The cost of living in Oakland is quite high compared to the national average by over 74%, and 25% higher than the California average. The average price to purchase a house is $959,760 — over three times the national average. Unsurprisingly, almost 60% of all Oakland residents are renters. Similar to other cities in California, residents are burdened with high taxes. This means residents are expected to return a significant portion of their income to the government. The city sales tax is also higher than the state average by 2%.
Similar to several other cities across the United States, Oakland’s construction industry also suffered shortages in supply during the COVID-19 pandemic, resulting in an inability to construct new houses. The cost of housing has significantly gone up in recent years. The cost to build a house in Oakland now ranges from $500 to $700 per square foot for value-conscious homes, $700-$800 per square foot for mid-range homes, and over $800 per square foot for high-end or luxury construction projects. The city is currently in the process of revising old zoning regulations in order to provide affordable housing by way of allowing multi-house buildings to be constructed in neighborhoods otherwise restricted to single-family homes.
Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest. Image Source: National Cost Guide.
Hard Costs
Expenses directly involved in the construction of the physical building – such as material fees, labor, landscaping and utilities – are considered hard costs. These do not yet include any other underlying costs such as fees charged for permits or inspections.
Simple homes in Oakland normally range from $400-$500 per square foot, $550 per square foot for mid-range homes and upwards of $850 per square foot for premium homes, a range that comes close to the cost average for a San Francisco Bay Area home. Oakland-based, high-end design-build firm building Lab has a price tag of $500-$700 for value-conscious homes, $700-$800 per square foot for mid-range homes and $800 per square foot for high-end custom homes.
Basic 1,500 square foot roofs in the city cost on average around $9,950. The typical range for asphalt roofing runs between $4.90 to $8.40 per square foot. Foundation installation in Oakland costs around $8.49 per square foot for 4-inch reinforced slabs. For heating and ventilation, the majority of homeowners dished out an average of $2,018, which already includes labor costs for installation as well as needed materials and equipment. On average, homeowners in Oakland pay around $480 to rewire their homes—which covers labor costs, the cost of materials and other project costs such as surface preparation.
Soft Costs
Figures and costs not involving the physical construction of a home falls under soft costs. Soft costs comprise of state or city-imposed taxes, permits and regulations, design and architect fees and the cost of a plot of land where construction will take place.
Cost of the Land
Oakland lots listed on real estate website Zillow range from $50,000 for 9,452 square feet (or $5.29 per square foot) to $3,250,000 for 104,108 square feet (or $31.22 per square foot).
Permits and Other Fees
The city’s local government computes the fees for necessary building permits based on the construction value of a project. The filing of building, electrical, mechanical and plumbing permits are met with an application fee of $74 per permit. Below is a rundown of the needed permits along with their accompanying fees.
Mechanical, electrical and plumbing (MEP) inspection fees also come with a minimum transaction of $115; or 15% of the total building permit cost accumulated by the homeowners. So homeowners with an accumulated fee of $500 still have to pay $115, whereas homeowners with a total fee of $5000 are required to shell out $750 for MEP inspection fees.
Inspection Fee for New Construction
Plan Checking Fees
Architecture and Design Fees
There are various ways architects in Oakland charge for their service. Professionals may charge based on a percentage of construction cost. Some choose to charge an hourly rate while some opt to charge a fixed rate for their services.
How do the custom home building costs in Oakland compare to other nearby cities?
As mentioned earlier, compared to other cities in the state of California and even the national average, custom homes are built at a higher price in Oakland. Aspiring Oakland homeowners are expected to face home costs of around $959,760, while neighboring Alameda, Berkeley and Lafayette homes average at $347,193, $912,114 and $722,650, respectively. The price of a home in Oakland is still lower than in San Francisco.
What Leading Custom Home Builders and Architects that Serve Oakland Say
Laryssa Stecyk, founder of Broadway Design Build, provided a range of their home construction projects. They charge approximately $425 per square foot for value-conscious homes, $550 per square foot for mid-range and upwards of $850-$1,000 per square foot for high end custom homes. It’s highly unlikely for them that a home can be built for less than $400 per square foot without cutting any corners. She highly recommends that clients set realistic expectations, understanding that delays are inevitable for construction projects—especially with the many challenges the construction industry is facing due to the pandemic.
Meanwhile, Building Lab posted a price of $500-$700 per square foot for value conscious homes, $700 to $800 for mid-range homes and $800 and above for high-end projects — with many of their clients opting for more high value custom homes. They’d like clients to know that it’s important for all stakeholders to be involved in the planning process so that project goals can be clearly understood and realistic. They also suggest that clients are able to project and account for all costs involved, especially soft costs that tend to be overlooked. Project-owners should expect that there will be bumps in the road, especially if they will be working through multiple years so they need to ensure that they are working with people they respect, trust and communicate well with.
Personnel from Larson/Shores Architecture and Interiors normally charge 10 to 15% of the estimated construction budget for new or renovated construction. The firm doesn’t make adjustments based on the budget-consciousness of the work, stating that the same amount of work is needed to complete the project. They firmly believe that the construction industry will remain strong, although prices will continue to be high. So they advise homeowners to expect and be ready for high prices on their construction projects – from labor, materials, permit fees and beyond.
The Future of Oakland’s Residential Construction Industry
In the past few years, there has been concern about the rising prices of hard costs and the market’s volatility — especially with raw materials and labor. Due to the deficit in laborers, builders are forced to contract the help of specialized construction services that usually have higher asking prices. The upward trajectory of prices is unlikely to end in the next few years. Many construction projects have been facing delays in construction—incurring additional fees in the form of property holding costs. By 2030, the value of homes is expected to rise to $1,713,554 with the current upward trend in building costs.
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