How Much Does it Cost to Build a House in Scottsdale?

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Scottsdale is the “West’s Most Western Town.” Located in Arizona, the city holds more than 200 golf courses and is considered the “World’s Finest Golf Destination.” The city also hosts more than 125 professional art galleries and studios, making it one of the highest per capita, and one of the largest art markets in the country. The city is also known for the people who have made it their home, including award-winning director Steven Spielberg, award-winning actress Emma Stone, author Stephenie Meyer, and architect Frank Lloyd Wright. The Frank Lloyd Wright foundation holds its headquarters in his winter home and studio, the Taliesin West in Scottsdale. The iconic property is not only a UNESCO World Heritage site but also a National Historic Landmark.

The COVID-19 pandemic forced people to work and study remotely, and Scottsdale was not immune to the transition. However, in 2021, the city was ranked first among the top 100 biggest U.S. cities the Best Place to Work from Home. The survey compared remote work data from 2019 and October 2020, which showed that 37% of the city’s workforce can work from home and that it has the third-lowest poverty rate in the country. Niche also places the city in top positions for several lists, such as #1 Best City to Retire in America, #22 Healthiest City in America, and #25 City with the Best Public Schools in America. The Trust for Public Land ranks Scottsdale #66 on the 2021 ParkScore, with 40% of its residents living within a 10-minute walk from a park. It is also worth noting that besides having a location with low catastrophic risks, Scottsdale holds around 25% of Arizona’s corporate headquarters.

With these, prospective homeowners and developers may ask–how much does it cost to build a home in Scottsdale?

The Cost of Building a Home in Scottsdale

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Nationally, building a 2,000-square-foot home costs an average of around $300,000 according to Forbes, which in Arizona would cost $295,580 to construct. On average, constructing a 1,500-square-foot home in Scottsdale would cost around $307,000. The pandemic pushed people to be more conscious about their lifestyles, and with Scottsdale being known for its golf courses and golf communities, it would seem attractive to those looking for a proper area to retire, or maybe for millennials to align their active hobbies with. However, the increase in demand for homes in the area pushed for prices to reach double-digit appreciations during the fourth quarter of 2021. This includes the Phoenix-Mesa-Scottsdale Metropolitan Area, or simply the Phoenix Metro area, with an appreciation of 25.7%.

The cost of building a new custom home in Scottsdale depends on the labor, materials, and professional services required. Some of these costs fluctuate independently from each other, such as the foundation, framing, exterior, and interior finishing. There are also the fees the homeowner or contractor may need to settle before proceeding with the construction process. These may include architecture and design fees, building permits, land fees, plumbing, electrical, and other miscellaneous fees that the city or state may require.

Hard Costs

The hard costs are expenses that fund the physical structure and construction of the home. These costs typically include the materials, labor, and even the total building value, and may vary with the quality or even the waiting time. According to BuildZoom bids, a budget or basic home starts at $142 per square foot or around $213,000 for 1,500 square feet. Middle-tier home constructions cost around $205 per square foot, while a luxury or high-end home starts at $230 per square foot.

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest. Image Source: National Cost Guide.

RealEstate Agent lists down some of the costs that may come with new home construction, including lot clearing and grading, which may cost around $2,700, and foundation, which may be priced at $6 per square foot. Exterior finishes may cost around $12 to $20 per square foot, while interior finishes can cost anywhere between $4,000 and $8,000. For home systems such as electricity, plumbing, and heating, ventilation, and air conditioning (HVAC), it may cost around $40,000 altogether.

HomeBlue states that drywall installation can go from $1.50 to $2.20 per square foot, including labor and a 1/2 inch drywall material. HomeYou indicates that roofing in Scottsdale typically costs around $5,501 to $6,214, and framing can cost around $3,280 to $4,789. However, framing can go from $2 to $12 per square foot or more with the current price of lumber and steel. Lumber costs reached an all-time high around May 2021 and dropped by 67% around July of the same year; however, as of February 14, 2022, the price of a thousand board feet reached $1,264.

For the interiors, Flooring America shares the cost of flooring in Scottsdale. Carpets cost around $2 to $11 per square foot, while hardwood flooring is around $6 to $14 per square foot. These costs, however, can still increase depending on style, brand, color, and other factors. When it comes to installation, the cost for carpets ranges from $700 to $2,500, and $2,500 to $6,000 for hardwood flooring, which may still increase depending on the size of the room and labor needed.

Arizona-based HVAC service, Autumn air, shares that complete HVAC replacement may cost anywhere from $5,000 to $10,000, which depends on the model and capacity of the HVAC system, ductwork condition, and home size.

Soft Costs

Soft costs are expenses beyond the physical construction of the home, such as architectural design, pre-construction, land development, and permit fees like building, plumbing, water, and others.

Cost of the Land

Getting the perfect property is crucial in the process of home construction. Generally, prices may vary with several factors like distance from metropolitan areas, view, amenities, and even land topography. According to RealEstate Agent, buying a one-acre lot in Scottsdale starts at around $49,500, but can go as high as $998,000. On Redfin, buying a 1.12-acre land, which is around 48,787 square feet, can cost around $110,000. The cost could go to $3,695,000 for a 2.34-acre lot or around 101,930 square feet. These values may still increase depending on whether the land is developed or not, since some properties listed on property purchase websites may be unimproved for residential purposes.

