Why I Decided to Build A Second Story as Opposed to Buying a New Home

Five years ago I finally saved enough to buy a sweet little bungalow in the Hollywood Hills. At the time I wasn’t married, and I didn’t think too much about the future, so a one bedroom, one bathroom, and an office felt like more than enough. To me it was all about the location and the gorgeous flat backyard.

The home itself is just starting to feel too small. So our options are move — with these interest rates — or build.

I was pretty apprehensive about building, because I work in construction. I’m on site all day and drawing all night, and taking on my own project felt like bringing work home. But the math just pencils. So we made the decision to do it.

Here’s how we got there, and everything we’ve had to learn since, because deciding to build turned out to be the easy part.

The hard part isn’t the money. It’s admitting what you’d be giving up.

Everybody frames this as a spreadsheet question, and the spreadsheet does matter. Buying into a comparable house today means taking on a new rate, and the interest alone over the first five years is a number that makes you sit down. Add the broker’s commission, the closing costs, the moving costs, the inevitable six months of fixing someone else’s decisions in a house you just paid a premium for. Set all of that against the cost of adding onto a house you already own and already like, and the comparison stops being close. That’s the part that made the decision defensible.

But that isn’t really what made it. What made it is that I already have the two things you cannot buy your way into later.

The first is the location. We are up in the hills, minutes from everything, on a street I still enjoy driving home on after a twelve-hour site day. Location is the one variable in real estate that no amount of construction budget can fix. You can gut a kitchen. You can raise a roof. You cannot move a house closer to where your life happens.

The second is the views, and the flat backyard that came with them — which, if you know hillside lots in Los Angeles, you know is close to a unicorn. Most of what’s for sale up here is a house pinned to a slope with a deck cantilevered off the back and nowhere to actually stand outside. We have real ground. Trading that away to buy square footage somewhere else would be trading the rarest thing we own for the most common one.

Then there’s the part I think about as an architect. If we buy, we buy somebody else’s floor plan and spend a decade quietly resenting it. If we build, I get to solve for exactly how we live — where the light lands in the morning, how the primary suite relates to the yard, what happens on the roof. I design custom houses for other people all day. There’s something a little absurd about not doing it for myself.

So: cheaper, better located, and shaped around us instead of around a stranger. That’s the case. The catch is that in this particular part of Los Angeles, what you’re allowed to build is a much narrower question than what you want to build — and we’re inside one of the strictest overlays in the city.

First problem: parking

Before we could talk about a bedroom, we had to talk about a garage.

Ours is gone. It was a permitted one-car garage, and a previous owner demolished it without pulling a demo permit — which means that as far as the city is concerned, it’s still standing. That’s an extremely common condition in older hillside housing stock, and it has to be squared away before anything else moves. We have to rebuild it.

The rebuild wasn’t what worried me. What worried me was whether adding a bedroom would trigger a second required parking space. Our house sits at an angle on a slope, and two covered spaces don’t fit gracefully — not without regrading, retaining walls, and a driveway geometry that would eat both the budget and the yard.

The answer, for our conditions, was no, for two reasons. The existing stall is grandfathered: nonconforming parking that came with the original house keeps its rights, and you don’t lose that by doing an addition. And on a substandard-width hillside street, a second required space doesn’t come due until you’re well past the scale of anything we’re contemplating.

There was a bonus in there too. Because the garage replaces a previously permitted structure rather than adding new square footage, it very likely doesn’t count against the square footage limits that govern everything else below — which is a meaningful amount of breathing room, and exactly the kind of thing you confirm in writing rather than assume.

The Mulholland Scenic Parkway, specifically

This is the overlay that catches more people in the hills than any other, and the one whose requirements are the strictest.

The Mulholland Scenic Parkway Specific Plan was adopted in 1992 to protect the views from Mulholland Drive. It runs from the Hollywood Hills west to Woodland Hills and reaches roughly half a mile out on either side of the road, which makes it the largest specific plan in Los Angeles — tens of thousands of parcels. If your property sits anywhere in that band, this plan, not your base zone, is probably the document that decides your project’s shape.

