If you made it this far, it is safe you assume you are seriously considering adding an accessory dwelling unit onto your property. And, like any responsible property owner, you are probably pretty curious about how this decision will affect you financially. There are a number of factors that go into pricing an ADU.
What factors affect ADU prices?
ADU costs can be divided into six main categories: design & engineering, site work, vertical building construction, permits & fees, solar, and additional site-specific costs. You can learn more about these types of costs on our ADU costs page, as the rest of this article covers how we handle pricing ADUs.
Why are ADU prices volatile?
Many of the cost elements are highly susceptible to change based on market dynamics, especially in the post-COVID era of supply chain irregularities and labor shortages. Sharp increases in building costs, as well as a shortage of materials, has been plaguing nearly every industry since the spring of 2020. We’re facing unprecedented volatility. This is a very unique position, and one that few industries have ever experienced.
Additionally, we are also experiencing unprecedented demand for accessory dwelling units due to favorable state regulations & changes in the way families wish to live. There is simply not enough capacity to serve this need to build ADUs, both at the contractor level and the subcontractor level. To keep consistent & quality workers on our jobs, we are simply paying more for labor.
The California Construction Cost Index (CCCI) went up 13.4% in 2021 and 9.3% in 2022, and back up at an all-time high as of May 2023. That means an ADU built for about $300,000 in Jan 2021 would cost $407,000 to build in May 2023.
Will ADU prices go down if I wait?
Unfortunately, it’s unlikely ADU prices will go down, but we do expect them to start to stabilize. According to the Commercial Real Estate Services company (CBRE) and the National Association of Homebuilders (NAHB), the increases in construction costs are expected to return to the historical average range of 2% to 4% in the year 2023. However, we have already seen increases this year of 4% by end of the second half.
Is the price of my ADU going to change over the course of the project?
With most design / build projects, your price would not be locked in until your build is about to begin. This leaves a lot of uncertainty on the homeowner, making it difficult to accurately budget for the project. So we’ve decided to take a different approach.
How does the pricing structure work with Snap ADU?
SnapADU Price Lock Guarantee
We are so confident in our ability to build our projects on budget and on time that we are willing to lock in your ADU pricing before we even submit plans to the city.
We have three points of communication about price to ensure we keep you updated on the cost to build your ADU.
- 1st checkpoint: Proposal. This will get you a budgetary project cost so you can have a good idea of how much the total job will cost, from design through build. At this point, we do our best to give you visibility on the potential additional sitework costs that could apply to your project. However, we won’t have detailed site information yet, so this pricing is subject to refinement as our Feasibility Study is completed. At the point of signing the Proposal, we guarantee pricing for the design and permitting portion of the project.
- 2nd checkpoint: Feasibility Report & Construction Estimate. At this point of the process, we have reviewed your full project and completed an onsite assessment of your property, including mapping out your utilities. This gives us – and you – a clear picture of what site constraints we will need to work around, such as need for grading, utility upgrades, and other factors. It will also include design feedback, in case the original plan needs to be adjusted at all to conform with setbacks. We provide you with your Construction Estimate to sign & lock in pricing for the construction portion of the project.
- 3rd checkpoint: Post Plan Check Comments. After we receive revisions from the city, we will know if any additional requirements have been flagged that were not in the original scope. For instance, some cities require a video of the sewer lateral and may mandate work. Others may mandate a survey. We will flag possibilities like this to you, but it is sometimes advisable to take a “wait and see” approach. We would address any of these costs at the time of plan check and review them with you for approval.
This approach of offering a price guarantee means we will take on the risk of any subsequent material & labor cost increases that happen while your ADU is permitted (a process that can take 4-6 months depending on the queue & review times at the municipality). We also love how this approach means you as the homeowner know our interests are aligned with yours. We want to push to get the build started as quickly as possible, just like you do.
Why experience matters in your ADU build
Because we have built so many ADUs and have such a deep well of knowledge, we have seen just about every scenario you can imagine. We have permitted so many ADUs that we have encountered – and now anticipate – just about every plan check comment there is. We have a team of 16 employees and perform our own design, permitting, and general contracting in house. Along with our wealth of experience, our vertical integration is what sets us apart from other ADU builders or construction companies.
This vast experience and control over the whole design/permit/build allows us to anticipate the unknowns and hidden costs, which are often left out of most estimates. Because of our size, we are able to keep our costs predictable and relatively stable with vendors. This enables us to deliver a fixed firm price before plans are even submitted for plan check. We operate this way to give our clients total peace of mind, knowing their costs from the outset, while SnapADU takes on the risks for unknowns.