ADU Cost Breakdown: Should You Build from Scratch or Go Prefab in 2025?
California, and San Diego particularly, witnesses an ADU boom — with many budget-friendly prefab options available, homeowners rush to make the most of their property. The Annual Report on Homes states that ADU construction in San Diego makes up almost 20% of new housing units permitted in San Diego.
ADUs (Accessory Dwelling Units), also known as granny flats or in-law suites, are secondary housing units located on the same lot as your primary home. ADUs are pretty practical as they can be used for:
- Additional living space for family members who fancy a bit of independence. Or, it might be a comfortable standalone office if you work remotely.
- A guest house for friends and family members.
- Rental income. In California, rent rates have never been low, so many people choose to rent an ADU rather than a house or a costly apartment. If you offer a unit for rent, you can return a great deal of your initial investment.
Choosing the Rignt ADU Option: Prefab vs. Stick-Build
The most common ADU construction options include:
Prefab, modular & panelized ADUs. These are partially constructed in a factory to be assembled on-site later. Prefab ADU kits are widely available in the market: you can purchase a fully finished modular prefab ADU starting from $90k. Prefab units typically come in two main types:
- Modular. These are complete units that are built in a factory and delivered to your site.
- Panelized. Manufactured wall panels are assembled on the site.
Stick-build, or custom ADUs. These are built on-site and can be:
- Attached – where a unit is an extension of a primary house and connected to it.
- Detached – when an ADU is a separate mini-home or a cottage.
Garage converted ADUs – when you transform an existing car garage and repurpose it into a separate living space. Given the existing structure and utility system, the cost to convert a garage to an ADU is typically lower compared to other options.
The Average Cost of ADU in San Diego in 2025
The table below compares the costs of prefab and custom‑built ADUs:
Size | Prefab/Modular ADU Cost in San Diego | Custom-Built ADU Cost in San Diego |
400-600 sq ft. | $90-150k | $150-250k |
600-800 sq ft. | $120-180k | $180-350k |
Reputable ADU builders in San Diego always emphasize the importance of thorough on-site estimation before making a final decision.
While the cost of a prefab unit might seem lower, the moment you start to add craning, foundation, and utility systems, the price would add up and can exceed the ADU garage conversion cost, which varies between $165–225k in San Diego.
The key advantage of a prefab unit over a stick-built one is the faster timeline. However, that comes at the cost of the inability to customize it. Some manufacturers do offer several models, so you can choose the most suitable one based on your plans and intended design.
Things are different for custom ADUs, where you can personalize and plan the layout of the unit from the size of the rooms and materials used to the location and design of your kitchen door.
Hidden & Often Ignored ADU Cost Items
While custom and prefab/modular ADUs differ in pricing, they share the same expenses often overlooked by homeowners: site preparations, craning and delivery, utility trenching, and materials. There are also hidden costs associated with weather delays, permits, and furnishing.
Cost management isn’t so difficult if you plan your budget wisely and hire an experienced contractor who can help you minimize the number of setbacks.
The best ADU builders in San Diego provide on-site project estimation to ensure thorough evaluation of all factors that may influence the final costs.
Financing Options in 2025
To ease the burden of ADU construction costs, there are several financing options to choose from:
- HELOCs and Home Equity Loans. Homeowners can borrow funds at favorable conditions.
- CalHFA ADU Grant Program. Provides qualified homeowners with up to $40,000 in grant funds to reimburse costs associated with ADU building.
Additionally, the San Diego Housing Commission provides an ADU Finance Program for qualifying homeowners.
If you’re qualified for the program, SDHC also provides project management support, an ADU consultant, and landlord-tenant training.
Both custom and prefab ADUs have their pros and cons. Faster timeline or personalized layout, the choice is yours.
With over 30 years in the San Diego home remodeling market, Groysman Construction has rightfully earned its reputation as an expert in home renovations. We install both prefab kits and design custom ADUs. You can look through our portfolio for ideas to implement in your home remodeling project.
Contact us for an estimate: experienced pros will recommend the right solution for your specific needs. Your dream-ADU will become reality with Groysman.
- HELOCs and Home Equity Loans. Homeowners can borrow funds at favorable conditions.
- CalHFA ADU Grant Program. Provides qualified homeowners with up to $40,000 in grant funds to reimburse costs associated with ADU building.
Additionally, the San Diego Housing Commission provides an ADU Finance Program for qualifying homeowners.
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