Computing The Costs of Building an ADU

ADU prices are all over the map. I've personally visited basement ADUs that cost $20K, and an ADU above a garage that toll north of $400K. So, information technology's not a straightforward task to explain how much an ADU cost to build.

The cost of structure for the same structure can vary greatly depending on the builder, likewise every bit what the current cost of labor and materials are in a given region. It will also largely depend on what type of structure we're talking about. A basement ADU conversion is a totally different animal than an ADU above a garage. These factors all make estimating the "boilerplate cost of an ADU" impossible.

To further complicate matters, many homeowners defray their out of pocket expenses by putting in sweat disinterestedness, particularly during the finishing stages of construction. This labor contribution can help defray some of the out of the pocket costs of ADU development.

But, for the purposes of this post, which attempts to explain evolution costs on an apples-to-apples basis, let's assume that the homeowner is hiring out the unabridged job, and not doing any of the work themselves.

Ane of the best ways to convey actual costs of construction is to examine some electric current examples. Luckily, I can utilize the self-reported cost data from ADU owners on recent ADU tours to show some of these actual costs from recent existent life examples. These costs include design costs, allow costs, utility connection costs, and all construction costs. And, simply as importantly, these costs also include the homeowner'south estimation of their sweat disinterestedness contribution. These costs do non include are landscaping costs and furniture.

This is what a homeowner needs to be prepared to spend for the development of an ADU. Here are those self-reported full development costs:

Type Price Sq footage Cost per Sq Ft
Attached ADU $106,000 500 204
Attached ADU $126,000 361 349
Attached ADU $157,000 820 191
Attached ADU $167,000 660 253
Attached ADU $216,000 439 492
Basement ADU $74,000 391 189
Basement ADU $100,000 799 125
Basement ADU $150,000 610 246
Basement ADU $150,000 659 227
Basement ADU $261,000 795 328
Basement ADU $380,000 800 475
Detached new construction $112,000 400 280
Discrete new construction $120,000 250 480
Detached new construction $128,000 448 286
Detached new construction $130,000 799 162
Detached new construction $139,000 560 248
Detached new construction $140,000 540 259
Detached new construction $145,000 640 226
Discrete new construction $145,000 445 326
Detached new construction $150,000 446 336
Discrete new construction $151,000 730 206
Discrete new structure $160,000 731 219
Discrete new construction $160,000 687 233
Detached new construction $160,000 515 310
Detached new construction $168,000 379 443
Detached new construction $177,000 491 360
Detached new construction $190,000 798 238
Discrete new construction $200,000 720 278
Discrete new construction $200,000 794 252
Detached new construction $202,000 607 332
Discrete new structure $202,000 796 254
Detached new structure $203,000 800 254
Detached new construction $205,000 656 313
Detached new structure $208,000 754 265
Discrete new construction $208,000 711 293
Detached new construction $225,000 330 682
Detached new structure $226,000 794 285
Discrete new construction $235,000 800 294
Discrete new construction $265,000 750 353
Detached new construction $285,000 750 380
Discrete new construction above a garage $128,000 800 160
Detached new structure to a higher place a garage $150,000 778 193
Detached new structure above a garage $160,000 932 171
Discrete new construction above a garage $195,000 790 171
Detached new structure in a higher place a garage $225,000 1250 180
Detached new construction above a garage $226,000 657 344
Detached new construction above a garage $440,000 1644 267
Garage conversion $eighty,000 576 138
Garage conversion $110,000 325 338
Garage conversion $150,000 370 405
Averages Cost Sq footage Cost per Sq Ft
Detached new construction $180,833 676 305
Basement ADU $185,833 676 265
Attached ADU $154,400 556 300
Garage conversion $142,000 504 297
Detached new construction higher up a garage $217,714 978 212

Since in that location were a larger sample of discrete new construction ADUs than other ADU types, nosotros tin can examine those development toll samples in more detail.

Detached ADUs costs from 2016-2019

  • The total price range was from $112K to $285K

  • The total cost boilerplate was $181K.

  • The toll per square foot range was $162-$682/sq ft.

  • The cost per square foot average was $305 per sq ft.

If we plot the costs, a couple trends appear, and an important development principle of housing makes itself axiomatic to u.s.a..

Total Costs vs Size for Detached ADUs (completed in 2016-2019).png

Beginning, regardless of size, there's a fairly wide range of development costs. Notation how a couple of the ADUs that are ~400 sq ft range in toll by over $50K. And then, note how the ADUs that are 750 sq ft range in cost by over $125K. This range is hard to explain, merely site conditions, level of finish, and overhead costs of the designers and general contractors are all pregnant variables that consequence these development costs.

