When making a major purchase, most of us will spend some time comparing prices in search of the best deal possible. When it comes to home buying, there are a lot of factors to consider – size, nearby amenities, neighbourhood, and room to grow – but ultimately, the most impactful factor may be the price.

Price ends up being the biggest consideration because many of the factors listed, plus more, actually have a significant influence on the cost of a home. Here are five of the most influential factors to look at when purchasing a home.


Home Type – Attached vs Detached homes

The first and perhaps most obvious factor that affects the price of a new home is the model style. Starting prices for townhomes usually differ quite drastically from starting prices for a detached single-family home, for example.

For instance, a townhome that includes features such as a garage, and green space may push the starting price up significantly relative to a townhome without personal parking and storage space. When searching for a home, it’s important to remember that while the type of home–townhome versus detached–is certainly the most influential factor in cost, prices among home models also vary. 

Size and Floor Plan

Closely related to the home model factor, the size of the house and the floor plan will also influence pricing. Square footage is the key here. Typically, as square footage rises, so does the cost of the home.

While bedroom and bathroom count is often one of the first questions asked about a home, it’s less of an indicator of a home’s price than square footage. In many cases, homes with an additional bedroom or bathroom may be only slightly more expensive than homes without. Builders will often shave square footage off of a few other rooms in order to add an extra bedroom, meaning square footage and pricing should stay relatively unchanged. This is great news if you have a growing family and are looking for an affordably priced home with lots of bedrooms.


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Every new home comes with a variety of standard features that can be upgraded by the home buyer upon request. Builders typically select their standard features by evaluating the most popular trends in home design and incorporating them into their builds. But builders will usually also offer a list of upgradable features that can be incorporated at an additional cost to the home buyer.

Major upgrades typically include things like hardwood flooring, higher quality countertops or cabinets, or upgraded plumbing fixtures throughout the home. Smaller, less costly upgrades might include things like a different shower style or upgraded front door.

When it comes to spec homes – also known as quick possession homes – upgrades are only possible at certain stages of the build. The later in the build, the less customization possible. With pre-builds, there’s significantly more flexibility when it comes to customization.

If upgrades are of interest, contact your builder early on to negotiate potential changes. Most builders also list standard and premium features on their websites to give prospective home buyers an idea of what’s available.

Building Supplies and Labour

Homes include a variety of construction materials along with a skilled team of trades to build the home. As the economy and political influences change, the cost of these supplies changes for the builder. This results in pricing changes across all new construction homes. Depending on the scale of the situation this may result in local price changes or large-scale changes across North America. For example, in 2020 there was a lumber shortage causing lumber prices to increase dramatically. Compiled with the large demand for new construction homes and home renovations this shortage has continued.


Perhaps less commonly thought of, but certainly no less important is the location of a new development. One of the major indicators of the cost of homes in a new development is proximity to the city centre or main arteries and desirability of the community. Typically, the more popular the community the more costly the land will be for the home.

However, this isn’t always the case. Other factors that may increase starting prices, even in the suburbs, include factors like lot size and green space, nearby amenities and entertainment, and on-site facilities such as private recreation facilities. While proximity to the city is certainly one of the greatest factors in home cost, the features of a neighbourhood are also important to note.

Down Payment and Taxes

It’s time to crunch some numbers. Whereas all of the above factors are generally out of the control of the home buyer, down payments are a price factor that you do have control over. The Canadian Mortgage and Housing Corporation requires a minimum down payment of 5% on a home. For down payments between 5% and 19.99%, a high-ratio mortgage can be secured. For homebuyers who contribute 20% or above, a low-ratio mortgage can be secured.

Of course, the size of the down payment will determine monthly payments. It should also be noted that a high-ratio mortgage must be accompanied with mortgage default insurance through the Canadian Mortgage and Housing Corporate–an additional cost to the home buyer.

When it comes to the final cost of a new home, GST and Home Warranty are also factors to consider. In addition to the warranty, GST and PST is applied to all real estate as well. Fortunately, this is factored into the purchase price through the applicable government rebate incentives. 

Look at the Whole Picture

When it comes to new homes, builders consider many of the same factors as homebuyers do. Builders plan their developments around neighbourhood features, amenities and entertainment, and model and design trends in the housing industry. All of these features and more contribute to the final price of a home.

As a home buyer, take some time to look at the big picture. Ask your builder about home and neighbourhood features. It’s sure to provide a better understanding of how a home is priced, and you may just find out about some exciting features along the way.