It’s Time to Get Serious About Construction Costs

RAND’s April 2025 report on California’s housing costs

RAND’s April 2025 report on California’s housing costs was a wake-up call.

The data was stark: construction costs in California are 2.3× higher than in Texas and with the Bay Area coming in at nearly 3× the Texas average. And these aren’t just headline-grabbing numbers—they translate directly into fewer homes built, longer development timelines, and affordable housing projects that never make it off the drawing board.

As a housing community, we’ve made real progress pushing for faster approvals, lower fees, and more flexible zoning. But there’s one piece of the puzzle that still gets too little attention: how we manage the cost of actually building.

That’s why we are teaming up with HAC’s members to launch a conversation on construction cost best practices—starting with a member forum open to all HAC stakeholders.

What We’ll Cover:

• The impact of macroeconomic forces like tariffs, global materials markets, and skilled labor shortages

• Hard cost management strategies: procurement methods, modular construction, and delivery model trade-offs

• Soft cost insights: architecture, engineering, permitting, insurance, and legal expenses

• Scope creep, change orders, and cost escalation: how to mitigate risk and plan smarter

• Lessons learned from the field: case studies and real project experiences.

We know from RAND’s research that soft costs in California average $97 per square foot, compared to $61 in Colorado and just $33 in Texas. Add in longer predevelopment periods (22+ months more than Texas on average) and local impact fees that can exceed $40,000 per unit, and it’s clear we can’t afford to ignore the construction side of the affordability equation.

Call to Action

We invite HAC members—developers, architects, GCs, engineers, and advocates—to join us for this first forum. It will be a practical, solutions-oriented discussion aimed at real cost containment, shared learning, and smarter delivery of affordable housing.