How Much Does it Cost to Build a House in Knoxville, Tennessee?

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With over 190,000 residents as of the 2020 census, Knoxville is the city proper of Knox County in Tennessee. It’s the third-largest city next to Nashville and Memphis, so it makes sense why it’s the location for the University of Tennessee. Knoxville remains festive throughout the year and is regarded to be rich in arts and culture. The city is home to several country musicians like Flatt & Scruggs, Homer & Jethro, and the Everly Brothers. Since 1935, the Knoxville Symphony Orchestra has maintained a group of professional musicians to perform in events and traditional venues around the state. Knoxville also hosts art festivals annually, including the Dogwood Arts Festival and the Rossini Festival every April.

More than the festivities, Knoxville has been regarded as a good location for affordable housing and retirees. Some of the most ideal neighborhoods in Tennessee can be found within Knoxville, including the Fountain City, Sequoyah Hills, and South Haven. As of March 2022, houses listed for sale are at an average of about $339,900 hiking up 31.2% year-over-year. The median price for the listed homes amounts to $186 per square foot. With such a yearly increase, investing as early as possible can be profitable in the long run.

The Cost of Building a Home in Knoxville, Tennessee

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The low costs of customizing a home in Knoxville have led Forbes to name the city as one of the best places to retire. This is in consideration of taxes, crime rates, natural calamities, and healthcare compared to over 800 cities in the United States. Knoxville’s cost of living is about 15% below the national average. The median cost of building a home in Knoxville can be priced at a mid-range of $135 to $300 per square foot, while the rest of the county averages at $129. The pricing mostly depends on the materials to be used, labor, and level of customization. The most basic home can cost as low as $100 and get up as high as $345 per square foot for luxury projects.

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest.

The costs for building a home can differ depending on the location, labor, and resources needed to complete the project. Most of the time, costs might only be associated with the price of the land or the materials needed for construction, but there is more to it than that. Building a new home involves permit fees, installation fees, and design fees which can pile up when added together. The total amount needed to fully build a home can be divided between hard costs and soft costs.

Hard Costs

Hard costs involve the price of labor, materials, landscaping, and the home construction itself. In 2022, hard costs in Knoxville average from $135 to $300 per square foot, depending on the level of construction. A standard-grade home can cost anywhere from $100 to $130, a premium-grade home ranges from $135 to $300, and a luxury-grade home is $300 to $345 or more. Based on previous trends of home building in the whole of Tennessee, the cheapest builder-grade home is a bungalow type priced at $130.97 per square foot. This type of home is the fastest and easiest to build in comparison to structures made of brick and cement. The materials needed for the project can amount to 30 to 50% of the total budget while framing costs can be 10 to 20%, and foundation costs at 10 to 15%. Framing costs for a custom home can range from $13 to $39 per square foot. For a 1,843-square-foot space, the foundation costs can be priced from $24,137 to $54,209.

Based on the data from 2022, homeowners of Knoxville spend an average of $6,066 for roofing. The price of shingle roofing can range from $5,337 to $6,796 or $5 to $6 per square foot. This does not include permit fees, inspection fees, sales taxes, and general contractor fees. When it comes to flooring, it may cost anywhere from $722 to $5,422, depending on the type of flooring. The cheapest is vinyl and linoleum flooring which costs $2.50 to $4 per square foot, while laminated flooring is priced at $5.50 to $6 per square foot.

Choosing between the Heating, Ventilation, and Air Conditioning (HVAC) system installation or air conditioning can depend on the homeowner’s preferences. For the full HVAC system, it is priced at an average of $1,695 to $2,025, while air conditioning is at a median cost of $2,700. For air conditioning alone, bigger houses might require a central type which is around $2,344 to $3,096. The final price is usually determined based on the ductwork, installation fee, and component needed.

Plumbing is another crucial hard cost at an average of $365, including labor costs, materials, machinery, and clean-up fees. There’s also the sewer line installation or repair which can cost a range of $50.96 to $65.26 per linear foot. The pricing range includes labor, permitting, excavation, and installation. Building a house from the ground up might require a sewer line installation instead of a repair. Within the spending allotted for the sewer lines, there’s also an additional average of $320 for services on faucets, bathtubs, and sinks.

Finally, the electrical wiring can be at a median cost of $999.76, based on an hourly rate of $35 to $100 for skilled electricians and $39 to $54 for licensed electricians.

Figure 2. Soft cost percentage and average price range of additional fees, determined from the overall cost of custom home building in Knoxville, Tennessee.

Soft Costs

Soft costs are the costs for other factors besides the building of the house itself. It comprises the cost of the land, permits and other fees, and architectural and interior design services.