Secondly, size matters, but non that much. As the size of the ADU increases, the development costs are likely to rise. This is self-evident, just it's skillful to validate our basic assumptions about these things. Just, instead, I'd like to focus on the flip side of this rather obvious conclusion. While size matters, and smaller ADUs can cost less, fifty-fifty very small ADUs are very expensive!Information technology'south the stock-still costs of development of an ADU that are expensive. Additional foursquare footage is cheap.

Adjacent, hither are information points plotted for only the x detached new construction ADUs that were features on the 2019 ADU Bout.

2019 costs per sq ft.png

Development costs for both labor and materials are going up steeply in the Portland market in recent years. Note how costs have increased from $174K to $194K from the previous set of toll information points in 2016/2017— a $20K increment in 2-3 years. Meanwhile, average costs per sq ft have increased from $294 sq ft to $327 sq ft.

chart (2).png

Unfortunately, I keep having to adjust the total average cost numbers, considering evolution costs go on quickly escalating.

Drum scroll….in 2019, in the Portland market, I peg 400 sq detached ADUs with an average development cost of $170K, (really, $168,750). I peg 800 sq ft ADUs at an average cost of $210K (actually, $210,667). The boilerplate price for 2019 was $193,900, as shown below. Average development costs for detached ADUs overall are $194K.

Here are the cardinal figures to consider:

  • 400 sq detached ADUs-$170K

  • 800 sq detached ADUs- $210K

2019 development costs.png

The costs tin go way up from the average, only information technology's possible, and adequately mutual, to build an ADU for these boilerplate prices in the Portland market.

Incidentally, here'southward the cost data plotted for discrete new construction ADUs above garages, which tend to cost more than considering they're typically larger structures.

Costs by size for Detached new construction above a garage.png

To date, I've still not seen a detached new construction ADU built from the ground up that cost less than $80K. There is substantially a fixed bottom-line toll to new ADU evolution. From what I've observed, it is just impossible to come in at far less than this bottom line $80K cost.

I take spoken and consulted with hundreds of ADU owners at this point, and I oasis't found anyone who has been able to build a discrete ADU for less than $80K.

ADUs are expensive, due to the stock-still costs of new housing development. For example, digging, physical formwork, and pouring a foundation lonely typically costs $10-15K. This cost cannot exist avoided.

From a purely rational, economic point of view, it makes sense to build the ADU up to the largest allowable size (800 sq ft, in Portland'south case), since it'southward only marginally more expensive to add together square footage. Homeowners are maxing out their zoning entitlements (800 sq ft ADUs) considering of the economic rationale to practice so. This is likely why, in Portland, homeowners appear to develop more than 800 sq ft ADUs than any other sized tier of ADUs. More than 40% of ADUs are greater than 700 sq ft.

Economics of development size

This post has absolutely only scratched the surface of the unproblematic question, "How much does an ADU cost to build?" The costs for ADUs can vary by type, and detached new construction ADUs certainly aren't the cheapest type to build. We'll cover more about ADU costs in future posts.

And, and so we'll get to the next logical question. If ADUs are so damn expensive, how exercise you pay for them?? The short answer is that homeowners typically accept to notice creative mechanisms to access the capital to pay for the ADU in cash. Information technology'southward not like buying a house, where yous can easily borrow (aka finance) the money easily from a bank. Although some financing options be, they're express, as ADUs are not still a mutual enough product.

In reality, almost of the time, homeowners must patchwork together funding to build an ADU, and this typically ways stretching themselves to their financial limit and beyond. We'll dive into the most mutual methods that homeowners are using to finance ADUs in a future postal service.

And, finally, we'll investigate whether ADUs are a good investment. While they're certainly not widely considered to be part of the standard lexicon of traditional retirement investments, I'll toss out there that ADUs are quite mayhap one of the best wealth-building investments available.

It boils downwards to this: the land is gratis. State is commonly the virtually expensive function of residential housing evolution, but in the case of an ADU, the land costs are already deemed for. Each dollar that is spent on the housing unit of measurement, is being spent in the actual housing unit. If the ADU is beingness congenital to help generate rental income, in that location's a adequately directly return on those dollars, in comparison to the evolution of other residential housing types.

When the return on investment is coupled with the lifestyle flexibility and security that ADU offer to an aging homeowner, the benefits of ADUs may suddenly start to dramatically prevail over more conventional, traditional, conservative fiscal investments. Notwithstanding, one must also realize that ADUs are not a mechanism to get rich quick. ADUs are a fantastic way to build wealth, not to build riches.