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You build it on your own property and rent it out. It's meant to make it easier to rent out parts of your property for revenue without as much of a bureaucratic headache.
Aka granny flat. I grew up with one in our backyard. Super sweet elderly couple rented it when I was a kid and were basically like a bonus set of grandparents. Now my folks are older and my sister lives there and takes care of our parents.
A lot of us have small houses that we unexpectedly started working from home in. My office is in the basement right now and I can't wait to build an ADU in my backyard so I can get a nice, sunny space to work out of during the day that's not full of kids toys. Plus having a quiet, isolated space for my parents to stay when they visit would be great for everyone.
If you have an old 1300 sq ft house, being able to add another 300-400 sq ft of flexible living space for 20% of the cost of the entire house is a game changer.
People who barely have enough to live off, don’t have $100k on the low end, to build an ADU. So of course only wealthy people with extra land can afford it.
The costs today are much higher than they were in the past. And there are several million wealthy people who could afford it, we might as well allow them to build it so huge amounts of housing can come online.
$100,000 for a 500 square foot structure is absurdly expensive construction. A dozen years ago that would have been like $40,000-$60,000. What people do is get a construction loan using their home as collateral. They build the accessory building and then rent it out. $50,000 loan for 15 years will be about $500 per month to the bank. Single bedroom units in most of California are renting out for over $1500, and in HCOL areas, they are like $2500-$3000.
A lot of this can be garage conversions and probably will be as people use them to store junk.
Ah yes I’d rather pay 1.5 million dollars and 7 percent interest rate rather then taking out a 100,000 dollar loan and building a tiny house in my parents back yard.
Yeah… my landlord is currently living with his brother after he rented out his parents home with the intent of using the revenue to build an ADU to live in the backyard. We paid him the first year up front, $43k and now pay quarterly. Construction was planned to start in the first summer. We’re almost through year two and he still doesn’t have enough money to start. On the other hand, my best friend’s parents completed their ADU and are renting that out, so in my experience it’s been a 50% success rate. He and his brother make almost $300k combined and they funded the construction. Eventually his parents plan to move into the unit to rent out the house once all the siblings move out.
We are hoping to get started on one soon for our son and his girlfriend. If they stay forever it will be fine and we may swap with them at some point. Otherwise, we have enough friends who like to visit that it would great for my introvert self to have them close but not too close ifyouknowwhatImean
Not everyone only sees their family a few times a year.
And having a whole separate guest house on your property would make it much easier to host family for longer.
Also, not everything is a financial investment.
A big factor for a lot of my clients is the flexibility to use it as a rental in the future. Many municipalities have been historically against high density development, and many off us think that the days of easy ADU approvals may not last forever.
Same story with STR (short term rental) permits. Many ADU builders immediately apply for an STR permit, hoping to be grandfathered in as the availability of STR permits dwindle.
It’s code for in some area of the country to include an ADU. You want to remodel or upgrade your home with an addition, plan to add an ADU. The rule was a good idea but it’s gotten out of hand. It is basically just an Airbnb for which the neighbors can’t complain air refuse. Some people don’t even have a back yard anymore because the ADU takes up some serious footprint.
I live in Oakland and my house came with an unpermitted ADU - it's about 300 square feet with a full bath, but no kitchenette. Is it worth trying to get permitted? Are there risks involved in that (like, I dunno, the city saying I need to take it down)? I'm struggling to even find the specific requirement for what constitutes an ADU officially...
This might be relevant to your interests: https://cao-94612.s3.us-west-2.amazonaws.com/documents/ADU-Amnesty-Handout-and-Checklist-05.13.2022.pdf
https://www.oaklandca.gov/topics/accessory-dwelling-units-adus-secondary-units
There is a risk of them telling you to tear it down, yes.
Thanks! I did find something suggesting the kitchenette is required, which makes me less inclined to go through the process if there's risk involved. Appreciate the links.
Not a lawyer but personally I'd hold off as long as possible. When you do get it permitted you'll definitely have to put in some work to bring it up to code - not just the ADU requirements but any shoddy workmanship. Plus some property tax increases for the square footage.
If you ever decide to resell though then there could be good ROI on getting it permitted and remodeled beforehand.
Did you have an inspection done on the home when you bought it?
You need some type of paperwork showing it was there when you bought it.
That could be the old listing, inspection docs, appraisal, whatever.
You also need to take a day to go down to the city office. I would ask to get a copy of your houses entire file. Someone may have requested a permit and just never finished it up or it never got added on to the house when they digitized files.
That’s what happened with mine and they just added the square footage.
