Research study
What builders tell the city an ADU is worth — and why it is not the cost
Declared permit valuation is the single most available ADU cost number in California, and the single most misleading. This page measures how wrong it is, and in which direction.
Written by HyreADU Research Desk Primary-source research and data analysis
Audited by HyreADU Research Desk Cost-label discipline and indexation audit
The finding
A declared permit valuation is not a construction cost and it is not a market price. It is a figure the applicant writes on a building-permit application, it is the input to the plan-check and permit fee in most California fee schedules, and some cities replace it outright with a published dollar-per-square-foot table.
The number is real and public, and it is the easiest ADU cost proxy in California to obtain. It measures something other than cost.
The size of the gap, measured. On 8,528 new detached ADU building permits in the City of Los Angeles, the median declared valuation is $120 per square foot, with the middle half between $102 and $152.
Carrying the 2021 owner survey forward on the California Construction Cost Index to August 2026 puts a detached ADU at $461 per square foot. The declared median is about 26% of that.
Even the 90th percentile of declared valuations falls well short of it.
A cost figure built from permit valuations is therefore low by roughly a factor of four, before design, engineering, impact fees, utility connection and margin, which the valuation field never captured at all.
The number also varies more between cities than construction plausibly does. Across the five jurisdictions this desk holds permit evidence for, the median declared valuation on an ADU permit runs from $40,000 to $156,800 — a spread of about 3.9 to 1 under one statewide statute.
Some of that is genuine: Marin builds larger and more expensively than Los Angeles. Much of it is valuation practice, and San José’s hard ceiling, set out below, is the clearest tell.
None of this is an accusation. Under-declaration is a known feature of permit valuation across the United States, and this page names no permit and no applicant. It puts a number on a bias every researcher who reaches for permit data inherits.
Read this first
- No accusation is made here against any applicant or any city
Declared valuation runs low as a systematic property of how building-permit fees are assessed, in every jurisdiction that assesses them that way.
Applicants frequently declare exactly what a city instruction or a city valuation table tells them to.
We name no permit, no applicant and no contractor in connection with a declared figure, and nothing here should be read as an allegation of under-declaration by anyone.
- The per-square-foot analysis is one city
The $120 per square foot headline is the City of Los Angeles, on new-construction permits adding exactly one ADU, because Los Angeles is the only one of our five jurisdictions that publishes a departmental ADU flag and a floor-area field on the same complete extract.
The five-city comparison further down is levels, not rates, and the extracts have different date windows.
- The cost anchor is somebody else’s survey, arithmetic-adjusted by us
The $461 per square foot figure is not a HyreADU survey and it is not a quote. It is the 2021 California ADU owner survey’s detached median, carried forward on the DGS California Construction Cost Index from December 2019 to August 2026.
DGS itself cautions that the underlying index “reports cost trends for specific construction trade labor and materials in the California market and does not reflect current market bidding environment”. It is an anchor for a ratio, not a price for a project.
- Comparing a declared valuation to a full cost is comparing two different scopes
Part of the four-to-one gap is under-declaration and part of it is that the two numbers were never measuring the same thing. A permit valuation is, at best, the value of the permitted construction work.
An owner-reported cost includes design, engineering, permit and impact fees, site work and everything the household actually paid. We separate what we can and we flag what we cannot; the ratio is a bound, not a decomposition.
- Not financial advice, and not a budget
Nothing on this page is a cost estimate for any project. If you need a number for a specific lot, the number comes from bids on a real scope, not from this page and not from a permit file. HyreADU does not design, permit or build ADUs.
What a declared valuation actually is
When an applicant files for a building permit, one of the fields is the value of the proposed construction. That figure does two jobs.
It becomes part of the permanent public record of the permit, and — in most California fee schedules — it becomes the input to the plan-check and permit fee that the applicant is about to pay.
Those two jobs point in opposite directions. A record wants an accurate number. A fee basis creates a reason for the number to be low. The result is a field that is systematically pulled downward, and that pull is a property of the instrument, not of the people filling it in.