The corridor is layered. An Inner Corridor covers the parkway right-of-way plus 500 feet in each direction and carries the tightest controls; an Outer Corridor runs from there to about half a mile out with relaxed but still meaningful standards; a third designation covers institutional uses along certain stretches.

What it actually governs is form and appearance. Height depends on which way your lot falls relative to the road — in the Inner Corridor, upslope lots within a hundred feet of the parkway are held to fifteen feet, upslope lots beyond that get thirty, and downslope lots get forty, as does most of the Outer Corridor. Grading is metered by lot area, and whatever you do cut has to read as natural landform rather than engineered benching. Prominent ridges can’t be built on at the top, and anything within fifty vertical feet of a ridge crest needs a finding that the structure complements the view from the road. Then there’s the whole appearance layer: non-reflective, subdued colors, natural materials, non-glare roofing with nothing on it but solar, walls and fences limited to rough wood, native stone, textured plaster or dark metal, shielded low-height exterior lighting, and native fire-resistant planting drawn from an approved list, with two-for-one replacement of any native tree you remove.

The part that actually moves your calendar, though, is process — and the important thing to understand is that there is no scope small enough to opt out. Every project in the corridor needs Mulholland clearance. A bathroom remodel. A mailbox. There are only scopes small enough to be processed quickly.

There are three tiers. A non-project is an interior remodel with no change to the building envelope, or an in-ground pool; it gets signed off at the planning counter in about a week during normal plan check. An exemption is an administrative review with no hearing and no public comment, nominally four to six months, realistically six to nine right now — the entire specific plan is staffed by one or two assistant planners for all of Los Angeles, one recently left, and the replacement is still onboarding. Just getting an initial response takes three to four months. And a full Design Review Board case is discretionary: a public hearing open to comment, appealable, CEQA review, a Neighborhood Council presentation, fourteen months minimum and longer if you’re stacking other entitlements on top.

We are aiming squarely at the exemption, and that aim shapes the design rather than the other way around.

Two process notes that matter more than they sound like they do. You can submit to Mulholland before Building and Safety — the review only wants architectural drawings, not structural, not soils, not civil unless you’re moving earth. So the sequence is architecture first, submit, then build out the full LADBS set in the background while the clock runs. And the standard LA move of filing a skinny set to get your place in line is exactly backwards here. When the department takes three months to answer, every round trip costs you a quarter. You send a complete package the first time.

Then the Baseline Hillside Ordinance, and the number 500

Underneath Mulholland sits the BHO, with its own trigger: a net addition over 500 square feet.

Stay under it and the ordinance doesn’t apply to you. Go over and you inherit a slope band analysis — your allowable floor area gets derived from the slope of the lot itself — plus street width considerations and the rest of the hillside apparatus.

The sting is that it’s cumulative since 2011 and does not reset. Neither does Mulholland’s own 900-square-foot ceiling on additions. You get one bite, ever, and whatever you don’t use, you hand to the next owner.

A few details turn out to matter enormously at this scale. A stair counts once, on the ground floor — treads on the second floor aren’t floor area — but if you have to pop out at grade to make room for that stair, the pop-out counts. Floor area means covered space, so an open roof deck with guardrails isn’t floor area, though it isn’t free either, for reasons that become clear in a second. And while our Mulholland height limit is forty feet, the BHO pulls that down for R1 to roughly twenty-eight feet for a flat roof and thirty-three for a sloped one. The lower number wins. A flat-roofed second story with a roof garden fits comfortably underneath it.

And the rule that quietly turns a renovation into new construction

This is the threshold homeowners understand least, and it’s the one that decides whether you’re doing an addition or effectively rebuilding your house.

If the value of the proposed work exceeds 50% of the existing building’s replacement value, the whole building — and the site — has to come up to current code.

