oregon. The state’s popularity means land prices are high and housing costs even higher, particularly in populous cities such as Los Angeles, San Francisco, San Jose, and San Diego, which frequently top the lists of most expensive places to live.

California also has extensive regulations for new construction to increase energy efficiency, such as a requirement for most newly built homes to have solar panels. In addition, all newly built homes in the state must meet net-zero standards, which means they produce as much energy as they use. To do this, homes need to be built with extra insulation and airtight construction as well as have highly energy-efficient appliances and systems.

This article covers the step-by-step process of how to build a house in California.

1. Understanding The Cost of Building a Home in California

The cost to build a home in California in 2024 varies significantly depending on factors such as location, size, materials, and level of customization. Here's a detailed breakdown of the costs.

In 2024, the average cost to build a house in California is expected to range from $200 to $600 per square foot, according to HomeGuide. This wide range reflects the diversity in construction types and locations across the state. Remember that these prices do not reflect land price or site prep. Check out the "additional costs" for an estimate of these prices.

• Basic, builder-grade homes: $200 to $400 per square foot

• Custom homes: $400 to $600 per square foot

• Luxury custom homes: Can exceed $600 per square foot

Cost by Home Size

Here's an estimate of total construction costs based on home size:

• 800 sq ft: $160,000 to $480,000

• 1,500 sq ft: $300,000 to $900,000

• 2,000 sq ft: $400,000 to $1,200,000

• 2,500 sq ft: $500,000 to $1,500,000

Material Costs

According to Houzeo, materials typically account for about 50% of the total construction cost. Some common material expenses include:

• Flooring: $9 to $32 per sq ft

• Drywall: $0.5 to $1 per sheet

• Siding: $2 to $50 per sq ft

• Lumber: $650 to $1,100 per board ft

• Roofing: $4,200 to $47,700 total, depending on material

Location-Specific Costs

Construction costs can vary significantly by location within California:

• San Jose: $300 to $450+ per sq ft

• Sacramento: $300 to $525+ per sq ft

• Orange County: $400 to $475+ per sq ft

• Los Angeles: $400 to $475+ per sq ft

• San Diego: $475 to $800+ per sq ft

• San Francisco: $500 to $800+ per sq ft

Additional Costs

Remember to factor in these additional expenses:

• Land purchase: Average $20,000 per acre in California

• Site preparation: $1,500 to $3,000

• Permits: Around $5,000

• Contractor fees: 10% to 20% of total project cost

• Electrical work: $7,500 to $12,500

It's important to note that these are estimates from Houzeo, HomeGuide and Element Homes. Actual costs can vary based on specific circumstances, design choices, and market conditions. Always consult with local builders and real estate professionals for the most accurate and up-to-date pricing in the specific area.

Remember that the California Solar Mandate requires all new construction homes are built with a solar panel system to meet the home's annual electricity needs. The average cost of solar panels in California is $12,500 to $17,300 for a 5 kW system, before subtracting the 30% federal tax credit.

Don’t forget to budget for homeowner’s insurance, homeowner’s association (HOA) fees, and property taxes for a new California home. The average cost for homeowner's insurance is $1,405 a year or $117 a month, well below the national average annual rate of $2,601, according to Insurance.com. HOA dues vary according to your location and community amenities. In 2024, Californians paid an average of $3,600 in annual property taxes, according to SmartAsset, with a typical rate of 0.71 percent.

Buyers also need cash for closing costs, which vary by jurisdiction and average 2-5%, according to Redfin.

Custom vs. Production Homes

When you plan to build a new home in California, it’s important to clarify whether you are thinking about a custom home or what’s called a “production” home. A custom home, which you can build on your own land or on a lot owned by a builder, usually requires you to hire an architect or a design/build company. Financing a custom home requires a construction loan and a permanent loan unless you’re paying cash. The cost to build a custom home in California varies widely according to land prices and your decisions about the house.

A buyer's first step when building a home in California is to obtain a loan pre-approval. Speak with lenders to get a sense of price range, but once the builder is chosen, the buyer may want to work with the builder’s in-house or preferred lender to streamline the process.

This article discusses how to build a house, specifically a production house, which is usually one of a group of homes in a community. The cost of the land and construction is included in the price of the home, although a potential buyer may have to pay an extra fee for a specific lot if it’s more desirable than others in the community. Depending on the builder, buyers have a choice of personalization or a package of choices for finishes and fixtures.

Building a home in California takes an average of six to 12 months, depending on a variety of factors including your home’s size and style, the availability of labor and materials, and the weather. The following steps are required to get from contract to completion on your new California home.

2. Choose Your Builder

The builder a buyer chooses for their home will have a large impact on the cost of building home in California and their experience. Narrow the choice of builders by researching communities and neighborhoods and look at models online, as well as in person. Ask neighbors about their satisfaction with the builder, look at communities previously built by that builder and check out reviews on a builder at TrustBuilder.

3. Line Up Your Financing

Most builders have a list of preferred lenders they trust. Some larger builders have an in-house mortgage financing business. Either way, buyers benefit from working with that lender because they have an interest in satisfying both the buyer and builder to complete the loan. Consider consulting another lender to compare rates and fees. Some builders offer an incentive to use their preferred lender and title company for financing and closing, such as paying closing costs.

The builder will tell the buyer how much of a deposit is required when signing the initial contract, which can be a few thousand dollars or as much as 10 percent of the home’s final price. Many builders offer an allowance for optional choices within the price of the home. In other cases, a buyer may need to pay cash for options that go beyond the typical homes in the neighborhood.

Investigate options for down payment assistance or other homebuyer incentive programs in the area, including those geared toward first-time buyers. California has numerous state and local programs that you can find by searching DownPaymentResource.com.

4. Choose The Lot and Floor Plan

The sales professionals at a new community are the experts about the advantages of the various lots and floor plans, and the ability to a desired house on any specific lot. Not every floor plan can be built on every lot, either because of space considerations or for the aesthetics of the community.

Ask about plans for the community and the surrounding land. Buyers don't want to choose a lot based on a view that may disappear as more homes are built in future years. Be sure to ask about lot premiums to include in the cost of financing.

5. Consider the Local Climate

One reason for California’s popularity is its temperate climate, but most people are also aware of wildfires, earthquakes, intense rain, and mudslides that occasionally impact different parts of the state. Ask the builder about choosing specific design elements or materials, making the home more resilient to some of these issues. The Buyers Guide to Resilient Homes also has useful information for homebuyers and homeowners.

6. Be Aware of Permitting and Inspections

The builder will handle all the permitting requirements and inspections, but be aware that these steps can add to the time it takes to build a home in California. Many jurisdictions have special additional inspections such as for fire safety that the builder will schedule. Buyers can also hire an independent home inspector if they want another inspection of the builder’s work. Buyers will need to consult your builder about the appropriate time to schedule an outside inspection.

Overall Build Timeline

While the average time to build a house in California is six to 12 months, as mentioned earlier, the total time to build a specific home will depend on certain key factors: availability of materials and labor, weather conditions, and the size and location of the home — plus, how long it takes for permits to be issued. The builder may already have some permits in place, but specific permits will be needed once the buyer selects the lot and floor plan. Once the permitting is approved and construction begins, it can take from 90 to 150 days for the home to be completed.