Building Costs in California

[Steven Silbert]

At the end of this year, I'll be moving back to San Luis Obispo County, CA, and I have been a bit depressed looking at the housing prices. It got me thinking about new construction for single family with an ADU or multi-family, and house hack to offset the mortgage. I've seen that the average building cost for the state is around 495K, which is significantly less than the average home in SLO at over a million. I was wondering if anyone had experience in new construction and how their costs turned out to be. Especially with small multi-family, but SFH info would be great too. I can find plots of land around SLO for less than 200, in paces like Atascadero and Los Osos, so I'm very curious to see if this will actually work!

[Jawei Kuo]

Hey Steven! I like the way you're thinking with respect to the San Luis Obispo housing market. You're pretty much on point with the average cost of a home in SLO trending at just over a million. In terms of new construction, a couple things to be aware of in San Luis Obispo County are water shortage issues and development fees/taxes which can significantly increase the building costs.

SLO city and the neighboring cities are particularly diligent on their water usage, as most of the county's water supply comes from three surface water reservoirs and a groundwater basin. This water shortage can lead to issues with development, particularly if you're looking at land and intending to connect it to the respective city's water supply/sewer system. In Los Osos for example, they just recently lifted the building moratorium which had essentially imposed a ban on construction in the town for the past decades. 

As for the development fees/taxes, my understanding is that it only applies to new construction with the intention of selling or leasing should they not contain enough affordable housing units. 

Shoot me a DM if you'd like to chat more, I'm a real estate agent and student studying here at Cal Poly!