How Much Does It Cost To Rebuild A House And Is It The Best Option?

If you live through a natural disaster or another major event, you may find yourself in the unfortunate situation of having to rebuild your house. Luckily, most people have home insurance in place to cover the costs.

Regardless of whether you’ve lost your home or not, it’s important to understand the cost of rebuilding your home (also known as its replacement cost). It’s important to know this number when you purchase your homeowners insurance policy to make sure you have enough coverage. And it’s even more important to know it if you end up having to rebuild.

Determining the replacement cost of your home is about far more than just finding the market value. Instead, you’ll have to consider the features and materials of your home, local building costs and more.

How Much Does It Cost To Rebuild A House?

According to the home improvement site HomeGuide, the average cost to rebuild a home ranges from $80,000 to $542,500, depending on the square footage. The table below shows the average cost for different house sizes.

Cost To Rebuild A House: Self-Calculator

1. Hire an appraiser: A home appraisal is a professional assessment of the value of your home. Appraisals are often used for tax assessments and sales. However, one can also be useful in helping you calculate replacement costs. Keep in mind that a home’s appraised value isn’t necessarily the same as its replacement cost.

2. Learn construction costs in your area: One of the most important factors impacting the cost of building your home is the local construction costs in your area. With a bit of research, you can get a cost estimate per square foot in your area.

3. Multiply by the expected square footage of your new home: Once you know the average cost per square foot for construction costs in your area, you can use that information, along with your home’s square footage, to calculate the rough cost of rebuilding your home.

4. Factor in additions: The cost to rebuild your home could be higher with additional features or upgrades, including attached garages or fences, higher-value materials, recent upgrades and more.

5. Calculate and add in demolition costs if necessary: If your home wasn’t fully destroyed, you may need to finish the demolition. The cost to tear down a home can range from just a few thousand dollars to more than $30,000 depending on the size of your home and other factors.

Factors That Affect House Rebuild Costs

As we’ve mentioned, many factors can affect the cost of rebuilding your home. Here are some of the most important ones to consider:

• Original home’s square footage: Your current home’s square footage is one of the most important factors that determine its replacement cost. The larger your home, the higher your replacement cost will be.

• New home’s square footage: When you rebuild your home, you may not rebuild it exactly as it was. For that reason, you’ll have to factor in the size of your new home in addition to your original home. Keep in mind that rebuilding a larger, more expensive home isn’t likely to be fully covered by insurance.

• Location: Your location will have a major impact on your home’s replacement cost. Each area has a different average cost per square foot for construction costs. The higher the cost of living in your area, the more expensive the construction costs are likely to be.

• Building materials: A major factor in the cost to build a house is the building materials themselves. Of course, the cost of materials varies depending on where you live. But your costs could be higher if you choose more expensive materials.

• Building company: Even in the same area with the same materials, rebuilding costs can vary significantly depending on the company you choose. While you may not want to choose the most expensive company, it’s important to choose one with a good reputation and quality work.

• Upgrades: You may wish to use this opportunity to upgrade certain rooms and features in your home from what they were in the original. Keep in mind that this will increase the cost of the rebuild and may not be fully covered by insurance.

The Cost To Rebuild A House Vs. Remodel A House

If your home has been seriously damaged or is simply very outdated, you might be considering rebuilding. However, you may also have the option of remodeling the home as it is now. The cost of remodeling depends on many factors – they’re many of the same factors that impact the cost of rebuilding.

The average home remodel costs between $20,000 and $100,000. But if the home has been partially destroyed or you plan to gut the home, your costs could be upward of $200,000. 

Only you can decide if rebuilding or remodeling is the right move for your personal situation. You can weigh your options by consulting with a contractor and your insurance agent to estimate your out-of-pocket costs for each option, the completion timeline and other factors.

The Cost To Rebuild A House Vs. Buy A New House

If you’ve lost your home, you may be tempted to buy a new house rather than rebuild yours. In terms of cost, it may be more affordable to rebuild your home. After all, you already own the land.

The average sale price for a home in the United States is about $332,070 , though prices can be higher in a high-cost-of-living area. Meanwhile, you may be able to rebuild a 2,000-square-foot home for as little as $200,000.

Ultimately, you’ll have to weigh your options to decide which is best for you. Yes, it’s a financial decision and you should run the numbers. But it could also be an emotional decision. It could be that you’re attached to your home’s location and want to stay put. On the other hand, maybe you want a fresh start or to take the easiest path.

Ways To Reduce House Rebuild Costs

There are ways to reduce the costs of rebuilding your home. Some options include:

• Build a smaller house: The average home size in 2021 was more than 2,200 square feet, down from a high of about 2,500 square feet just 6 years earlier. You may find that you need less house than you thought and building a smaller home can be an excellent way to cut costs.

• Use more affordable materials: Another easy way to save money on your rebuild is to choose more affordable materials. Opting for the less expensive option can save you a lot of money in the long run. Just make sure the materials you choose are still of good quality and will last a long time.

• Work with licensed professionals: While it may not be cheaper upfront, working with a licensed professional will save you a lot of money in the long run. You can ensure that things are done properly and safely the first time and avoid having to go back and fix things later on.

• Choose a simpler floor plan: The more elaborate your floor plan, the more expensive your rebuild is likely to be. Consider saving money by choosing a simpler floor plan.

Also, remember that as long as your home was destroyed in an event that’s covered by your homeowners insurance, your insurance company may cover the majority of the costs of rebuilding your home.

The Bottom Line

No one wants to think about the prospect of losing their home and having to rebuild it from scratch. But it’s important to consider the possibility before it happens to ensure you have the proper insurance coverage in place.

If you need to rebuild your home or simply want to make some major improvements, consider getting a cash-out refi with Rocket Mortgage^® to help finance your project.