The Reality of Construction Costs
As a licensed building general contractor, we see the realities of the building trade and the economy affecting reconstruction and new construction of homes every single day. The Los Angeles Fire, Pacific Palisades, and all the areas that were burned are bringing a lot of this to the forefront of public news. Contractors in Los Angeles are saying equity is gone, and new construction will be expensive.
Insurance Policy vs. Actual Construction Costs
What does that mean? Even though you may have an insurance policy on your house that covers the value of your house, the construction of a new house might cost two times as much as what your insurance policy covers. How is that possible? The new building laws might require higher-level construction, maybe more resiliency for earthquakes, better fire protection, or updated codes. The NEC electrical code comes out every few years and has new rules about building requirements. When you got your insurance policy and they put a value on your home per square foot, that was done using the codes and policies at the time.
Challenges in Rebuilding
You may find that building a new home, especially in a disaster area where thousands of homes will be built simultaneously, will be more expensive. Labor costs might increase due to supply and demand. Getting materials to the job site might be more difficult because of road conditions. Construction costs will be higher.
Expert Consultation Available
In the meantime, remember that ActualHuman.com offers live one-on-one private video consultation with an expert in this exact subject. We want to listen to your story, hear your questions, and give you expert advisement on your options. We can tell you what we know about your particular situation.
Preparing for Higher Costs
If you are getting an insurance policy on your home, you may want to look at higher coverages so you can afford to rebuild. Remember, you’re already going to lose your deductible—whether it’s a couple of thousand bucks or $5,000. You also want to factor in that building a new home might be more expensive than the construction value of your previous home.
Zoning and Permitting Changes
Building new homes comes with a completely different landscape in terms of zoning, permitting, and requirements. Some of these could change as new homes are being built in Pacific Palisades. The city may also rezone some properties to multifamily units. This means the replacement value of your house, once built, might be less because it is now next to an apartment building instead of single-family homes.
Talking to a General Contractor
You want to take all of this into account. Talk with a general contractor. You can click the link below if you have questions about what it might cost to build your house and what the realities of reconstruction might be. A new home replacing a 20, 30, or 40-year-old structure might be different. You may get a better house, but you might have to cut corners on luxury items such as fixtures, furnishings, countertops, and cabinets. These may not be as nice as what you had before, just to keep up with the base construction cost, which might be higher in your area.