Some cities remove the applicant’s discretion entirely. Sacramento publishes a residential valuation table on form CDD-0245 that sets new living area at $170.80 per square foot; San José points applicants at ICC construction-tax valuation rates.
Where a table governs, the “valuation” field stops being an estimate of anything and becomes an arithmetic output of floor area — which is why San José’s harvest has a maximum of exactly $234,848 and a minimum of $25,091, a range far too tidy for a market.
And the scope is narrower than a homeowner’s idea of cost. Design and engineering, plan-check and permit fees themselves, school and park and traffic impact fees, utility connection and capacity charges, site work outside the permitted structure, financing costs and the contractor’s margin are all things a household pays for an ADU and none of them are what the valuation field was asked about.
HYRE analysis. Put those three effects together — a downward fee incentive, a table that flattens, and a narrower scope — and you would predict a declared valuation well under half of a household’s total outlay.
The measured ratio in Los Angeles, 26% of an indexed detached-unit cost, is at the low end of even that expectation.
The gap, per square foot
Dividing declared valuation by recorded floor area on the same permit removes the size difference between a 480-square-foot conversion and a 1,200-square-foot detached unit, and leaves a rate that can be compared to a construction-cost rate.
On 8,528 Los Angeles new-detached ADU permits the median is $120 per square foot. A quarter declare $102 or less. A tenth declare $96 or less.
The indexed anchors sit far above that whole distribution. A detached ADU indexes to $461 per square foot in August 2026 money; the statewide all-types median to $384; even a garage conversion — the cheapest type in the survey — to $291.
The declared distribution’s 90th percentile, $201, still sits below the cheapest anchor on the chart.
Fact. The median declared rate is 26% of the indexed detached rate, and 41% of the indexed garage-conversion rate.
HYRE analysis, stated as analysis. A researcher who computes “average ADU cost in Los Angeles” from the permit file and reports it as a cost is out by something like a factor of four.
That is not a small correction and it is not a rounding error; it is the difference between a number that supports a policy argument and a number that destroys it.
Because permit valuation is the most accessible ADU dollar figure in California, this is a mistake with a large surface area, and it is why this page exists.
What we are not claiming. That the true cost of a Los Angeles ADU is $461 per square foot.
That anchor is somebody else’s 2021 survey moved by an index, and DGS explicitly warns the index does not reflect the bidding environment.
The defensible claim is about the ratio: two independent instruments, measured on the same units, differ by roughly four to one in a direction the mechanism predicts.
Declared against indexed, in one table
Every number in the chart above. The left column is what applicants told the City of Los Angeles. The right is HYRE arithmetic on the 2021 owner survey. They are not the same kind of number and the table says so on every row.
| Measure | Value | What it is | Source |
|---|---|---|---|
| Declared valuation per square foot — 10th percentile | $96 | A fee input recorded on a permit | LADBS pi9x-tg5x, 8,528 new detached ADU permits, retrieved 2026-09-05 |
| Declared valuation per square foot — 25th percentile | $102 | A fee input recorded on a permit | LADBS pi9x-tg5x, retrieved 2026-09-05 |
| Declared valuation per square foot — median | $120 | A fee input recorded on a permit | LADBS pi9x-tg5x, retrieved 2026-09-05 |
| Declared valuation per square foot — 75th percentile | $152 | A fee input recorded on a permit | LADBS pi9x-tg5x, retrieved 2026-09-05 |
| Declared valuation per square foot — 90th percentile | $201 | A fee input recorded on a permit | LADBS pi9x-tg5x, retrieved 2026-09-05 |
| Indexed cost per square foot — garage conversion | $291 | HYRE arithmetic on a 2021 owner survey, indexed to Aug 2026 | 2021 California ADU owner survey median × CCCI factor 1.536 |
| Indexed cost per square foot — statewide, all ADU types | $384 | HYRE arithmetic on a 2021 owner survey, indexed to Aug 2026 | Same method. Statewide median, all types |
| Indexed cost per square foot — detached ADU | $461 | HYRE arithmetic on a 2021 owner survey, indexed to Aug 2026 | Same method. The comparable unit type to the declared frame |
| Ratio: median declared ÷ indexed detached | 26% | A HYRE calculation comparing two different instruments | The finding of this page |
The indexation chain: DGS California Construction Cost Index, December 2019 = 6,924, August 2026 = 10,633, factor 1.535673.