Cost of the Land

The value of land in Knoxville is $5 per square foot on average. It is ranging from $0.75 to $23.41, depending on the location, neighborhood, and market value, among other factors. The cheapest vacant land with a size of 4,791 square feet is priced at $11,999, while a 40,075-square-foot lot is at $469,000, based on listings in Redfin.

Permits and Other Fees

The total amount that typically goes to permits and other fees is based on the total value of the project. Usually, when the cost of construction is higher, the fees hike up. For a range of $100,000 to $500,000, these fees can be anywhere from $490 to $1,690. Additional fees can also be expected for HVAC inspection, plumbing, and if the slab is other than Monolith pour.

Fees for review of plans priced from $75,000 to $500,000 are at an average of $100. This is based on the review of plans for one or two-family residential properties and other structures. If the value is less than $75,000 then a $50 fee is to be expected. But, if it’s priced higher than $500,000 or $1 million, then fees are priced at $250 and $500, accordingly.

On top of that, the Board of Zoning Appeals (BZA) also charges a double fee of $200 when a violation of the zoning codes has been committed.

Architecture and Design Fees

A typical architectural firm situated in Knoxville can charge an average rate of $150 per hour. A range of 10 to 15% of the construction costs usually goes to the architectural services. The time spent for consultation with an architectural firm can be anywhere from 30 to 250 hours and when multiplied by the $150 rate, it can cost about $4,500 to $52,500. Meanwhile, interior designers charge an average of $5,839 per project, prices usually ranging from $729 to $10,839. This fee includes labor costs, materials, equipment, and cleanup fees.

The national average for architectural fees ranges from $1,971 to $9,518. This pricing is based on the firm’s location, type of services, and size of home.

How do the prices of homes in Knoxville compare to other nearby cities?

Within the city of Knoxville are 63 neighborhoods. According to the latest house listings, Beaumont offers the most affordable homes with an average of $117,000. The most expensive neighborhood in Knoxville is Sequoyah Hills with an average of $699,000. The whole of Knoxville has a median home price of $339,000 with a yearly increase of about 31.2%.

Meanwhile, the neighboring cities of Knoxville have house listings averaging from $245,939 to $587,380 for mid-range homes. The nearby city of Alcoa has a median home value of $245,939 with a 31.0% year-over-year growth rate. There’s also Rockford City with homes averaging at the price of $279,556 and a 33.5% growth over the past year. One of the most expensive cities near Knoxville is the suburban town of Farragut. The value of mid-range homes is at the median cost of $587,380 with a growth rate of 29.6%.

What Leading Custom Home Builders and Architects that Serve the Knoxville Area Say

Within the past year, general contractors like Falcon Development have witnessed an increase in pricing for labor and cost materials, including lumber, concrete, drywall, and such. Some suppliers even had a dramatic increase of 40% and price variations are happening week after week. The continuous increase in price influences the constant change in a client’s budget for a home build, as caused by the pandemic and the shortage in the supply chain.

Another general contractor Matt Noss Construction also added that the site work issues and finishing preferences can impact the total costs for building a home. More than that, there’s also a big difference in whether the house will have air conditioning or what type of roofing will be used.

Biles Construction also stated that Knoxville experiences an increase of 18 to 24% in the home building market, year over year. The increasing demand is influenced by people fleeing metropolitan areas looking for a location with lower taxes, fewer crimes, and better schools. Since Knoxville is a hotspot for these factors, more buyers are set to move to the area — influencing a higher demand and lower supplies and so, increasing the costs of home building.

The Future of Knoxville’s Residential Construction Industry

As the world continues to experience the repercussions of the pandemic and supply shortage, prices have gotten higher than usual. This has significantly affected the pricing for materials and land costs in Knoxville, like the rest of the cities in the United States. Despite this, interested buyers can still expect lower living expenses than in other places in the country.

The low living costs and affordable housing offered by Knoxville continue to convince more people to become homeowners in this city. Buyers have more options when it comes to neighborhoods, depending on what they’re looking for. It’s surely an ideal location for growing families as the city is home to 77 public schools and 34 private schools. Parents can have peace of mind knowing that their children can have access to quality education. More than that, as the value of homes in Knoxville is increasing at an average of 31.2%, home construction should be a promising investment. Year after year, homeowners can expect an increase in their house market value which is profitable in the future.

Ideal Retirement Location

As Forbes recently named Knoxville as one of the best locations for retirement, it promises an opportunity for more retirement communities in the city. Retired individuals or couples can expect better air quality, good healthcare, low taxes, low crime rates, and affordable living costs. With the median home price in Knoxville averaging $135 to $300 per square foot, retirees can make the most out of their budget. It is important to note that as more people flock to Knoxville, affordability is projected to go down; more demand means less supplies and higher prices.