Building a New Home

Parent Q&A

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  • Custom Home

    Sep 29, 2021

    We want to move out of Oakland to Pleasanton, San Ramon, Orinda, or Pleasant Hill, but can’t find a home in our budget. Is it more affordable if we custom build? Should we tear down vs build on developed land? With the shortages in building materials is this even a good idea? Any ideas are appreciated!

    As a general rule, custom homes are more expensive than buying existing properties. Spec homes can often be built new for less than renovating existing homes - especially if the existing home needs a lot to bring it up to code.

    If you have never taken on such a project and are considering it because you can’t afford to buy, I would advise against it. Generally this kind of thing requires a lot of cash outlay before you find out if you can even do what you want to do. Then you would have to qualify for a construction loan - which is harder to get than a mortgage and has a higher interest rate.

    There is a reason why real estate developers build most new things. They have the experience to know what projects will be approved, the architect and engineer relationships to do the design, the cash to fund the project until construction, the track record and assets to get a construction loan, the contractor relationships and volume to do it at a low price per square foot, and the relationships with real estate agents and brokers to sell or rent at a profit.

    Profits can be high, but the risks are often very high. I’ve seen developers walk away from projects after spending $150k doing their due diligence and figuring out that the final project wasn’t going to pencil out. That’s fine for them because that loss will be offset by another project that’s profitable. But if it’s for your own house and something isn’t going to work, are you prepared to walk away from thousands of dollars already invested?

    You absolutely can build new for less than buying, but only if you have the knowledge, experience, and cash to do it. Try interviewing a few developer / architects who work in the cities you’re considering and get a budget and proposal for this from them. And go in with eyes wide open if you pursue this. Remember if the developers aren’t competing for the land that you’re trying to buy, then the numbers don’t work for them — and they probably won’t be in your favor either.

    Like the previous poster said, it's not cheaper to build new and will take a lot longer. Your best bet is find a fixer and updated it to your taste. If the homes you are looking at are out of your budget, then the home that you want to build will probably be out of your budget too. Expect to pay $600 or more per square foot for building new not including buying the land. 

  • My husband and I are frustrated with the housing market.  We continue to get out bid on less than desirable homes that we can hardly afford.  We are starting to shift our attention to buy and build.  Specifically we are looking into prefab homes.  Unfortunately, our realtor is not supportive nor knowledgable in selling land lots.  Can someone please recommend a realtor who specializes in selling land?  We are open to anywhere in the Bay Area but are mainly focusing our search in Castro Valley area.

    Thanks in advance.

    I think that the bay area is largely built up and very little land is for sale. You might have some luck if you looked for land you liked, and then tried to convince the owner to sell. Your real estate agent is not going to make much money off of land, so they are not going to go out of their way to accommodate  you. 

  • We have a double lot in El Cerrito and would like to build a second home on it and sell our older home that we live in right now on the same property. We have a vague idea on some options but would really love to hear from folks who know the process (What to do first--Contact an architect for ideas and pricing? Seek a home equity loan? A builder's loan? A line of credit? Contact the city first to see if we can build a single family home on our property?) and recommendations for architects/builders/contractors, tips on pulling permits, banks, insurance, etc.

    We just need to educate ourselves and be pointed in the right direction.

    Thank you!

    I think the first thing you'll want to do is talk to the city to see if you can subdivide your lot into 2 separate lots.  Otherwise it will still be one property with 2 houses, and you'd be tenants in common with anyone you sell to, which is not ideal for a lot of reasons.  If you can subdivide, check with the city on what permits/approvals/variances you would need.  Then get cost estimates from architect and contractor and look into construction loans or a line of credit with your bank (I doubt a HELOC would be enough but who knows).  I would also talk to any neighbors that might be impacted to make sure they can't impede the project.  Good luck!

    Just call the city and speak with the planner on duty. S/he will give you the overview of what's required from the city side and you can go from there. You're def going to need to split the lot which is an engineering contract, as well as get an architect & contractor. I am not sure I would do this without the cash on hand to pay for it myself... but if you're dead set on it, try to get a loan from a family member, and if that is not an option, yes, you're looking at a construction loan from a bank.

    Hi there:

    I'm in the throes of a major renovation in Albany and so have learned my way around some of the relevant considerations here.  IMO, your first step should absolutely be to go to the city, talk to a staff planner, and clarify exactly what is legally possible on your lot.  That means taking a careful look at the zoning code to ensure that what you want to do is permissible, including such mundane but critical matters as adequate space for required off-street parking and maintaining required setbacks from property boundaries, to cite only two.  Also, if you want to sell one house and live in the other, it sounds like you will need to convert them (in a legal sense) into condominiums -- as far as I know, that is the only way to have multiple house properties on the same parcel that can be sold independently of each other.  So you will need to understand very clearly the city's rules around that too.  After getting clear on this stuff, you may be ready to begin preliminary discussions with an architect.  FWIW, based on our conversations with general contractors (now a few years old), for initial planning purposes, you can probably ballpark your construction costs at about $400/sf, and that will not be exhaustive of all the costs involved (e.g. design fees, engineering fees, utility hook-up fees, permits).  These so-called "soft costs" will almost certainly add up to multiple tens of thousands if you are building a new structure from scratch.  Building around here is exciting but it ain't cheap.  Good luck!

    You state yu have a double lot, and you want to build a new house, and sell the old house Your very first issue is whether, and how, you can subdivide the double lot, into two single lots, so when the new home is built, the old one can be sold as a separate parcel/home. Since you live in El Cerrito your county is Contra Costa County. You may want to start with a call to the Tax Assessor in Contra Costa, and proceed from there.

    I would say you need to go to the city first and find out if it's even possible.  For Architects, I'd recommend Alex Korn, AIA his website is  He is very good at listening to your needs, answering questions and designing a house that fits your current and future needs.  For banks, I'd start at your local bank and ask them advice on financing.

    Good luck on your project,


  • Have you recently build a new small home (600-700 sqft) in berkeley? How much did it costs for the Planning and design, permits, and construction?  Do you have a trusted contractor you would recommend? 

    I can highly recommend Eric Sterken. He is a licensed and insured General Contractor and has done a LOT of work for me. Excellent craftsmanship ... and he's also a delightful person and wonderful to have around. 

    His company is E&J Builders, and their website is here:

    His email is ej [at]

    Good luck with your project!

    You can trust Levitch Associates Inc. They have been around for more than 60 years in Berkeley. They do design-build.  I met different contractors but these guys do a good, clean job and have a heart. ❤️

    There was a NY Times article recently about a start-up in Berkeley that sells and installs prefab tiny homes. I am looking at this for my mother, as she gets older. The company looks pretty cool, and they have a lot of details on their website about cost options.