DGS’s own caution, quoted: “The ENR BCI reports cost trends for specific construction trade labor and materials in the California market and does not reflect current market bidding environment.” A second index — the Census/HUD constant-quality Laspeyres price index of new single-family houses under construction — gives a factor of 1.487 over a comparable period, which is close enough that the choice of index is not driving the finding.
That index is national, not Californian, and is published here only as a check.
Declared valuation by permit type
The whole Los Angeles ADU frame, split on the department’s permit type. Levels, not rates — the floor areas differ and so does the scope of work.
| Permit type | Permits with a valuation above zero | 25th percentile | Median | 75th percentile | 90th percentile |
|---|---|---|---|---|---|
| New construction (detached ADU) | 10,604 | $90,000 | $124,661 | $200,000 | $350,000 |
| Addition (attached ADU) | 12,224 | $50,000 | $75,000 | $115,000 | $175,195 |
| Alteration/repair (conversion) | 16,421 | $20,000 | $32,000 | $50,000 | $75,000 |
| All ADU-flagged permits | 39,250 | $35,000 | $60,000 | $118,894 | $192,065 |
HYRE calculation on LADBS resource pi9x-tg5x, non-supplemental ADU-flagged permits issued 2020 to 2026-08-30, retrieved 2026-09-05. 29 permits in the frame carry a zero or missing valuation and are excluded from the distributions.
The alteration/repair median of $32,000 is the number most often quoted back at us as “what a garage conversion costs in LA”. It is not a cost. It is a fee input on a conversion permit, and the conversion study keeps it labeled as one throughout.
Does the declared number track construction inflation?
Median declared valuation across all Los Angeles ADU permits rose from $37,000 in 2020 to $75,000 in 2025 — about 103% in nominal terms across five years. On new detached permits specifically the movement is smaller: $108,500 to $125,000, about 15%.
Over roughly the same window the DGS California Construction Cost Index rose by a factor of 1.54 from its December 2019 level. So declared valuation on new detached units has moved at a fraction of the pace of the construction-cost index it is nominally tracking.
HYRE analysis. Two readings are consistent with that. Either the declared field is sticky — anchored on habit, on a table, or on last year’s number — or the mix of units being built is shifting toward smaller and cheaper ones.
Our size study finds the median new detached ADU has not shrunk, which leaves stickiness as the more plausible explanation. We are not able to settle it from this data, and we are not going to pretend otherwise.
The practical consequence is that a time series of ADU permit valuations is an even worse cost series than a single-year cross-section, because the bias is not constant. If you need to say something about ADU costs over time, permit valuation is the wrong instrument and no amount of deflation will fix it.
Five jurisdictions, one statute, five valuation practices
Median declared valuation on ADU permits in each of the five California jurisdictions where this desk holds extracted permit evidence. Read the date windows before you read the medians: these are different vintages of different feeds, not a controlled comparison.
