Should I wait until 2023 to build an ADU?

Question

Chen Zhou · Answer

I'd argue there's no better time to build than in a recession. Contractors are aggressively looking for work now as the demand dries up. Material prices are also dropping quite dramatically (lumber, cabinets, flooring, tiles, etc.). A few months ago, no contractor is willing to go below $300/sqft in the bay area, now you can probably find plenty.

Jon Kelly · Answer

@John Anderson I'm confused about the post. What data / stats are you using to make your decision? Sounds like you've been contemplating for 2 years whether or not to build an ADU...

What's the cost to build? How much rent or value will you achieve?

Create a simple profit / ROI calculation to help with your decision.

Dan H. · Answer

Ab2221 addresses time delays, height limits and front setback. sb897 addresses existing unpermitted work, ADU not triggering r occupancy that can have an impact on fire sprinklers. ab157 addresses ADU financing options and the Adu grants.

I think not having to address existing permit issues can be a big benefit on many ADU additions.   the others are more project specific.  But you are 1.5 months from 2023.  Because it is so close, I would proceed in preliminary planning only looking into if any of these new rules benefit your effort.  If there is any benefit by any of these rules (unpermitted work could alone be worth the wait) I would wait the 1.5 months.

Good luck

Peter Mckernan · Answer

I was in the same exact place on one of my properties, we are pushing forward to build an ADU now (we got approved for the ADU back in December 2021). Now prices are a little softer so we are pushing forward and can get more bang for the buck (this property is in SoCal).

Bram Klein · Answer

I agree, we build ADUs in Southern California and I'm in the permit process now for my own investment property.  The design time for construction documents and permit approval can take longer than you think.  Get the part out of the way now so you can start ordering your appliances, etc.  In the meantime, shop around for the right GC at the right price per sq. ft. and then start building.

Whitney Hill · Answer

To comment on trends in construction costs... they are unlikely to go down, but hopefully will flatten. Material increases have been unprecedented (up 23% from Jan 2021 in California), but perhaps worse now is that continued labor shortages are not showing signs of improving. Fewer people are going into the trades and that is a huge constraint (not just the material costs you no doubt heard about, e.g. the lumber shenanigans). Our subcontractors are still coming to us regularly with labor cost increases.

However... some contractors are feeling the pinch of jobs cancelled due to financing and you may be able to find some one-off situations where they are looking to fill up their pipeline at a bit of a discount. Like @Chen Zhou mentions, some may be looking for work going into slower fall/winter months. Not sure if you have plans and permits yet though, allow 5-7 months for that process.

Regarding new ADU laws passed in September (e.g. SB 897, AB2221)... nothing big there that should change your design for the most part. Changes were mostly related to closing ambiguities in what the cities must do when reviewing plans, with a few tweaks to height limits (cities must allow 18', but the state law does not explicitly state they must allow 2 story ADUs and it's very tough to get an actual two story in under 18' anyway).

Good luck with the decision!

Wayne Yahnke · Answer

The best time to build an ADU in CA is yesterday. There are so many opportunities out there that support this work right now. Redwood Credit Union has an ADU construction loan. One of the first in the business. California had a ton of grant money for ADU builds. Up to $40k per applicant. If I were you Id get this thing rolling ASAP. Happy to discuss more.

Carlos Ptriawan · Answer

If you are building ADU for your family, why wait? What happened externally doesn't impact you. Good luck with your ADU.

Vasile Gavrila · Answer

Hi,

I am in process of starting ADU build on my side yard (east bay SF). I start the process back in dec 2021 and finally got approved plans. Takes long time to get plans approved and lot of fees to be paid. Per exemple Contra Costa Water district charged me $14600 because my existing water meter is 5/8 and for detach ADU is need it for 3/4 and backflow valve. I am in $20k so far and no fundation yet. For a long term I think it was good decission.

Carlos Ptriawan · Answer

when I could have free ADU why I shall build an ADU :)

Should I wait until 2023 to build an ADU?

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