The city runs that on permit valuation, not on what you’ll actually write checks for. In our hillside area it’s roughly $150 a square foot for good-quality construction, up to about $184 for what they call hillside exceptional, and the same rate applies to the existing house and the new work alike. For a clean addition, that reduces to a square footage comparison.

It stops being clean the moment you touch anything else. Remodel work — moving walls, redoing a kitchen — carries its own valuation at roughly half the addition rate. Rebuilding floor framing to carry a roof deck lands in similar territory. Those numbers stack against you fast, which is why a project that reads as “a modest addition plus a light refresh downstairs” can cross the line without anyone meaning to.

Crossing it costs you a full structural upgrade of the existing building rather than just the new work, fire sprinklers throughout the entire house, almost certainly an electrical upgrade, a Title 24 analysis of the whole building that can pull in windows and possibly solar, and site work — oversteepened slopes mitigated, geotechnical hazards addressed.

Some of that you’d be doing regardless. Putting a second story on an existing house means new footings, underpinning and shear walls to carry the load, so you’re bringing that portion up to current code anyway. The real question is how far past the new work the requirement spreads, and that’s an answer you buy from a structural engineer and a soils engineer before you’re committed to a plan — not after.

There’s a second way to run the valuation, using a contractor’s line-item bid to rebuild your existing house against a bid for the proposed work. It can produce a friendlier ratio. It also raises your stated permit valuation, which raises your permit fees and hands the assessor a higher baseline for your property taxes. We’d rather take the $150.

One asymmetry is worth memorizing, because it’s the whole strategic picture in a sentence: the 50% threshold resets every time a Certificate of Occupancy is issued, while Mulholland’s 900 and the BHO’s 500 never reset. Phasing the work — primary suite now, the rest in a few years — genuinely helps you on valuation and does absolutely nothing for you on square footage.

What we’re actually doing

Three numbers, measured three different ways, on three different clocks: 900 square feet of cumulative additions under Mulholland, 500 square feet net under the BHO, and 50% of replacement value under the building code. The first two are permanent. The third renews.

The cleanest path, and the one we’re pursuing, is to stay under 500 square feet net. That one move avoids the BHO entirely, keeps us comfortably under the Mulholland ceiling, keeps us under 50% by definition, spares us from sprinklering the house, and keeps the project legally an addition rather than new construction.

I want to be honest about the tradeoff, though, because it’s the same conversation I have with clients. Designing to a threshold is not the same as designing to a life. If the only layout that actually delivers the primary suite we want pushes us past 500 square feet, then the right answer may well be to go over, absorb the code upgrades, and get the house we’re going to stay in for twenty years. Thresholds are inputs to the decision. They aren’t the decision.

So we start with schematic design and run the square footage and valuation math alongside it rather than after it, while both are still soft. We get a soils engineer in early — footing depths, driveway slope, and a direct question about what crossing 50% would demand from their side. We ask a structural engineer the same question about the existing framing and foundation. We bundle the garage rebuild and the addition into a single Mulholland exemption package, because you can’t run two exemption cases at once. And we ask a broker what a primary suite is actually worth up here, because we’re doing this to live in it, but it should still make sense on paper.

None of that is design yet. It’s four or five constraints, two of them permanent, and one approval process that’s going to take the better part of a year no matter how good the drawings are. Knowing all of it on day one is the entire difference between a project that fits and a project that gets redrawn in month eight.

The reason it’s worth it anyway is the thing I started with. We’d be building on the location we already chose, keeping the views and the flat yard we’d never find again, and ending up with a house shaped around how we actually live instead of how somebody else did. That’s not a compromise against buying. On this lot, at these rates, it’s the better version of the same dream.

I’ll keep writing this one as it goes — including the parts that don’t go smoothly.

Matter is an architecture studio in Los Angeles working on residential and commercial projects across the city. If you’re in the Mulholland corridor and trying to understand what your lot allows, get in touch.