| Jurisdiction | Permits with a valuation above zero | Median declared valuation | Range in the extract | Extract window | What the shape suggests |
|---|---|---|---|---|---|
| City of Los Angeles (legacy contractor extract) | 3,809 | $40,000 | $501 – $17,500,000 | 2017-02-28 to 2023-05-19 | A very wide range with a low median. Consistent with applicant-declared figures and no binding table. |
| City and County of San Francisco | 1,314 | $150,000 | $1 – $3,500,000 | 2015-06-26 to 2026-08-28 | High median, wide range. San Francisco ADUs are frequently interior conversions in multi-unit buildings with a genuinely different scope. |
| City of Sacramento | 749 | $133,105 | $800 – $1,500,000 | 2018-10-29 to 2026-07-24 | Tight interquartile band. Sacramento publishes a residential valuation table (CDD-0245, new living area at $170.80 per square foot), which would produce exactly this. |
| City of San José | 459 | $98,971 | $25,091 – $234,848 | 2008-02-11 to 2026-08-27 | The clearest tell in the whole study. A minimum of $25,091 and a maximum of $234,848 on 459 permits is not a market. It is a formula. |
| Marin County (unincorporated) | 277 | $156,800 | $856 – $4,500,000 | 2014-04-10 to 2026-07-20 | Highest median of the five and the widest tail. A small, expensive, low-volume market — and the county excluded 145 owner-builder permits by name, more than any other feed. |
HYRE calculation from the desk’s five municipal ADU-permit harvests, computed 2026-09-05. Owner-builder-named records are excluded throughout under Business and Professions Code § 7044. Zero valuations dropped. Per-permit figures, one issued permit row each.
The Los Angeles row here uses the legacy LADBS extract (resource xnhu-aczu), which is the only LADBS shape that carries the contractor of record and therefore the only one usable for a contractor-named harvest; its window ends 19 May 2023.
The per-square-foot analysis higher up this page uses the current extract (pi9x-tg5x), which runs to 2026 but has no contractor columns. They are two different files and we do not mix their figures in a single row.
Method
Two datasets, one arithmetic chain, and every step named.
- 1 The per-square-foot frame
All 409,619 rows of LADBS Socrata resource
pi9x-tg5xdownloaded 2026-09-05. ADU frame from the departmental fieldsadu_changed > 0orjunior_adu = 1; supplementals excluded; restricted topermit_type = 'Bldg-New'withadu_changed = 1, which is the only cut on which the floor-area field reliably describes the ADU.Rate computed permit by permit as valuation divided by floor area, then percentiles taken of the rates — never as a ratio of two medians.
- 2 The exclusions, stated
Valuations of zero or missing are dropped (29 permits in the whole ADU frame). Floor areas below 100 or above 3,000 square feet are dropped as implausible for a single accessory unit.
Both exclusions push in the same direction — they remove the most extreme rate outliers — and both are published rather than silently applied.
- 3 The cost anchor and its chain
The 2021 California ADU owner survey reported medians for a survey of owners who had completed units permitted in 2018–19.
Those medians are carried forward by the DGS California Construction Cost Index, December 2019 = 6,924 to August 2026 = 10,633, a factor of 1.535673. That arithmetic is HyreADU’s. The survey is not.
We cite the survey as the survey’s and never restate its findings as our own research.
- 4 A second index as a check, not as a headline
The Census/HUD constant-quality Laspeyres price index of new single-family houses under construction gives a factor of 1.487 over a comparable period, against 1.536 for CCCI.
The two agree closely enough that the finding does not depend on which is chosen. The Census index is national, not Californian, which is why it is the check and not the anchor.
- 5 The five-city levels
Computed from the desk’s five municipal ADU-permit harvests, one per jurisdiction, with owner-builder-named records excluded under Business and Professions Code § 7044. These are levels on different date windows from different feeds and they are presented as such — a comparison of valuation practice, not a controlled comparison of construction cost.
- 6 What we did not do
We did not attempt to decompose the four-to-one gap into under-declaration, table effects and scope differences, because the data cannot support that decomposition. We report the ratio as a bound on how far a permit-valuation cost estimate is from an indexed one, and we stop there.
If you are about to use permit valuation as a cost variable
Do not, without a correction and without saying so. On this evidence a Los Angeles ADU permit valuation is roughly a quarter of an indexed construction cost for the same unit type, the bias is not constant across years, and it is not constant across cities either — the same field in San José is a formula and in Los Angeles is an applicant’s figure.
If permit valuation is the only instrument available, the defensible uses are relative and internal: comparing conversions to new builds within one city and one year, or ranking areas within one jurisdiction. The indefensible use is a headline dollar figure described as a cost.
If you want the anchors we consider defensible for a cost claim, they are set out with their whole chain on the California ADU cost study, and the honest answer there is a range with named movers rather than a price.
