Publication Date: Friday, August 13, 2004
Building a new house
Building a new house
(August 13, 2004) How do you figure the costs of wood vs. steel framing?
by Lynn Comeskey
Q I want to build a new house on property I own, but I am having a difficult time trying to find out how much it would cost per square foot to build. I need to know this to see if the project is even feasible before I start the process. I want the house to be 3,000 to 3,500 square feet and to have a full basement.
Also, I want to use lightweight steel framing instead of wood and would like your opinion on the matter. Do you know any builders and engineers in the area who have had experience with that type of construction?
And worker's compensation and liability insurance costs seem to be big factors in the cost. What are the chances building costs will be reduced if the state can get it together and straighten things out?
A You win the award for the most (and best) questions asked!
How much will it cost to build a new house? In this area, use $300 a square foot. That's a good ballpark to begin to determine feasibility.
Factors that will affect cost include what the parcel is like (is it steep or flat, what kind of soil and where is it located?) and what kind of details and materials do you want to incorporate into the home? I don't know the cost of a full basement, but it will be expensive.
When speaking of steel in construction, it is important to make the distinction between heavy structural steel posts and beams and lightweight (26-gauge) steel studs and plates. Lightweight steel is used frequently for non-structural tenant improvements (usually walls) in commercial buildings and not so much on residential work. I believe steel framing is not used in residential work because of custom more than anything else.
If one were to have an "all steel" house, one would need to use 6 and 8 gauge "C" channels for joists. The heavier gauge joists are much more difficult to work with and, consequently, are not used as much. You shouldn't have any trouble finding contractors and engineers experienced with framing lightweight steel walls; it will be more difficult to find contractors with a lot of experience with the heavier gauge joists. I go to a dry wall subcontractor for steel framing when I do have the need.
There are a number of advantages to using steel. Steel is far more stable than wood; you hardly ever find a warped steel stud. As you might guess, termites have virtually no interest in steel (there still will be wood in your house -- the plywood sub floor for instance -- so there is still the attraction). Steel is also less susceptible to mold.
In the past, a contractor could always depend on the price of lightweight steel being stable whereas wood pricing was volatile. However, with the continuing construction boom in this country and in China, both wood and steel prices are increasing rapidly. But, steel appears to be increasing faster. So the price stability issue advantage is not currently valid.
I could not obtain a consensus regarding relative costs. Prior to the material cost increases over the last six months steel walls in place were probably less expensive than wood. Now I am not so sure. I just don't know about the relative costs of an all wood house versus a mostly steel house.
Regarding worker's compensation insurance, State legislation mandating change has recently been signed and, while the results are not in yet, it does appear that the rates are going down. However, they haven't decreased as much as most of us would like.
Coincidentally, the San Jose Chapter of the National Association of the Remodeling Industry (NARI) has just completed a survey of liability insurance costs with some interesting results. It comes as no surprise that the bad news is the rates have gone up astronomically (should I also say obscenely). Some of the members reported up to a 400 percent increase in the last five years.
The good news is that even with the increases, the cost of liability is approximately only 1 1/2 percent of gross revenue -- it's not significant. The problem for contractors (and for any other small business for that matter) is that cash flow is usually tight and adding another $10,000, $20,000 or $40,000 a year in increased insurance costs is very difficult to handle. Because we sometimes compete with people who don't have insurance, we can't always just increase our prices.
To answer your question, the cost of liability insurance does not appear to significantly affect construction costs so don't wait for prices to go down. Further, I don't know the impact of worker's comp insurance, but my guess is that it is also not significant, just painful!
Lynn Comeskey continues to work with Mac & Lou Construction Co. in Palo Alto. Readers can write Comeskey care of the Palo Alto Weekly, P.O. Box 1610, Palo Alto, CA 94301.
E-mail a friend a link to this story. | 