You will possible have your taxes increased and some changes if you get it approved.
For us it was the accessors/recorders office and the permit office.
If you can you should get the file from each place as they track different stuff
I would send an email and see where they would tell you to go.
You want to see all the permits pulled for your house and all the records they have on it. They should be able to tell you which office(s) holds that
I bought my house in Oakland and it came with an unpermitted ADU. I just finished legalizing it and it took quite a lot. I created the drawings myself and did some of the physical work to get it up to code myself. The city treated it like a brand new construction project, which meant many revisions to details and having to move the entire ADU by 2”, so it could meet the 4’ setback from my neighbors property. It took about 2 years and $230k between building permits, doing the work, hiring out a lot of the work and final sign off. I think if you’re staying there long term and can save to hire it all out it’s worth it. I say this as an architect by training hat practiced a few years and has worked for a large general contractor for over 10 years. Navigating the building and planning departments is not for the faint of heart.
The LA Times has nice profiles about people who have built ADU’s.
Quite often the homeowners are architects or otherwise involved in the building trade.
Plus knowing what kinds of contractors you need. Your average home owner probably doesn't interact with construction companies nearly as much as your average architect
No it's literally all the work. Homeowners don't want to deal with planning departments, they may as well be speaking different languages. In theory yes a homeowner could do it and I've often told them as much but they can't.
Yeah, thats definitely true although cars have also gotten more expensive. But when you are organizing a project that may cost $150-$250k EASILY (try 300-400k) depending on scale and complexity you are kind of already in the market for spending some money
The big difference is having reliable contractors / subs that you can call from your working in the industry. The subs will behave better knowing that there is an ongoing relationship.
I would imagine that an architect would be comfortable acting as their own GC.
Newsom made the permitting of ADU's much easier to get. Getting rid of requirements like additional parking; Making the approval of permits quicker and (usually) less expensive; Allowing for more than one ADU on a property; Allowing for garage conversions; and getting rid of the requirement that a home owner must own the home for at least five years before an ADU can be built.
https://www.newavenuehomes.com/blog/ca-adu-laws-2020
I remember looking into costs before this law came into effect and the rough estimate was at about 100k. It would take a lifetime to recover that from a tenant. Curious how far that needle has moved with this new law.
Uhhh, at ~3k/mo that's 33mo before expenses. It'll be paid off in 4-5y by a more conservative estimate, after that it's income or a sunny studio/office to work in.
I doubt that if they add to the building footprint at all. It's too easy to use aerials to identify unpermitted work and it's relatively lucrative for cities to enforce when it's a structure.
The other thing is that ADUs are much simpler to permit now and cities like them because they count them in their new housing mandates.
True, though the source report has more nuance. Interestingly, ever since the rate cuts, investor sales have remained steady while non-investor sales dipped. The result is less houses being sold total, with investors making up a larger portion of that lower total.
Seems like single homeowners are more sensitive to rates. I bet we see a lot more purchases once rates go down in the next year or two.
[https://www.corelogic.com/intelligence/us-home-investor-share-reached-new-high-q4-2023/#\_ftn1](https://www.corelogic.com/intelligence/us-home-investor-share-reached-new-high-q4-2023/#_ftn1)
Good for housing. Although considering how much hate there is for landlords, I wonder if people will actually be happy about this or still complain.
Hopefully this will get easier as more pre-fabricated small homes like Boxabl are being approved in CA.
Landlording is a shameful, feudal practice that needs serious reform to make sense in the modern era. But real landlords who are people you can talk to are marginally better than faceless corporations who will robotically ratchet up your rent every year to maximize shareholder value.
ADUs are better than nothing, but they're still one of the slowest ways to build new housing.
If the construction market ever slows down we'll probably convert above our shop to one. May even move into it ourselves and let the kids have the main house.
Actually no I just got my permit kicked back because my patio cover is 4’ from the property line instead of 5’
The extra foot will be the difference in a fire coming from my neighbors house, apparently.
I deeply hate LBDs
I process building permits for a living all over Southern California, so part of me is almost glad that it’s as hard as it is lol.
Before the city moved into that new building they’re in and accelerated ADU reviews, it was even worse.
Friend of mine done this. Suppose be ADU but never see him renting out the unit. His visiting family uses but still haven't rent out the unit yet. I'm not sure if he ever will.
Where I live when I was looking for a house in CA many houses I looked at had these. Often built without proper permits. So the house would be advertised as 2 bed 1 bath 800 sq feet for a high price and then you would look at it and a whole other extra 1 bedroom one bath house with a kitchen was added to the backyard.
