From the AskAnton archive. This report retains its original figures and source dates. It is not a live market feed. Confirm current prices, rates, rules and property details before acting.
The Short Answer
New construction punishes optimism. The winners budget for reality, hire well, and build to the market, not to their ego.
- Building with no real contingency
- Building above what the neighborhood supports
- Cheaping out on the team and the plans
1. Building with no real budget contingency
Budgeting to the bid with no cushion for change orders, material swings, or the surprises every build produces.
What it costs: Running out of money mid-project, the worst place to be, and finishing on expensive emergency capital.
The fix: Carry a 10 to 20 percent contingency and use fixed-bid contracts where you can. Plan for the unexpected, because in construction it is not unexpected.
2. Over-building for the neighborhood
Over-customizing or building the most expensive house on the block, assuming the market will pay for your taste.
What it costs: A home you cannot recoup, because buyers price to the comps, not your invoice.
The fix: Build to the comps and the absorption you can prove. The goal is the right house for the street, not the trophy that cannot be appraised.
3. Cheaping out on the team and the plans
Hiring the cheapest general contractor, skimping on architectural plans, or skipping the geotechnical and site work.
What it costs: Costly rework, delays, and structural problems that dwarf what you "saved" upfront.
The fix: Vet the GC hard, invest in good plans, and do the soils and site work right. The cheapest team is almost always the most expensive in the end.
The Bottom Line
Budget for reality, build to the market, and hire a team you can trust. That is the whole game in new construction.
Frequently Asked Questions
How much contingency should I budget for new construction?
Plan for 10 to 20 percent on top of your bid. Change orders, material price swings, and site surprises are normal, not exceptional, and the worst outcome in construction is running out of money mid-build and finishing on expensive emergency capital. Use fixed-bid contracts where possible to cap the risk.
What is the biggest mistake in new construction?
Bad math, specifically building with no contingency or building above what the neighborhood supports. The first leaves you stranded mid-project; the second leaves you with a home you cannot recoup because buyers price to the comps, not your costs. Budget for reality and build to the market.
Is it cheaper to build or buy a house?
It depends on land cost, your build team, and the local market. Building can create equity if you control costs and build to the comps, but it carries more risk, time, and budget exposure than buying an existing home. Buying is faster and more predictable. The right answer comes down to your timeline, risk tolerance, and whether the finished numbers beat what you can simply purchase.