When I wrote about how Somerville's affordable housing "bonus density" rules made it likely profitable to build 100% affordable housing, Chris pointed out 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 could be a good idea. At which point Chris needed to again remind me 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, new construction in the Northeast had a median cost of $179/sqft in 2021 (xls, sheet). 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, 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. Does anyone have better cost estimates?

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I could ask architects or GCs for rough estimates, but if I'm not actually going to be building anything this seems dubious.

Maybe just be open and ask: "I'm writing a blog about building new affordable housing and doing research on the cost. Do you have an estimate? I'm happy to give you a backlink to your homepage on my blog post?"

That's a great idea! I just wrote to the architect for our dormer work:

Thanks again for designing our 2016 dormer addition: the design has worked well, and it's very helpful to have the extra space, especially now that we have a third kid!

I'm looking into affordable housing construction in Somerville, where we now have an affordable housing overlay district which allows construction of much denser housing than would normally be allowed as long as the units are all sold or rented under affordable housing restrictions.  I'm trying to figure out costs, in a very rough ballpark way, as part of looking into whether it could work for groups of neighbors to get together to fund affordable housing construction.

Would you happen to have any rules of thumb for estimating the cost per square foot of no-frills construction in this area?  For example, I see the census saying new construction in the Northeast had a median cost of $179/sqft in 2021, but my guess is places like Somerville are more expensive than average?  Alternatively, do you have any recommendations on who to ask?

If you're able to help I'd be happy to credit you or link back to your website from my writeup!

Which spreadsheet did you look at in the HUD data? Did you use the contract price?