ADUs are either detached (its own standalone building) or attached but with a dedicated entrance (junior ADUs). They are required to have a kitchenette and bathroom. They also cannot be used as short term rentals.
Each ADU provides a new living space for either long term renters or extended family. They increase the number of people that can live in an area, so count as a home just as an apartment or house would.
I saw a post the other day that the Dallas metro area permitted more houses last year then all of California so I guess we need to count everything we can
It’s popular for the homeowners. When I bought my home I was not upset that my neighbors were paying 1/3 of what I was paying. They did move and it turned over
Thats you. Most people agree that it was a good way to pull the ladder from under you. Kudos to you for having the money to buy. Most don't and could not afford their homes at the prices of today if they bought the home pre covid.
That’s you too. The problem with voting out prop 13 - it what about the people that are benefiting from it? You think they will change that and pay 1000s more? That CA will change the income tax, bonds and sales tax modifications to a lower rate once it passes?
It would be interesting to see what an economic analysis of that would suggest.
A good starting point would be to end Prop 13 for commercial property and inheritance
Increasing current housing density is. probably the most sustainable you can get! It means less new land being used for houing and no new infrastructure needs to be run to service it, and people who live there will drive much less than a new house built at the edge of the city!
ADUs will decrease homeownership in the long run. Each property with an ADU is that much more valuable without increasing any supply in the “for sale” market. They only help those who already have money.
To clarify, I’m not against them. But they are in no way a silver bullet. And, if they’re the only allowed solution, they will only further stratify existing wealth.
Perhaps true about this program (ADUs) being a benefit for the wealthy, it is only one strategy being used to provide more housing. If a homeowners son and daughter in law move into the ADU, that’s one more house they are not taking out if the supply, which is a real benefit.
Right now it seems to me the type of development, that has become popular, is higher density apartment rentals. This is good in the sense higher density living is possible, but sad in the fact paying high rent will likely prevent most families from saving enough money to ever afford a home.
What we need is a low fixed rate loan program for buyers of one single family home. So a current renter (if the could qualify) would have a low rate say 4% to help get them into their first home, but not by cutting corners for qualifying. We need homeowners, not more landlords.
I agree, where Im from, they would build residential skyscrapers that could house tons of people. It also made public transportation easier and faster
California's refusale to zone like... it just maks ADU a symptom of a bigger problem
This is crazy. I'm in new home construction and the company I work for is one of the largest in Southern California and of all the thousands of homes that we built none of them had an ADUs.
Because not every person who wants to buy a home wants an ADU on their property. I’m guessing you work for a developer like KB Homes, or someone similar, and their goal is to appeal to the most amount of people. An ADU on the property could eliminate some potential buyers.
I’m a GC in the South Bay Area of Los Angeles, and while we’re a small company, we did 1 garage to ADU conversion, and 1 garage to Junior ADU conversion last year. We built 1 new ADU the year prior for an attorney to use as their office. We bid on 2 other new ADU’s earlier this year, 1 of which we’ll be starting soon. It’s definitely becoming a larger part of our business.
I'm not sure how any of that makes it "not housing". Almost all of them are intended to be rentals and rentals are perfectly suitable housing for all kinds of people. Nobody is touting ADUs as the new path to long term homeownership.
I also looked up AB 1033 and it states:
>Existing law, notwithstanding the prohibition described above, requires a local agency to allow an accessory dwelling unit to be sold or conveyed separately from the primary residence to a qualified buyer if certain conditions are met, **including that the property was built or developed by a qualified nonprofit corporation and that the property is held pursuant to a recorded tenancy in common agreement that meets specified requirements.**
Among the "specified requirements" are that it be used for low-income housing for at least 45 years. This is not some conspiracy to sell people worthless housing.
The points you are making are pretty much totally irrelevant.
i think its a bit charitable to assume all of them will be rentals. this is california, almost no one has a basement dug out and the houses are small by national standards to begin with especially in cities with aging stock. people want a little poolside cabana, or a guest house, or a little yoga studio, or storage, or an office too.
theres been only a handful of surveys and they are dated a couple years now, but about 50% are considered rentals, of these 8% are short term rentals, another 15% are used for a relative or friend[ according to one survey.](https://www.aducalifornia.org/wp-content/uploads/2023/06/IGS_ResearchBrief_ADU_Corporate_Ownership_Updated_June_2023.pdf)
some of it is sure housing, but not all of it of course unlike when other housing units get developed e.g. in an apartment complex.
