Here’s what to know about the cost of starting over from the ground up
It’s never fun to dwell on a potential disaster involving your home. That’s why homeowner’s insurance serves as a safety net for your biggest investment.
To ensure that your insurance policy offers enough coverage, you’ll need to know the rebuilding cost of your home, which is the dollar amount needed to replace the entire home should you have to rebuild after a hurricane, fire, or other catastrophic events. As building prices rise and inflation grows, it’s important to revisit your insurance coverage often to prevent the problems that come with being underinsured. Let’s take a look at how to calculate your home’s rebuild cost to set you up for success.
The overall cost to rebuild a home has dozens of factors, and the following are the most common.
One of the biggest cost factors is the total square footage. Since the size of the home will impact the amount of materials and time—the two most significant expenses of the job—the larger the home, the larger the price tag. In most cases, building a new home can cost between $100 and $500 per square foot; however, your costs will vary greatly based on the other factors below.
If you live in an expensive area, your home rebuild costs will be higher. That can be due to higher material costs if you live farther from manufacturers or suppliers, higher labor costs if you live in a more expensive location, or both. In general, places with lower real estate costs will have lower renovation and rebuild costs. Talk to a local contractor, your insurance agent, and real estate professionals to gauge how your location will impact the overall cost of rebuilding your home.
The building materials you choose and the overall cost when you buy them will also change the price. Basic construction costs can rapidly change based on inflation, material prices, and the cost of finish materials—especially if you have or choose upgraded or luxury materials like sustainable wood—can drastically change rebuilding costs.
In recent years, the cost of framing materials has increased due to material shortages, and the cost of labor for framing work has also risen. That means replacing an existing home has gotten increasingly more expensive. On average, the cost to frame a house runs from $7 to $16 per square foot.
Roofing materials vary from traditional shingles to metal roofing or other, more costly options. However, while shingles may cost less initially, premium materials like metal or slate roofing may last longer since they’re more durable and require less maintenance and upkeep. They won’t need as many repairs, meaning fewer costs on future replacement and labor.
As you choose materials that impact your home’s look and function, consider the roofing that will complement your home, last the longest, and fit within your budget. The average cost range for a new roof is between $5,900 and $12,900, but that can vary widely depending on the material you choose and the size of your home.
The average new foundation cost is around $9,100, but it could be much less or much more, depending on your location, the size of the foundation, and the materials you choose. The foundation (the building blocks of your home) is one area where you don’t want to cut costs.
If your original foundation is compromised and you must replace it, choosing a quality foundation contractor and the right foundation for your home's size, materials, and other details is important.
If you have to rebuild your home, you’ll want to include interior features and upgrades in the estimate. While you can rebuild the home as it was, you may also want to improve or add some interior features—like heated floors, a sunroom, a home gym, universal design elements, a wine room, a home theater, and more. You can also opt for premium finish materials, like upgraded stone countertops, hardwood flooring, custom cabinetry, upscale fixtures, and other elements that make your new home feel more luxe or more like you.
| Interior Features and Upgrades | Average Cost |
|---|---|
| Sunroom | $28,000–$72,000 |
| Home gym | $13,500 |
| Wine storage | $30,000 |
| Home theater or media room | $17,500 |
| Home office | $15,000 |
| Sunroom | $47,000 |
| Basement upgrade | $22,000 |
| Premium finish materials | $150 per square foot |
| Universal design | $800–$8,000 |
If you want your home to look unique on the outside—to match your existing home or achieve a fresh new look—leave room in your budget for customized exterior features such as an attached garage, deck, porch, fence, pool, custom landscaping, and more.
| Exterior Features and Upgrades | Average Cost |
|---|---|
| Attached garage | $50 per square foot |
| Deck | $4,300–$12,300 |
| Porch | $7,000 |
| Fence | $3,150 |
| Aboveground pool | $3,400 |
| Inground pool | $55,000 |
| Landscaping | $3,500 |
There are several ways to calculate your home’s rebuild cost estimate. Although every home rebuild will have different cost factors influencing the final price, these are some ways to estimate the most accurate expected costs.
While the cost will come out of your own pocket, hiring a home appraiser will give you a sure estimate of your home’s rebuild cost. An appraiser will assess your home’s architectural structure and home features based on current rebuild costs. However, it’s important to note that the rebuild cost will differ from the market value appraisal, which an appraiser would calculate for you if you were selling or refinancing your home.