Four numbers that are not each other
- Declared permit valuation
- The construction value on the building-permit application. A fee input, a public record, and the subject of this page. It is not a cost.
- A city valuation table
- A published dollar-per-square-foot schedule a city substitutes for the applicant’s figure. Sacramento’s form CDD-0245 sets new living area at $170.80 per square foot. Where a table governs, the valuation field is arithmetic on floor area and carries no information about the actual job.
- Owner-reported cost
- What a household says it spent, in a survey. Broader than a permit valuation — it includes design, fees, site work and finance — and dependent on recall and on who answered the survey.
- A bid
- A price from a named contractor to do named work on a named lot. The only one of the four that is an offer. None of the numbers on this page is a bid, and no number on this page should be used in place of one.
- Impact fee
- A defined statutory term, not a synonym for “fee”. Government Code § 66311.5 bars impact fees on an ADU of 750 square feet of interior livable space or less. Plan-check and permit fees, and utility connection and capacity charges, are separate questions.
Questions
Is the valuation on a building permit the same as what the ADU cost?
Why would anyone under-declare?
Do all cities let the applicant pick the number?
What is the median ADU permit valuation in Los Angeles?
Has the declared valuation kept up with construction inflation?
Does this mean permit data is useless for cost research?
Is a low declared valuation a sign of an unlicensed or a bad contractor?
Which section governs ADU impact fees now?
Written and audited by
HyreADU Research Desk
Primary-source research, data analysis and fact checking
We are a research desk, not a builder. We read the permit extract, the statute, the HCD return or the fee schedule ourselves, and publish each figure with its source and retrieval date.
Where a number cannot be traced to a primary source, we leave it out and say what we could not verify. Our store-based claims cover California only.
- CA
- the only state this desk will make store-based claims about
- 5
- jurisdictions with extracted ADU permit evidence
- 735
- CSLB-verified companies in the California store
- 0
- national claims from a one-state store
How this desk works
- Primary sources only. Permit counts come from the city or county that issued the permit. Production counts come from HCD’s Annual Progress Report. Rents come from HUD or the Census. We do not cite an article that cites a source; we download the source and compute the figure ourselves.
- This is a California site. The company store is 734 California firms and one New Mexico firm. Permit evidence exists for five named jurisdictions: Los Angeles, San Francisco, Sacramento, San José and unincorporated Marin. A number from that store is titled to those places, never to the United States.
- A permit is not a completion, and a license is not an ADU grade. California licenses no ADU classification. Being named on an ADU permit is evidence of engagement in that jurisdiction, not of quality, completion, or work anywhere else. Owner-builder permits are excluded from contractor counts.
- Calculation is labeled as calculation. Figures we derive are never presented as something HCD, HUD, the Census or a city published. Terner Center research is cited as Terner’s, never restated as ours.
- We do not design, permit or build ADUs, and we take no payment for placement, ranking or a favorable mention. Pages that look like rankings are not: they publish public-record counts and let the reader decide.
- Nothing here is legal, tax or financial advice. Zoning, underwriting and appraisal practice vary by jurisdiction, lender and appraiser. The useful next step on a specific lot is the planning counter and a licensed professional.
Data as of LADBS Socrata resource pi9x-tg5x (409,619 rows) downloaded and analyzed 2026-09-05; five-jurisdiction declared-valuation distributions computed 2026-09-05 from the desk’s municipal harvests; DGS California Construction Cost Index to August 2026. Authorship on this site is organizational: the analysis belongs to the desk rather than to a named individual, and we do not publish credentials we do not hold.
Our editorial policy sets out how we source, date and correct what we publish.
Sources & retrieval dates
- City of Los Angeles Department of Building and Safety — Building Permits Issued from 2020 to Present (Socrata resource pi9x-tg5x) , Full resource download, 409,619 rows, retrieved 2026-09-05. Fields used: permit_nbr, permit_type, issue_date, valuation, square_footage, apc, adu_changed, junior_adu, refresh_time. All per-square-foot and by-year figures on this page are HYRE calculations on this file. Retrieved 2026-09-05.