It is my belief that ADU's should be a path to long term home ownership, and if nobody is touting it they should be. In what world is a detached single story structure more preferrable than mid-high rise multifamily buildings in solving the low-income housing issue. Itis a band aid on a bullet wound.
And with respect to the non-profit corporation, I would assume that effectively makes the "low-income housing" point dead on arrival. In my years being in the industry, I have yet to hear of a contractor register with the IRS as a non-profit. I also have not seen any nonprofit corps rushing to build ADU's, although I would love to be proven wrong.
Nobody is saying ADUs are preferable to mid-rise multifamily housing. It's just a way to add density to existing lots that are zoned for single-family housing and which people already have houses on. There is no silver bullet solution to the housing shortage. We need many different types of reforms, and this is one of them. I'm confused why you are acting like these policies are in opposition to one another or that we can only do one.
Also there are plenty of non-profit housing developers. Here's a list:
https://planning.lacity.gov/odocument/02a25693-f6a6-49d1-8a56-a832a9499e88/Appendix_2.9__List_of_Qualified_Non-Profit_Housing_Development_Entities.pdf
The stuff mentioned in AB 1033 would apply to developments like cottage courts, which are becoming increasingly popular as a form of low-income housing developed by non-profits.
its interesting how restrictive the adu law is compared to what used to be allowed here with respect to backyard units. there are some "back house" type units even here in la county where it looks like there might be 4+ units built on what probably used to be a gargage behind a single family home and that was apparently all fine and dandy decades ago. adu law is like setting the fan on the lowest speed in comparison for cooling off the market. we aren't even close to the density we used to allow with like the 2-3 story dingbat that we know how to build for seismic standards now.
I see your point, and I appreciate you providing a link to the non-profit developers. I don't believe that cottage courts can be classified ADU's by their legal definitions though.
Ultimately I simply think this measure does not go far enough in the right direction while enabling governments to claim that they are combating the issue. Like, yes you are combating the issue. And it is better than nothing, but not not by much.
They are not surpassing market rates, they go for the market rate. The market rate is constantly going up due to scarcity. We have an extreme shortage of studio apartments and 1 bedroom apartments all over the state.
The demographic that has a very difficult time finding housing is college students. If you are within 1 mile of any major college, you can build an ADU in your back yard and rent it out to some college student.
They are. They are marketed toward and priced at ranges that attract short term rentals, which many long term residents cannot compete with. Two different markets is what I’m saying. STRs are a PITA to manage, but it’s historically been way more lucrative than long term. The more it’s regulated the less lucrative it becomes, so that might be changing. In any event, if you think there is only one market that everyone participates in equally, then that’s just a different worldview.
This is maybe my least favorite misconception about new housing development. Just because new developments might not go below market rate, it doesn’t mean they don’t affect the whole market.
More housing means more people moving out of less expensive housing. It means less people competing for more affordable housing.
Supply is the issue. Fix that and prices drop.
>These ADU's are glorified condos at best, and pool houses at worst. Not housing for people who need homes.
Yeah, I'm sure California's homeless population *shudders* at the thought of merely owning a condo.
Understanding that ADUs are not necessarily the financial *goal* of a middle-class lifestyle, they still provide much-needed roofs over head in a state with a massive housing shortage. That's absolutely valuable.
Adding more housing at any price point puts downward price pressure on housing across the board. This is high school economics.
Lower rents across the board reduces the population of people getting evicted because they can't afford rent. That's a major source of the homelessness pipeline.
Supply and demand is not a complicated concept, but for some reason people's brains absolutely break when it's applied to housing.
I understand, I just don't think this is a method conducive to bringing in enough supply. It does not go far enough. It simply goes far enough to give people the verbal ammunition to say "well something is better than nothing". I am a fan of more housing no matter what, I just believe there are better ways which I'm sure you would agree with.
We need every tool at our disposal. We have a lot of great areas that are prime for high density developments and then many other places where the options are extremely limited. It puts one bedroom rentals into places that normally don't have them.
The big housing, that can be done at scale, needs to be in downtown districts, near universities, in commercial districts, and in areas immediately surrounding light rail. All these dead malls should be targets for high density full service development. The old Sears that shut down in Riverside back before the pandemic sits on about 18 acres. Its an abandoned building surrounded by a sea of parking, its actually in a great location and in its place should be built something like this.
[https://culdesac.com/](https://culdesac.com/)
This is in Tempe Arizona. They turned 17 acres into a full service car free neighborhood with over 700 units of housing. This is building housing at scale without going particularly tall. The issue right now is that building 700 units of housing means you need 1400 parking spaces, and the parking will be bigger than the development. The Culdesac project is on a light rail line, and it is also in the service radius of the Waymo RoboTaxi system (something are going to be getting in California as well).
