One fact that I did not notice is that the price per square foot for houses includes land costs. In places like California the cost of land is the dominant cost in buying a house. If ADUs are more expensive per square foot even with basically free land, that is extraordinary. I never would have guessed it.
That is a very serious problem for ADUs, even if they adopt the HUD standard.
For those who are skeptical of my claim that land prices dominate housing prices in California and other expensive metropolitan areas, look at this data. It is really quite shocking.
What proportion of the total cost is plumbing and electrical hookups? Seems like the fixed costs and limits on placement here could make or break in many cases.
For AUD, yes. Not so sure for regular housing. Price sold is easy to acquire online, but again that includes land prices.
How do you get the actual construction costs to the builder of a house? That is proprietary information. You could estimate it, but the article does not mention that this was done or how the estimate was made.
So I wonder what that means for the cost per square footage of:
A) House + the land under it (i.e. what new homeowner pays) compared to
B) AUD without having to pay for land because the homeowner already owns it.
Without running the numbers, it would likely mean that AUDs make no sense in metro areas with affordable land. It is more cost-effective to buy a small home (per square foot).
In metro areas with very expensive land, such as California, AUDs make sense as a more cost-effective alternative. Using HUD regulations, as the author suggests, would make it even more affordable (although probably less affordable than moving to a different metro area).
Sure, that is ONE way to relax land use restrictions and outdated building codes, but let's not overlook others. Just let developers build what increases land values.
In this case I think relying too much on Census data and averages can really muddy the waters. The $80 PSF for a single wide is based on an average 1,050 SF home which doesn't make sense when you think about it in terms of shipping dimensions - common oversized load width for a HUD home is 16' wide so that works out to a 65' long home. However, a 65' long backyard ADU doesn't fit on most suburban lots or work very well architecturally, so even though in theory you could build as big as 1,200 SF for an ADU (16'x75'), in practice anything >600 SF (40' ADU width plus 10' setbacks = min 60' wide lot) ends up being a two section ADU.
I'm guessing there's a significant amount of selection bias in the cost PSF data - if you're buying a 16'x65'+ single section home, you're most likely putting it in a manufactured home community (60% of HUD code homes) which is a price sensitive customer, unlike Crest and Villa who are selling premium HUD homes, and so the fair comp is well north of $100 PSF. The immutable law of single family construction - as your square footage increases your cost PSF decreases - still holds, it's just buried under the noise introduced by quality differences between single and double wides. I also wonder if the ADU effect is a possible explanation for why cost PSF for HUD homes has been increasing by 20-25% for the past couple years even though inflation is ticking down.
The city San Francisco promoted ADUs a few years with accelerated permitting and other incentives. We had plans drawn. Applications were submitted. Then, promptly after permits were duly issued, the project was duly rejected by our HOA. I believe the ADUs built in SF has been miniscule. Despite our permitting success, we of course had not yet faced the city's notorious inspections. Most homeowners here want nothing to do with this from prior experiences with the city.
1) Many neighbors are not going to appreciate having a 10x70 single wide mobile home with a 4/12 pitch roof slid onto an adjacent lot, particularly if the other homes in the neighborhood are relatively nicely finished and cared for and reflecting a certain architectural style. And I've seen landlords pop in a used mobile home on their lot as an ADU, something they picked up cheap, with dented and faded metal siding. You can seriously affect the property values of your neighbors if the ADU isn't designed to fit and complement the home it's placed next to and the other homes in the neighborhood. Our town is struggling with this dilemma. It's a clear case where NIMBY can make good sense.
2) The cheapest ADU's are those that are carved out of the existing home, or built within an existing outbuilding, such as second floor over a garage.
Actually, if someone wanted to, they can permit them under the HUD code, most don't because of the negative connotation associated with it. They can also be permitted under the RV code if they maintain wheels (could be removed once onsite) and thereby reducing costs even further.
Very interesting article.
One fact that I did not notice is that the price per square foot for houses includes land costs. In places like California the cost of land is the dominant cost in buying a house. If ADUs are more expensive per square foot even with basically free land, that is extraordinary. I never would have guessed it.
That is a very serious problem for ADUs, even if they adopt the HUD standard.
For those who are skeptical of my claim that land prices dominate housing prices in California and other expensive metropolitan areas, look at this data. It is really quite shocking.
https://www.aei.org/housing/land-price-indicators/
What proportion of the total cost is plumbing and electrical hookups? Seems like the fixed costs and limits on placement here could make or break in many cases.