You can research construction industry groups in your area that might list the current costs per square foot to build a new house. To estimate your rebuild cost, take the average cost per square foot and multiply it by the number of square feet in your current home. Note that building supplies, design fees, and permits make up about 60% of the cost of building a home, with the rest spent on labor. However, the cost to build a new home tends to fluctuate greatly, and it’s heavily dependent on the availability of building materials and contractors.
Whether you’re replacing your existing home with one of the exact size or having a local general contractor or architect draw up plans for a brand-new home design, you can use the expected square footage of your new home to help estimate your final costs.
The larger the home, the higher your expected replacement cost will be. In most cases, you can estimate low-end and high-end building costs per square foot, giving you a ballpark range your home build should fall within if you choose average-cost materials and features. If you want more expensive or high-end options, you’ll want to increase the estimated cost per square foot.
Remember, though, insurance usually only pays for replacement costs equaling the value of the original home, so going bigger or upgrading your new space and materials will probably require you to budget beyond your insurance payout for added expenses.
Your home is more than just floors, ceilings, and walls. Additional features such as garages, interior material upgrades, updated appliances, and customized rooms or products will change the cost of rebuilding. This is especially true if you’ve made recent upgrades to your existing home, such as investing in the cost of a garage extension or home gym; always catalog and document upgrades in the structure and home contents (such as furnishings, electronics, decor, antiques, and other belongings) for insurance purposes, as replacing them will require more funds.
Home rebuild budgets should include demolition costs for existing structures, whether you’re rebuilding a single room, garage, or entire home. That’s because demolition is a major part of the process. Depending on any damage and the condition of your home, you can often choose between deconstruction (saving parts or materials for reuse or salvage), tear down (a more careful way of tearing down a part of a home or a home that’s in a confined space), or demolition (usually using heavy machinery to level an existing structure). These methods have different costs, so defer to your contractor for advice on which is best for your project and needs.
While the experience of living in your home might be priceless to you, you’ll have to narrow it down to a more exact figure to figure out how much insurance to get as part of your homeowner’s policy.
An insurance company can help you estimate the rebuild costs, but it pays to hire an appraiser to provide additional data. The insight of a third-party professional will give you more peace of mind that you’ll be living in an adequately insured home. For example, if your home has an RCV of $200,000 but your coverage limit is $180,000, you will have to pay $20,000 out of pocket if you must rebuild your home.
As a homeowner, you don’t want to be underinsured. Otherwise, you’ll be on the hook for what could turn out to be quite a bit of cash if you have to rebuild your home in the wake of a disastrous event.
But it can be difficult to get a truly accurate replacement cost for your home — plus it could fluctuate as time goes on and building supply materials change in price. For example, suppose a tornado affected numerous homes in your area. In that case, construction costs will likely increase, meaning that the initial rebuild cost calculation will be lower than what it will actually cost.
At first, it might seem like a good idea to overestimate your home’s rebuild cost to have more than sufficient coverage in your homeowner’s policy. However, you’ll spend hundreds or thousands of dollars more on insurance you don’t need. That’s why it’s essential to estimate your home’s replacement cost as accurately as possible to avoid overpaying.
As a homeowner, you have two options for additional coverage:
Extended replacement cost policy: This policy covers your home up to a certain percentage above the dwelling limit. For example, if you have $300,000 in dwelling coverage with a 20% extended replacement cost policy, you will be able to get $375,000 for rebuild costs.
Guaranteed replacement option: This policy lives up to its name. If you have to rebuild your home, you’ll get fully reimbursed. However, this policy is much more expensive, plus it’s not available in all states or with all insurance companies.
In the event of a disaster, enlist the advice of an experienced home builder near you to determine whether it’s possible to renovate your entire home or if you must rebuild it completely. Depending on the damage, it might not be safe to rebuild on a structure or foundation that has been compromised. In that case, it’s safer to demolish and rebuild your home than renovate a dangerous one.
After a natural disaster or other home damage—or if your existing home is very old, doesn’t meet your basic needs, or is in poor shape—you may have to decide whether to rebuild your home or buy a new one. Extensive home remodels can cost between $50,000 and $100,000, and homes that are seriously damaged or need complete remodeling can cost $200,000 or more to repair or totally renovate.
In some cases, starting over and rebuilding can get you a brand-new house for a similar price as renovations or major repairs. However, most experts agree that the cost of building a house is almost always more than the cost of renovating a house.
Only you can make this decision, but it will be easiest if you have real numbers to compare and align with your budget. It’s smart to start the process by talking with your insurance agent, building contractors, and local realtors. These professionals can help you understand what to expect financially and in terms of timing and effort when deciding whether to rebuild or purchase a new home.
Barbara Bellesi Zito contributed to this piece.