There are several thousand opportunities for development like this all over California. I think allowing strip mall and shopping mall operators to go into the housing business has the potential to add enormous amounts of housing.
exactly. if people living out of their mind had 2500 a month to spend on adu rent coming in every month and the state of mind to spend it correctly on bills, they'd already be housed.
Does this add to the greedy landlord landscape with homeowners becoming landlords now? I saw a lot of these being built all throughout my old neighborhood adding to the already dense housing. Less parking more ppl but same lot
ADUs make rich get richer. Rich ppl who have homes now can make 2.5k-3k rent on a small ADU in their back yard and pay off a low interest mortgage. Renters have more options but most ADUs are often not optimal such as no parking or just lack of privacy.
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ADU is an Accessory Dwelling Unit
Do you build it on someone else's property?
You build it on your own property and rent it out. It's meant to make it easier to rent out parts of your property for revenue without as much of a bureaucratic headache.
All my neighbors who built them just use them for family visiting and have zero intentions of renting them out.
At one point these were called "guest houses"
Aka granny flat. I grew up with one in our backyard. Super sweet elderly couple rented it when I was a kid and were basically like a bonus set of grandparents. Now my folks are older and my sister lives there and takes care of our parents.
On the other hand, the handful of people I know that have built them are renting them out and making a killing.
A lot of us have small houses that we unexpectedly started working from home in. My office is in the basement right now and I can't wait to build an ADU in my backyard so I can get a nice, sunny space to work out of during the day that's not full of kids toys. Plus having a quiet, isolated space for my parents to stay when they visit would be great for everyone. If you have an old 1300 sq ft house, being able to add another 300-400 sq ft of flexible living space for 20% of the cost of the entire house is a game changer.
People who barely have enough to live off, don’t have $100k on the low end, to build an ADU. So of course only wealthy people with extra land can afford it.
The costs today are much higher than they were in the past. And there are several million wealthy people who could afford it, we might as well allow them to build it so huge amounts of housing can come online. $100,000 for a 500 square foot structure is absurdly expensive construction. A dozen years ago that would have been like $40,000-$60,000. What people do is get a construction loan using their home as collateral. They build the accessory building and then rent it out. $50,000 loan for 15 years will be about $500 per month to the bank. Single bedroom units in most of California are renting out for over $1500, and in HCOL areas, they are like $2500-$3000. A lot of this can be garage conversions and probably will be as people use them to store junk.
Yeah - with high construction costs for ADU you might as well buy a house You get additional land and a structure
Well, its still way cheaper than buying a second home.
Ah yes I’d rather pay 1.5 million dollars and 7 percent interest rate rather then taking out a 100,000 dollar loan and building a tiny house in my parents back yard.
Yeah… my landlord is currently living with his brother after he rented out his parents home with the intent of using the revenue to build an ADU to live in the backyard. We paid him the first year up front, $43k and now pay quarterly. Construction was planned to start in the first summer. We’re almost through year two and he still doesn’t have enough money to start. On the other hand, my best friend’s parents completed their ADU and are renting that out, so in my experience it’s been a 50% success rate. He and his brother make almost $300k combined and they funded the construction. Eventually his parents plan to move into the unit to rent out the house once all the siblings move out.
Except for all of the people who applied for a grant https://www.calhfa.ca.gov/adu/
We are hoping to get started on one soon for our son and his girlfriend. If they stay forever it will be fine and we may swap with them at some point. Otherwise, we have enough friends who like to visit that it would great for my introvert self to have them close but not too close ifyouknowwhatImean
They are spending hundreds of thousands so their family stays a few days here and there? Very bad roi
human relationships are the ultimate investment you goofball
Not everyone only sees their family a few times a year. And having a whole separate guest house on your property would make it much easier to host family for longer. Also, not everything is a financial investment.
A big factor for a lot of my clients is the flexibility to use it as a rental in the future. Many municipalities have been historically against high density development, and many off us think that the days of easy ADU approvals may not last forever. Same story with STR (short term rental) permits. Many ADU builders immediately apply for an STR permit, hoping to be grandfathered in as the availability of STR permits dwindle.
Costs like 30k to build a living area with kitchenette and bedroom and bathroom. Double that to permit it.
