Defining Budgets: Residential Projects

February 7, 2024

What An Architect DoesEco DesignGreen ArchitecturePassive House Architecture

Before we start a project, our main guide to cost is what we’ve done before. For new houses, cost ranges we have seen are fairly consistent. For renovations, costs vary widely depending on whether the project is a gut renovation or a more targeted decarbonization retrofit, for instance.


A recent article in the Chicago Tribune stated that construction costs had increased over 35% since 2019, which aligns with what we’ve seen: new homes we would have expected to be in the $250-300/s.f. range are now coming in around $320 to $380/s.f. Keep in mind that these construction costs usually include demo of a previous house (or other site development), a new garage which isn’t included in the overall square footage, and usually some constructed site amenities such as a screened porch, exterior fireplace, or greenhouse. A modest-sized home of 3,000 s.f., can easily be $1M with all these inclusions. These houses are cost-dense: rooms are on the smaller side, with built-ins, cabinetry, all the utilities and infrastructure of a larger house. We could make the cost per s.f. go down by inflating cheap rooms, but that’s not the mindset of us or our clients, nor would it make the house less expensive overall.

Also keep in mind that the figures we’re talking about are construction costs, which include all finishes, fixtures, and cabinetry, but exclude appliances, furniture, decoration such as drapery, and landscaping. Most of these are Phius (Passive House), LEED, or Zero Energy Ready. Design costs are also excluded; for new homes these typically range from 10-15% of construction cost.

The construction cost premium to get to this high-performance level is in the range of 5-10%, but radically lower operating energy costs offset an increased mortgage. For all quality construction, major cost drivers include:


With many retrofits, there is often a wide range of applicable costs. If a home is to be gutted on the inside, with new HVAC, kitchen and baths, electrical, windows, etc., the construction budget can equal that of a new house. But usually there are many elements that can be maintained. Many of our decarbonization projects take a lighter touch toward the interior, with targeted insulation and HVAC replacement, for instance. From a global carbon standpoint, retrofitting is by far the better choice instead of demo and new build: preserving all the embodied energy of the structure is a big win in carbon reduction.


With decades of residential design experience (including about a hundred high-performance new homes and retrofits), we know how to take an economical approach to high-performance. We engage with contractors in the design and construction process to ensure that our design solutions make sense in the field, and our many third-party rated projects show proof of concept.

Our design process begins with a collaborative study of options, where we arrive at the best balance of layout and economy. Once the project is developed to a Schematic Design level (25-35% of the way through design), we send it out to contractors for budget pricing–our first reality check based on the actual layout and current material and labor costs. With the contractor at the table, we can understand cost drivers so you can feel confident committing to the rest of the design work. Once the design is complete, the contractor prepares the final bid, financing is secured, and construction work gets underway.