Permits and Other Fees

Permit applications may be submitted online through the Digital Plan Submittal Program of the Scottsdale Planning and Development Services. According to the website of RealEstate Agent, permit fees in the area vary from project to project, but the client should have at least $725 set aside for the process. The Plan Review fees of single family custom homes in the city are as follows:

Livable area with Air Conditioning (A/C) – $0.44 per square foot
Covered area (non-A/C) – $0.28 per square foot
Fences – $0.16 per linear foot
Retaining walls – $0.16 per linear foot

For the permit fee schedule, the following are the specifics for custom single family homes:

Base Fee – $195
Livable area with A/C – $0.78 per square foot
Covered area (non-A/C) – $0.44 per square foot
Certificate of Occupancy – $160
Geographic Information Systems (GIS) Fee – $315
Lowest Floor Certificate – $295

To help project owners, architects, and builders in calculating the total permit fees, the Scottsdale city government developed a building permit estimate fee calculator.

Architecture and Design Fees

Architecture and design fees vary with the size, scope, and complexity of the construction project. The client’s preferences, needs, and lifestyle also contribute to the overall or final design. Some projects may be simple and straightforward, while others may require extensive research, attention to detail, and consultation with industry professionals. Typically, architect rates range anywhere between 5 and 20% of the total construction cost. RealEstate Agent states that hiring an interior designer can cost around $6,000. For Arizona, MK Design and Build states that hiring an architect and a structural engineer can cost around $100 to $250 per hour.

How do the custom home building costs in Scottsdale compare to other nearby cities?

According to Realtor, Scottsdale is currently a seller’s market, where there are more buyers than homes available for sale. The city is known to be a relatively “luxurious” area for both Maricopa County and the state of Arizona. However, when it comes to new single family home construction, Scottsdale is lower by a small margin compared to two other Arizona cities, Phoenix and Mesa.

For Phoenix, constructing a basic or value-conscious home starts at $164 per square foot or a total of $246,000. A middle-tier or mid-range home costs around $213 per square foot, which is around $320,000, while luxury or high-end homes cost an average of $474,000, or $316 per square foot.

For Mesa, the basic or value-conscious construction costs of a new single family custom home is an average of $143 per square foot. Middle-tier or mid-range home construction costs anywhere from $152 to $195 per square foot. Lastly, for luxury or high-end homes, the construction costs around $248 per square foot or more.

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

Ryan Bates, principal of Beacon Rock Custom Builders, shares that Phoenix Valley is experiencing a drastic shortage in the housing inventory: prices are expected to increase 15 to 20% this year. This may even be outpaced by the inflation in the cost of construction, with price increases being seen on a monthly basis. Bates recounts when one quote lasted a total of four days due to the constant changes in material costs. Some of the major factors for the price fluctuations are the supply chain issues related to COVID-19, the shutdowns in Europe and China, and the rising fuel costs. He recommends that if homeowners want to build, then they should start quickly since material prices will continue to climb upwards, and interest rates might increase as well. Although commodity prices like wood and copper might ease, there may be little chance that manufactured goods will go down anytime soon. This is the same for appliances, plumbing, tiles, and light fixtures. It is also advisable to decide and order the selections as early as possible due to brutal lead times. For example, some appliances nowadays are taking over a year to complete. Costs may soon lower by 10 or 20%, but probably not before they rise to 30% first. Thus, there will never be a more affordable time than today.

Brad Leavitt of AFT Construction says that the biggest challenge for clients to consider is the supply chain. With factors like high demand, product output shortage, and extended labor force, build times are prolonged. Pricing is also difficult to guarantee until the product is ordered and delivered. Some materials may need to be ordered in advance, but items like lumber may only take around seven to 28 days to deliver.

Jason Easterly of E&S Builders shares that prices increased by 25% since last year, and it is still rising. Easterly mentioned that supply and demand, shortage of labor, and shortage of materials from suppliers were contributing to the increasing prices. He advises project owners to ensure that every finish is 100% dialed in before breaking ground so that the items can be secured and priced before it is needed. Doing so will also cut down the build time since there will be no waiting time that would probably have long lead times. On average, E&S Builders work on 6,500-square-feet properties for around ten months once they start the pad.

Tom Fisher of Fisher Custom Homes shares that may be difficult to place a fixed price on custom homes until the supply chain, labor force, and inflation solidify. Whether COVID will come back or not should also be considered for the values. The North Scottsdale market is seeing trends with total house remodeling, partial raze and rebuild, and complete raze and rebuild. As for the raw land inventory, it is almost done, with no new areas within the city limits for new developments or custom homes.

As for Argue Custom Homes, its founder, Tom Argue, reiterates how the supply chain, oil, gas, and product availability have impacted the construction industry, pushing cost trends at an all-time high. Budgets and product estimates are also constantly adjusted. It would be beneficial for patient project owners to check if market prices will adjust to more reasonable ranges. However, for timeline-focused clients, selecting a building team that is committed to working on budget updates and scheduling is crucial to ensure the clarity, timeliness, and full view of the project development.

The Future of Scottsdale’s Residential Construction Industry

The Phoenix metro was one of the hardest hit by inflation. The area saw a 10.9% increase between February and December 2021, with another 2.1% increase between December 2021 and February 2022. Thousands of people are moving into the Valley, which includes Scottsdale, but the housing inventory is yet to catch up. Scottsdale-based economist, Elliot Pollack, predicts that if the housing market fails to keep up with the increasing demand, then only 20 to 30% of the Valley residents will be able to afford the median home price in 2025. This problem has become difficult to address especially with the supply chain issues and labor shortages.

Another side to this issue is that more developers are constructing big projects, purchasing and building on mixed-use land, and converting commercial land for purely residential use, which is destroying the city’s economic viability. Scottsdale has more retail space per capita compared to other cities in the Valley, but the need for more housing has become so heightened that even shopping centers are being converted into apartments.