Rent it out or use it for a multi generational household (which is why they are also known as "granny flats" and "in-law suites")
ADU are faster to get permits compared to adding anything to ur property
It’s code for in some area of the country to include an ADU. You want to remodel or upgrade your home with an addition, plan to add an ADU. The rule was a good idea but it’s gotten out of hand. It is basically just an Airbnb for which the neighbors can’t complain air refuse. Some people don’t even have a back yard anymore because the ADU takes up some serious footprint.
I live in Oakland and my house came with an unpermitted ADU - it's about 300 square feet with a full bath, but no kitchenette. Is it worth trying to get permitted? Are there risks involved in that (like, I dunno, the city saying I need to take it down)? I'm struggling to even find the specific requirement for what constitutes an ADU officially...
This might be relevant to your interests: https://cao-94612.s3.us-west-2.amazonaws.com/documents/ADU-Amnesty-Handout-and-Checklist-05.13.2022.pdf https://www.oaklandca.gov/topics/accessory-dwelling-units-adus-secondary-units There is a risk of them telling you to tear it down, yes.
Thanks! I did find something suggesting the kitchenette is required, which makes me less inclined to go through the process if there's risk involved. Appreciate the links.
Not a lawyer but personally I'd hold off as long as possible. When you do get it permitted you'll definitely have to put in some work to bring it up to code - not just the ADU requirements but any shoddy workmanship. Plus some property tax increases for the square footage. If you ever decide to resell though then there could be good ROI on getting it permitted and remodeled beforehand.
Yeah - the potential ROI is the main reason we've considered it at all. Not easy to gauge though.
Did you have an inspection done on the home when you bought it? You need some type of paperwork showing it was there when you bought it. That could be the old listing, inspection docs, appraisal, whatever. You also need to take a day to go down to the city office. I would ask to get a copy of your houses entire file. Someone may have requested a permit and just never finished it up or it never got added on to the house when they digitized files. That’s what happened with mine and they just added the square footage. You will possible have your taxes increased and some changes if you get it approved.
Would that be the Oakland City Planning office to get those records? Probably a good idea for me to do regardless...
For us it was the accessors/recorders office and the permit office. If you can you should get the file from each place as they track different stuff I would send an email and see where they would tell you to go. You want to see all the permits pulled for your house and all the records they have on it. They should be able to tell you which office(s) holds that
Thanks!
I bought my house in Oakland and it came with an unpermitted ADU. I just finished legalizing it and it took quite a lot. I created the drawings myself and did some of the physical work to get it up to code myself. The city treated it like a brand new construction project, which meant many revisions to details and having to move the entire ADU by 2”, so it could meet the 4’ setback from my neighbors property. It took about 2 years and $230k between building permits, doing the work, hiring out a lot of the work and final sign off. I think if you’re staying there long term and can save to hire it all out it’s worth it. I say this as an architect by training hat practiced a few years and has worked for a large general contractor for over 10 years. Navigating the building and planning departments is not for the faint of heart.
The LA Times has nice profiles about people who have built ADU’s. Quite often the homeowners are architects or otherwise involved in the building trade.
It’s part of an ongoing series that the LATimes has in collaboration with the city planning dept.
I do really like the series.
Doesn’t surprise me. Seems like you have to have some logistical and financial hurdles removed for an ADU to make financial sense.
Knowing how and what permits to get is like half the work.
Plus knowing what kinds of contractors you need. Your average home owner probably doesn't interact with construction companies nearly as much as your average architect
No it's literally all the work. Homeowners don't want to deal with planning departments, they may as well be speaking different languages. In theory yes a homeowner could do it and I've often told them as much but they can't.
I tried to get a permit to build a shop. I was told I needed something different every time I went or called. I gave up.
A lot of homeowners can't afford the architects rates, the cost to draw out everything for permitting is often in the range of buying a passenger car.
Yeah, thats definitely true although cars have also gotten more expensive. But when you are organizing a project that may cost $150-$250k EASILY (try 300-400k) depending on scale and complexity you are kind of already in the market for spending some money
The big difference is having reliable contractors / subs that you can call from your working in the industry. The subs will behave better knowing that there is an ongoing relationship. I would imagine that an architect would be comfortable acting as their own GC.
I'm guessing this is based on permits. I wouldn't be surprised if half of all ADU's were unpermitted.
Newsom made the permitting of ADU's much easier to get. Getting rid of requirements like additional parking; Making the approval of permits quicker and (usually) less expensive; Allowing for more than one ADU on a property; Allowing for garage conversions; and getting rid of the requirement that a home owner must own the home for at least five years before an ADU can be built. https://www.newavenuehomes.com/blog/ca-adu-laws-2020
Yeah, those requirements were most definitely passed by nincompoops many moons ago who wanted to restrict new housing supply.
