Can a Builder Lower the True Cost of Homeownership?

Buying a home is often one of the biggest financial decisions you'll ever make. The preparation and research that goes into the purchase of a new or existing home can take months, if not years. Ultimately, the long-term impact of owning a home is substantial when you consider the full cost of ownership.

So, how much does it really cost to own a home? And what influence does a builder or designer have on the full cost of ownership?

We often view the builder or designer's role on home cost as solely focused on the purchase price. Certainly, the negotiated price of the home has a substantial impact on long-term homeownership finances, but it isn't the only factor. The true and full cost of ownership includes the mortgage payment (principal and interest), down payment, taxes, insurance, utilities, maintenance and repairs, and HOA fees.

One of the main long-term impacts that a builder has on costs relates to "operational" costs. More specifically, the quality decisions that a builder makes during construction can significantly impact utility costs and maintenance/repair costs.

Utility Costs: How does a builder impact the cost of utilities? One of the primary influences here is associated with the energy efficiency and the performance of a home. Builders that include higher levels of insulation, greater airtightness in the enclosure, and higher-performing mechanical equipment will provide homebuyers with lower energy costs to heat and cool their homes.

Maintenance/Repair Costs: How does a builder impact the costs of maintaining and repairing homes over time? Quality-minded builders will design and install assemblies and systems that reduce the risk of degradation and moisture intrusion, thereby increasing the longevity of materials in the home. In addition, designing finishes and systems in the home that prioritize durability will keep the homebuyer from having to repair or replace components too quickly.

Why is this discussion critical in today's market? According to the U.S. Census,"Median monthly owner costs increased 3.8% from 2023 to 2024; more than the increase of 3.0% from 2022 ($1,902) to 2023. This increase was primarily driven by higher mortgage costs and insurance fees." In other words, costs of homes are increasing in ways that are beyond our control. In light of this, it is critical that designers and builders take steps to reduce and manage the full cost of ownership for their clients.