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How Much does a Custom Home Cost?

Posted by Sarah Steen on April 8, 2021
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The current real estate market in Colorado Springs is challenging for home buyers. Extremely low inventory and high buyer demand is causing prices to continue to rise and creating bidding wars among buyers. As of April 2021, homes listed under $400,000 are typically receiving multiple offers, going under contract within a few days, and selling for well over list price. The stressful existing home market is creating higher demand for new construction. Lots in new developments are being sold so quickly that many buyers are considering purchasing a piece of land and building a custom home. But how much does building a custom home cost?  Buyers are usually surprised to learn that even a very small custom home comes with a hefty price tag.

Click here to download the New Build Guide


The size of the home is a relatively small factor in the actual price of a completely custom home. Important items like soil prep, boulder removal and overdigs to ensure the structural integrity of the home start to significantly increase the price of a custom build.

If you build a custom home in a unique location, you will also find that because the builder has never built your specific home before. There will be some mistakes from the builder and/or you changing your mind. Either way, anything unforeseen will eat into your budget. Building a home is a process, and you will realize you should have planned a few things differently. But that’s just something that comes with a fully custom home. If you know that ahead of time you can set the right expectations

Gowler Homes, a very reputable builder in Colorado Springs that we highly recommend, states: When you factor in current land and building costs in Colorado Springs in 2020, it is difficult to build a custom home in Colorado Springs with a budget of less than $1,000,000.”

There really is no way to determine an average cost to build a house in Colorado on an individual lot. Every customer has their own tastes and requirements from design features to large appliance like heating and cooling especially when it comes to alternative energies.

Related Reading:
New Construction Checklist
5 Reasons to Hire a REALTOR for New Construction

Neighborhood or Individual Lot?

There are a few different types of subdivisions and new developments for new construction in Colorado Springs.

Production Subdivisions
In this type of subdivision, the developer makes sure that the proper infrastructure is in place. This can include streets, alleys, street lights, utility access for each lot, rec centers, walking paths, etc. This infrastructure is usually completed in sections called “filings.” The lots in each filing are assigned to the builders who commit to building on them. Building plans in production subdivisions vary very little. There is a set of home plans available from each builder with very little flexibility for some interior design choices. This allows builders to scale their production and drastically reduce the price of the homes in these communities.

Hybrid and Semi-Custom Neighborhoods

Colorado Springs is seeing more hybrid and semi-custom options in new developments.  Some developers create master planned communities focused on various buyer demographics. These neighborhoods could include a mixture of semi-custom homes (homes with a building plan that includes more flexibility to match home buyer choices), low maintenance townhomes, 55+ communities and general tract home construction. Some neighborhoods, like Flying Horse and The Farm, even offer sections for fully customized homes.

Custom Home Neighborhoods

This is a great compromise because you can build a custom home on a large lot but all of the infrastructure is in place. Utilities have been prepared and soil tests may have already been completed. This convenience comes at a high price and the construction process is still quite involved. Flying Horse North and Cathedral Pines offer this option in northeast Colorado Springs.

Individual Lot

Of course, it’s ideal to buy a piece of land in a location that you love. But it can be quite challenging to find a suitable lot if you want to build a custom home in Colorado Springs.

  • “In fills” are lots with existing homes that builders purchase with the intention to bulldoze the house in order to build a new home.
  • Unsold lots that are within city limits should be carefully examined because there might be an issue with the soil or soil preparation that could be cost prohibitive.

We frequently have clients who want to purchase a piece of land to build a future home on. Building on a single lot in a unique location is still the most difficult and probably the most involved option. This type of purchase requires a tremendous amount of due diligence:

  • Soil tests
  • Perc tests (a test that measures the rate at which water is absorbed (percolates through) the soil
  • Tree removal
  • Rock removal
  • Water considerations (if the land does not have a connection to public water: do you have water rights? Will you need to dig a well?).

Related Reading:
Where to Find New Construction in Colorado Springs
New Construction Terms

Selecting a Custom Builder

Selecting a builder is a very important part of the custom build. After all, you will be working with this team for a lengthy amount of time as you plan your dream home. You’ll want a partnership with a builder that includes mutual respect to ensure the most efficient process and satisfying experience.

Tips for selecting a builder:

  • Read our detailed post about choosing a builder here: Tips for Choosing a Builder
  • Location expertise. There are some very particular areas within Colorado that need specialty experience. Anything from specific soils to building on extreme slopes could necessitate choosing a builder familiar with those conditions.
  • Ask for references and interview them. Ask your real estate agent to assist with your research as well.
  • Where has the builder built before?
  • How does the builder communicate?
  • Remember that custom builders are essentially craftsman with individualized service. This comes at a high price.

Shopping for Land

If you decide to purchase an individual lot and build, we highly recommend selecting a builder FIRST. Then the builder can assist you in the land selection. After all, the builder will have a wealth of knowledge about which pieces of land work for your needs. For example, a flat lot might not always be the best option for the type of home you’d like. Sometimes a sloped lot is much more desirable because it creates great drainage and allows for a walk out basement. There is nothing worse than spending thousands of dollars on a lot that ends up not being suitable for the home you imagined. Involving your builder in the land selection can help avoid this costly error. (Keep in mind that it is not appropriate to have a builder spend hours consulting with you on lots if you plan on hiring a different builder).

Related Reading: Questions to Ask when Buying Land


It’s important to know that buying a lot in the mountains does not necessarily avoid covenants and HOAs. Depending on the rules and regulations laid out in the building codes, the covenants and overlaid HOA rules will determine the size, height, basement size and coverage of the lot.

Related Reading: Steps to Buy a Home


Materials come with a higher price with a fully custom home because the builder has to individually order building materials in sequence of construction. Additionally, if one of these links in construction lags, everything gets pushed further down the timeline.

What should you do?

  • If the current Colorado Springs market has you thinking that it will just be cheaper to build a custom home, we strongly recommend building a semi-custom home in your preferred location. Most of the cost is already built into the price and this option allows for better budgeting and pricing expectations.
  • If your budget is more flexible, and location and home design are the most important factors, it would be suitable to look for an individual lot or buy a lot in a custom home subdivision like Flying Horse North or Cathedral Pines.


Questions? Give us a call 719-219-9739 or email susanna@co-regroup.com. Our team is here for you and all of your real estate needs.

Click here to download the new build guide