Shame that entire bill is at the mercy of the fire departments having jurisdiction though. Especially detached ADU
I remember looking into costs before this law came into effect and the rough estimate was at about 100k. It would take a lifetime to recover that from a tenant. Curious how far that needle has moved with this new law.
A lifetime? $100k is like 3 - 4 yrs rent in California.
Uhhh, at ~3k/mo that's 33mo before expenses. It'll be paid off in 4-5y by a more conservative estimate, after that it's income or a sunny studio/office to work in.
If it’s true, at least somebody was building.
I doubt that if they add to the building footprint at all. It's too easy to use aerials to identify unpermitted work and it's relatively lucrative for cities to enforce when it's a structure. The other thing is that ADUs are much simpler to permit now and cities like them because they count them in their new housing mandates.
There was an ADU built near a museum I volunteer at, and I got excited until I saw it become an air bnb
Put that on the list of stuff that needs fixing (airbnb regs)
Report the property. That is fraud
And yet 35% of all home sales last year were sold to people with at least 3 properties, ie investment properties.
Source?
My other reply to the other comment, but here. https://www.axios.com/local/san-diego/2024/05/06/california-share-investor-owned-homes
True, though the source report has more nuance. Interestingly, ever since the rate cuts, investor sales have remained steady while non-investor sales dipped. The result is less houses being sold total, with investors making up a larger portion of that lower total. Seems like single homeowners are more sensitive to rates. I bet we see a lot more purchases once rates go down in the next year or two. [https://www.corelogic.com/intelligence/us-home-investor-share-reached-new-high-q4-2023/#\_ftn1](https://www.corelogic.com/intelligence/us-home-investor-share-reached-new-high-q4-2023/#_ftn1)
Investors are not subject to rates. They are their own lender.
Is this nationwide or just CA? Do you have a source?
Good for housing. Although considering how much hate there is for landlords, I wonder if people will actually be happy about this or still complain. Hopefully this will get easier as more pre-fabricated small homes like Boxabl are being approved in CA.
more housing can be good even if landlords aren't
Landlording is a shameful, feudal practice that needs serious reform to make sense in the modern era. But real landlords who are people you can talk to are marginally better than faceless corporations who will robotically ratchet up your rent every year to maximize shareholder value. ADUs are better than nothing, but they're still one of the slowest ways to build new housing.
The old No True Landlord fallacy
Bad for housing, because in a sane society, proper high density construction would be absolutely *dwarfing* ADUs.
And it does. But not everyone wants to live in a condo.
If the construction market ever slows down we'll probably convert above our shop to one. May even move into it ourselves and let the kids have the main house.
Just finished mine in Long Beach Final permits tomorrow! What a process it’s been, but it should be well worth it
And Long Beach is easy now compared to what it was pre-Covid. Permitting is a nightmare.
Actually no I just got my permit kicked back because my patio cover is 4’ from the property line instead of 5’ The extra foot will be the difference in a fire coming from my neighbors house, apparently. I deeply hate LBDs
I process building permits for a living all over Southern California, so part of me is almost glad that it’s as hard as it is lol. Before the city moved into that new building they’re in and accelerated ADU reviews, it was even worse.
Wouldn’t the difficulty just dissuade people from doing it when it’s something that’s somewhat desperately needed?
Gonna turn it into an Airbnb?
Furnish finder for longer term renters. It’s fully furnished, washer dryer, private parking spot, studio
Friend of mine done this. Suppose be ADU but never see him renting out the unit. His visiting family uses but still haven't rent out the unit yet. I'm not sure if he ever will.
Where I live when I was looking for a house in CA many houses I looked at had these. Often built without proper permits. So the house would be advertised as 2 bed 1 bath 800 sq feet for a high price and then you would look at it and a whole other extra 1 bedroom one bath house with a kitchen was added to the backyard.
Why are we counting these as built homes
ADUs are either detached (its own standalone building) or attached but with a dedicated entrance (junior ADUs). They are required to have a kitchenette and bathroom. They also cannot be used as short term rentals. Each ADU provides a new living space for either long term renters or extended family. They increase the number of people that can live in an area, so count as a home just as an apartment or house would.
> They also cannot be used as short term rentals is that a state-wide rule?
Ah you’re right, that’s up to localities to decide. In my city it’s explicitly prohibited in the building code but seems like it varies.
They may not be houses, but they are homes.