- City of Los Angeles Department of Building and Safety — legacy building-permit extract (Socrata resource xnhu-aczu) , The only published LADBS shape carrying the contractor of record and that contractor’s license number; used for the five-city levels table. Its contractor evidence ends 19 May 2023 and it is deliberately not topped up from the newer feeds, which cannot supply it. Retrieved 2026-09-05.
- California Government Code § 66311.5 — impact fees and the 750 square foot threshold , Quoted on this page: “A local agency, special district, or water corporation shall not impose any impact fee upon the development of an accessory dwelling unit that has 750 square feet of interior livable space or less…”, and the proportional-charging rule above that size. History as retrieved: “Added by renumbering Section 66324 by Stats. 2025, Ch. 520, Sec. 7. (SB 543) Effective January 1, 2026.” Cited to keep the impact-fee question separate from the permit-fee question this page is about. Retrieved 2026-09-05.
- DGS California Construction Cost Index (CCCI) , The index used for the whole indexation chain: December 2019 = 6,924, August 2026 = 10,633, factor 1.535673. Built from the ENR Building Cost Index averaged across Los Angeles and San Francisco. DGS’s own caution, quoted in full on this page: “The ENR BCI reports cost trends for specific construction trade labor and materials in the California market and does not reflect current market bidding environment.” Retrieved 2026-09-05.
- U.S. Census Bureau / HUD — constant-quality price index of new single-family houses under construction , Used only as a cross-check on the indexation factor: annual 2019 = 134.4, July 2026 preliminary = 199.8, factor 1.486607. National, not Californian, which is why it is a check and not the anchor. Retrieved 2026-09-05.
- City of Sacramento — Fees and Charges on Residential Building Permits (form CDD-0245) , The published residential valuation table that sets new living area at $170.80 per square foot. The clearest documentary example this desk holds of a city replacing an applicant’s declared valuation with a formula. Retrieved by this desk for the ADU cost study on 5 September 2026. Retrieved 2026-09-05.
- City of San José — building permit fees , The city’s own fee information, which directs applicants to ICC construction-tax valuation rates rather than to a self-declared figure. Cited as the explanation for the unusually tight valuation range in the San José extract. Retrieved by this desk for the ADU cost study on 5 September 2026. Retrieved 2026-09-05.
- Implementing the Backyard Revolution — 2021 California ADU owner survey , The source of the 2021 medians this page indexes forward. Reports what owners of completed ADUs said they spent, by region and by unit type, on units permitted in 2018–19. Cited as its authors’ work; the indexation arithmetic applied to it is HyreADU’s and is labeled as such everywhere it appears. Retrieved 2026-09-05.
- HyreADU — five-jurisdiction declared-valuation distributions , Per-permit and per-site declared-valuation percentiles for Los Angeles, San Francisco, Sacramento, San José and unincorporated Marin, computed 5 September 2026 from the desk’s municipal harvests with owner-builder-named records excluded under Business and Professions Code § 7044. Published in full alongside the cost study. Retrieved 2026-09-05.
A permit valuation is not a budget
If you need a number for your lot, it comes from bids on a real scope. The fee estimator sets out which charges are driven by valuation, which by floor area, and which by neither — and it will never tell you what your ADU will cost.
HyreADU does not design, permit or build accessory dwelling units, and takes no payment for placement or a favorable mention.
This page is informational and is not financial, tax or legal advice, and no figure on it is a cost estimate, a quote or a budget for any project.
Declared permit valuation is a fee input recorded on a public application; this page names no permit, no applicant and no contractor in connection with a declared figure, and nothing here alleges under-declaration by anyone.
The indexed cost anchors are HyreADU arithmetic applied to a published 2021 owner survey, using an index whose own publisher states that it “does not reflect current market bidding environment”.
Per-square-foot figures are the City of Los Angeles only; the five-jurisdiction table compares different feeds over different date windows and is a comparison of valuation practice, not a controlled comparison of construction cost.