Everyone knows Toronto’s housing costs are out of control. But what if you do it yourself?
Building a home in Toronto is still very expensive. It can easily be more expensive than buying an existing house.
According to one expert estimate, building a home in the Greater Toronto Area can run you between $205 to $280 per sq. ft.
But those numbers don’t include a lot of important extras — most notably, the cost of buying the land itself. The final cost will also depend on what type of home you want to build, and the labour and materials involved in building it.
How Much House Can I Afford?
This is one of the first questions you should ask yourself when considering building or buying a home. It’s often not as straightforward as you might think.
When buying an existing home, you’ll need to factor in the home’s sale price as well as the mortgage you’ll have to pay for (probably) decades to come.
When building a home, however, there are a number of extra costs to consider. These include the cost of the land, the cost of your materials, the cost of the labour, and all the permits, inspections and unexpected costs that are sure to crop up.
We’ll dive into all of these costs below.
What To Consider When Building A Home
When building a home you should consider how much it will cost and where you’ll get the money; how big you want it to be and how big it can be; and what the local laws say about where, when and how you can build it.
Land Cost
The first cost you’ll be hit with is acquiring the land. This can be just a few thousand dollars if you’re looking at an empty lot in Libau, Manitoba, but in Toronto it will run you hundreds of thousands at a bare minimum. Many vacant lots cost millions in the city.
Like homes, the specific costs will vary wildly depending on location and size. But you can easily get a sense by going through existing listings.
If there’s an existing home on the land, you’ll need to tear it down. Thankfully, that’s much less expensive than building a new one. Estimates hover around $20,000 for Toronto. Budget up to $50,000 to be on the ultra-safe side.
The cost will vary depending on what kind of materials the existing structure is made of. If it has material that requires special handling, like asbestos or lead pipes — or tougher materials like lathe or plaster, the cost will go up.
Overall Building Cost
Okay, you’ve secured your land. Now it’s time to get to work.
According to the 2023 estimates from Altus Group, a real estate software company, the cost of building a home in Toronto can run you between $205 to $280 per sq. ft. for a single-family home with an unfinished basement.
That translates to $205,000 for a cheap 1,000 sq. ft. house, to $840,000 for a 3,000 sq. ft. home on the pricier side.
As expected, that’s among the priciest in Canada. Altus estimates Vancouver has a lower floor but a higher ceiling with building costs between $185,000 and $945,000 for the same range. But a city like Halifax will run you between $105,000 and $495,000.
Are the maritimes calling yet? No? Then it’s time to consider more specific building expenses.
Hard Vs. Soft Costs
First, let’s define some terms.
So-called “hard costs” have a fixed rate. This includes things like the frame of the house, labour, equipment, material, and anything that you can touch or see.
“Soft costs” refer to things like permits, inspections, legal fees, and other non-material costs that are nonetheless mandatory when building a home.
Your general contractor should give you a list of hard and soft costs early on in the process so you can prepare for the hit to your pocketbook.
Labour
You’ll have to deal with a whole bevy of builders, including roofers, plumbers, electricians and general contractors.
Different general contractors will give you different estimates, but a good estimate is 10 to 20 per cent of the building’s entire cost. It’s up to you to do the research and find ones that will do a good job at a tolerable price.
In addition to building the house, you’ll have to hire people to demolish any existing structures. They might also have to level out the lot and remove any big obstacles like boulders or trees.
Remember, this isn’t an area to cheap out on. You’ll want this house to stay standing for a long time.
Materials
Timber construction or concrete? Hardwood floors or vinyl? Smart home features? Soundproof windows?
Maybe just a shipping container?
We’ve come a long way from stick-and-mud huts. The list of potential upgrades to your home structure is as long as the costs.
Custom homes will cost more than “pre-designed” homes — cut-and-paste templates builders have done a million times before. And each of those are more expensive than “prefab” homes that can go up much more quickly.
It’s up to you to determine what you can and can’t live without — and what will help your home’s resale value down the road, if you’re not planning to stay in it forever.
Regulations
Different cities have different building codes that homebuilders have to abide by. In Vancouver, for example, earthquakes are a constant danger.
So new homes have to be flexible to sway with the earth, instead of crumbling. That’s why you see lots of brick houses in Toronto, but not on the west coast.
Check out the City of Toronto’s construction requirements and guidelines page for a good starting point.
You’ll have to contend with getting a building permit and paying for inspections, keeping noise under control, making sure the site stays clean, and giving appropriate notice to your neighbours.
These are all rules a reputable homebuilding company should know by heart.
How To Save Money When Building A House
Not building in Toronto would be your best bet. But if you’re dead-set on the Six, there are a number of ways you can save a bit of money.
First, consider your location. An empty lot in downtown Toronto will likely cost a lot more than
Second, consider your materials. Would a prefabricated (also known as “prefab” or “modular”) home meet your needs? Those are often cheaper than “stick-build” homes by a significant margin, since they’re easier and faster for contractors to build.
Third, think about size. Ask yourself: “how much house can I afford”? Do you really need a 3,000 sq. ft. home, or can you live more minimally? Do you want a finished basement? Are you planning for a family, or do you just need one bedroom? Do you need a backyard, or can you make do with a nearby park?
Living in the city can require tradeoffs, and space is often the first thing to go.
Fourth, don’t do everything at once. Even if you do want a basement, you can always save it for down the road when you’ve had a chance to rebuild your finances.
Finally, do your research. Ask friends and family and become a review-reading machine when comparing contractors. Get multiple quotes from competing contractors and, if you feel comfortable, haggle with them, armed with your research and previous estimates.
Remember: don’t cheap out on labour. But with enough research, you should be able to find one to give you the best bang for your buck.
Can I Get A Loan To Build A House?
Yep! This is called a “construction loan.”
It functions similarly to a mortgage. You go to a bank and apply, submitting documentation for how much you think the cost of building the home will be, combined with as much proof as you can muster that you’re good for the money.
Construction loans are much different than mortgages, though, since they’re short-term loans — usually not more than a year, compared to the usual 25- to 30-year mortgages.
You may be able to combine a construction loan with a mortgage, though. This is called a “construction-to-permanent loan.” Once the building is done, it converts to a traditional mortgage.
Frequently Asked Questions
What is the average size of a home in Ontario vs. Canada?
According to Statistics Canada, the median area of a single-family detached house in Ontario is 1,520 sq. ft. That obviously varies — more rural areas tend to have bigger homes than Toronto. The average condo in Toronto is 840 sq. ft, according to StatsCan. One independent estimate puts Canada’s average at 1,948 sq. ft.
How much does it cost to build a 1,500 sq ft house in Ontario?
This number varies wildly depending on where you build. In Toronto, prices for a single-family detached home with an unfinished basement range between $205 to $280 per sq. ft. In Ottawa, that number is $140 to $225. In more rural areas, the numbers will go even lower.