# Better Construction Cost Estimates?

When I wrote about how Somerville's affordable housing "bonus density" rules made it likely [profitable to build 100% affordable housing](https://www.jefftk.com/p/come-build-affordable-housing), [Chris pointed out](https://www.facebook.com/jefftk/posts/pfbid0hDCioDSdoQTZHrq4415cXkLX6pe3GePJFzk9cNDbbe7dGsthx85PQhcnUNdb46jfl?comment_id=10100236300014712) that I was underestimating construction costs (I was using $150-$200/sqft, though also finding some parcels that looked good even at $600/sqft). I looked into this some and had trouble finding good estimates, and then I forgot about the conversation and posted about how a for-profit [affordable housing investment fund](https://www.jefftk.com/p/affordable-housing-investment-fund) could be a good idea. At which point Chris needed to [again remind me](https://www.facebook.com/jefftk/posts/pfbid02HUptQXykHcdE7i9sUXJvTcG8kf5eeWp6EToa3zGbF1eX5gksNy64aXaUn2jzcpR9l?comment_id=667872074852227&reply_comment_id=431611015619545) that my cost estimates were likely too low. Whoops!

Chris gave two examples:

> A recently completed 98 unit, 95,000 sqft development in Cambridge had a total cost of $587,000 per unit (Around $100k of that was land cost.). Another for-profit affordable housing project started post-pandemic is expecting to have a total cost—with \*zero\* land cost—of $615,000/unit. A public housing development is expecting to pay $960,000/unit. (That one is especially bad for a lot of reasons related to public procurement, federal public housing authority mandates, and cross-subsidy of unfunded spaces like community rooms, but just giving a sense of where these things sit.) These are for units that have a maximum sale price of around $250,000-$300,000, under the legislation.

The first one is $503/sqft excluding land. The second two don't include unit sizes, but assuming they're also 970sqft they come to $634/sqft and $990/sqft. These are all depressingly high, and I agree you can't profitably construct affordable housing at those prices.

On the other hand, these are all much higher than I'd expect? According to [the census](https://www.census.gov/construction/chars/), new construction in the Northeast had a median cost of $179/sqft in 2021 ([xls](https://www.census.gov/construction/chars/xls/contractpricesqft_cust.xls), [sheet](https://docs.google.com/spreadsheets/d/1q4nwBPeeP_QT7xl8XFYNcOn-ulwOXDxrKGZIilQs3Ss/edit?usp=sharing)). This already includes things like lumber being more expensive during the pandemic; it's 24% more expensive than 2020 and 31% more than 2019. Now, the Boston area is one of the most expensive parts of the Northeast, Somerville can be hard to work with, and wood-frame is cheaper than 5-over-2. But people building new houses generally make them fancy ("luxury") and cheaper finish work should push things the other way. (You usually don't see this because 'affordable' units need to be as nice as the market-rate units in the development, but this doesn't apply if you're building 100% affordable.) I also expect there would be some savings from building many medium-scale projects in parallel?

For a minor bit of personal calibration, in 2017 we had [dormers added to our house](https://www.jefftk.com/p/adding-dormers-to-our-house), which was 330sqft of new construction on the third floor of an existing building. This was $304/sqft, including things like "we needed to install wired smoke detectors in the whole rest of the house" and "this meant we had to move our electric meters and get a new line of service". Now, this didn't include kitchen, bathroom, or foundation work, but I'd expect a smallish job working in an existing building to be much more expensive than completely new construction?

I could ask architects or GCs for rough estimates, but if I'm not actually going to be building anything this seems [dubious](https://www.jefftk.com/p/freeloading). Does anyone have better cost estimates?

*Comment via: [facebook](https://www.facebook.com/jefftk/posts/pfbid02R4coa68msHzCTyEwaPbqB75ZqqtLia2NYDQXk4BCnC6jvGCPHYJebBiJesQgvXJDl)*