Terner Center Report: The Hard Costs of Construction: Recent Trends in Labor and Materials Costs for Apartment Buildings in California

High cost to build

The Terner Center for Innovative Housing at UC Berkeley has an ongoing study on the cost to build housing.

The Hard Costs of Construction: Recent Trends in Labor and Materials Costs for Apartment Buildings in California.

They have released a new report based on data they collected for over 200 apartment projects all over California.  They confirm what CBA members reported during the Chico City Council Ad Hoc Housing meetings and workshop.  The cost to build housing has increased.  This is at the heart of the housing shortage and difficulty with housing affordability.

  • The per-square-foot hard cost (only) for multifamily is up 25% on average since 2008. Adjusted for inflation.

This is for hard costs only - materials and labor.  It doesn't include all the other increases - land and closing costs, legal and professionals fees, insurance, development costs and the cost of delay.

This is an important study for anyone who is serious about understanding and solving our shortage of affordable housing.  The rental cost is directly related to the cost to build the unit.

Also of interest is the recognition that requiring Prevailing Wage adds a minimum of $30 per square foot.

Our concern is that now legislation requires both Prevailing Wage AND "Skilled and Trained Workforce."  Terner Center doesn't mention "STWF" which creates the inability to source a local workforce to build housing, period.

For example, in 2017 Senator Wiener brought the "Skilled and Trained Workforce" requirements to affordable housing and permit streamlining with SB 35.  He tightened the grip in 2018 with SB 765.  During this legislative year, we are looking at "STWF" requirements being added to any project with affordable housing funding or tax credits.

As shown in the Terner Center report, all legislators are doing is adding to the cost of housing construction.

Someone needs to do a Regulatory Impact Assessment.  Fast.

Anyone listening from the Legislative Analyst's office, the State Auditor, the Administrative Law Office, Go Biz or even Housing and Community Development?