Makes sense, but I have a hard time believing that makes up for the ridiculous land prices in California.
Pretty sure he's comparing only construction costs.
For AUD, yes. Not so sure for regular housing. Price sold is easy to acquire online, but again that includes land prices.
How do you get the actual construction costs to the builder of a house? That is proprietary information. You could estimate it, but the article does not mention that this was done or how the estimate was made.
Footnote 2 cites the construction census which tracks construction costs sperateley from land costs.
Thanks.
So I wonder what that means for the cost per square footage of:
A) House + the land under it (i.e. what new homeowner pays) compared to
B) AUD without having to pay for land because the homeowner already owns it.
Without running the numbers, it would likely mean that AUDs make no sense in metro areas with affordable land. It is more cost-effective to buy a small home (per square foot).
In metro areas with very expensive land, such as California, AUDs make sense as a more cost-effective alternative. Using HUD regulations, as the author suggests, would make it even more affordable (although probably less affordable than moving to a different metro area).
Sure, that is ONE way to relax land use restrictions and outdated building codes, but let's not overlook others. Just let developers build what increases land values.
In this case I think relying too much on Census data and averages can really muddy the waters. The $80 PSF for a single wide is based on an average 1,050 SF home which doesn't make sense when you think about it in terms of shipping dimensions - common oversized load width for a HUD home is 16' wide so that works out to a 65' long home. However, a 65' long backyard ADU doesn't fit on most suburban lots or work very well architecturally, so even though in theory you could build as big as 1,200 SF for an ADU (16'x75'), in practice anything >600 SF (40' ADU width plus 10' setbacks = min 60' wide lot) ends up being a two section ADU.
I'm guessing there's a significant amount of selection bias in the cost PSF data - if you're buying a 16'x65'+ single section home, you're most likely putting it in a manufactured home community (60% of HUD code homes) which is a price sensitive customer, unlike Crest and Villa who are selling premium HUD homes, and so the fair comp is well north of $100 PSF. The immutable law of single family construction - as your square footage increases your cost PSF decreases - still holds, it's just buried under the noise introduced by quality differences between single and double wides. I also wonder if the ADU effect is a possible explanation for why cost PSF for HUD homes has been increasing by 20-25% for the past couple years even though inflation is ticking down.
I wonder if some of it is simply profit taking in a constrained market (or R&D as firms expand).
The city San Francisco promoted ADUs a few years with accelerated permitting and other incentives. We had plans drawn. Applications were submitted. Then, promptly after permits were duly issued, the project was duly rejected by our HOA. I believe the ADUs built in SF has been miniscule. Despite our permitting success, we of course had not yet faced the city's notorious inspections. Most homeowners here want nothing to do with this from prior experiences with the city.
Two things come to mind:
1) Many neighbors are not going to appreciate having a 10x70 single wide mobile home with a 4/12 pitch roof slid onto an adjacent lot, particularly if the other homes in the neighborhood are relatively nicely finished and cared for and reflecting a certain architectural style. And I've seen landlords pop in a used mobile home on their lot as an ADU, something they picked up cheap, with dented and faded metal siding. You can seriously affect the property values of your neighbors if the ADU isn't designed to fit and complement the home it's placed next to and the other homes in the neighborhood. Our town is struggling with this dilemma. It's a clear case where NIMBY can make good sense.
2) The cheapest ADU's are those that are carved out of the existing home, or built within an existing outbuilding, such as second floor over a garage.
Can this be done nationwide via HUD's existing regulatory authority, or does it have to be legislated at the state level?
I think that is legally unclear, but HUD has a long history of not taking on exclusionary zoning of manufactured housing directly. They've called it out in whitepapers as an issue though: https://www.huduser.gov/portal/publications/affhsg/rb_mhpuc.html
https://www.youtube.com/watch?v=0Cdqs2Q1Vis Some of the Boxabl homes are said to start at $55K https://www.boxabl.com/these-new-49k-prefabs-can-snap-together-like-lego-bricks/ https://www.prefabreview.com/blog/boxabl-prices-and-cost
Actually, if someone wanted to, they can permit them under the HUD code, most don't because of the negative connotation associated with it. They can also be permitted under the RV code if they maintain wheels (could be removed once onsite) and thereby reducing costs even further.