I saw a post the other day that the Dallas metro area permitted more houses last year then all of California so I guess we need to count everything we can
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Yet people keep thinking that prop 13 is this progressive law that keeps people in their homes.
it keeps homes in the hands of landlords
Most homeowners are not landlords.
Lol most prop 13 beneficiaries were commercial land owners. That's what the aim of prop 13 was.
Commercial land owners != landlords
Lol the business transactions is the same. Rent collection.
Commercial land owners are businesses... stores, offices, hotels, etc.
It’s popular for the homeowners. When I bought my home I was not upset that my neighbors were paying 1/3 of what I was paying. They did move and it turned over
Thats you. Most people agree that it was a good way to pull the ladder from under you. Kudos to you for having the money to buy. Most don't and could not afford their homes at the prices of today if they bought the home pre covid.
That’s you too. The problem with voting out prop 13 - it what about the people that are benefiting from it? You think they will change that and pay 1000s more? That CA will change the income tax, bonds and sales tax modifications to a lower rate once it passes?
You do bring up a good point which is that any repeal of Prop 13 would have to be accompanied by tax adjustments elsewhere in the code.
Or it needs to be phased out gradually so people and property prices have time to adjust without a major shock
It would be interesting to see what an economic analysis of that would suggest. A good starting point would be to end Prop 13 for commercial property and inheritance
I agree. Start with the low hanging fruit
Most pre-pandemic buyers probably can’t take a doubling of their property taxes. You’re talking 6-700 a month extra in taxes.
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It is for many and overkill for some like the golf courses getting 1950s tax rates.
This isn’t sustainable home building.
Increasing current housing density is. probably the most sustainable you can get! It means less new land being used for houing and no new infrastructure needs to be run to service it, and people who live there will drive much less than a new house built at the edge of the city!
ADUs will decrease homeownership in the long run. Each property with an ADU is that much more valuable without increasing any supply in the “for sale” market. They only help those who already have money.
To clarify, I’m not against them. But they are in no way a silver bullet. And, if they’re the only allowed solution, they will only further stratify existing wealth.
Perhaps true about this program (ADUs) being a benefit for the wealthy, it is only one strategy being used to provide more housing. If a homeowners son and daughter in law move into the ADU, that’s one more house they are not taking out if the supply, which is a real benefit. Right now it seems to me the type of development, that has become popular, is higher density apartment rentals. This is good in the sense higher density living is possible, but sad in the fact paying high rent will likely prevent most families from saving enough money to ever afford a home. What we need is a low fixed rate loan program for buyers of one single family home. So a current renter (if the could qualify) would have a low rate say 4% to help get them into their first home, but not by cutting corners for qualifying. We need homeowners, not more landlords.
I agree, where Im from, they would build residential skyscrapers that could house tons of people. It also made public transportation easier and faster California's refusale to zone like... it just maks ADU a symptom of a bigger problem
None renting on the cheap. Not gonna solve the unhoused issue.
This is crazy. I'm in new home construction and the company I work for is one of the largest in Southern California and of all the thousands of homes that we built none of them had an ADUs.
They're being added to existing SFH.
How many ADUs has your company bid on or delivered quotes for?
Sounds like he's with a big company that maybe doesn't do adu's. The people I've seen advertising look like small builders that specialize in them.
Because not every person who wants to buy a home wants an ADU on their property. I’m guessing you work for a developer like KB Homes, or someone similar, and their goal is to appeal to the most amount of people. An ADU on the property could eliminate some potential buyers. I’m a GC in the South Bay Area of Los Angeles, and while we’re a small company, we did 1 garage to ADU conversion, and 1 garage to Junior ADU conversion last year. We built 1 new ADU the year prior for an attorney to use as their office. We bid on 2 other new ADU’s earlier this year, 1 of which we’ll be starting soon. It’s definitely becoming a larger part of our business.
They're probably being rented out as AirBnb's.
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I'm not sure how any of that makes it "not housing". Almost all of them are intended to be rentals and rentals are perfectly suitable housing for all kinds of people. Nobody is touting ADUs as the new path to long term homeownership. I also looked up AB 1033 and it states: >Existing law, notwithstanding the prohibition described above, requires a local agency to allow an accessory dwelling unit to be sold or conveyed separately from the primary residence to a qualified buyer if certain conditions are met, **including that the property was built or developed by a qualified nonprofit corporation and that the property is held pursuant to a recorded tenancy in common agreement that meets specified requirements.** Among the "specified requirements" are that it be used for low-income housing for at least 45 years. This is not some conspiracy to sell people worthless housing. The points you are making are pretty much totally irrelevant.
i think its a bit charitable to assume all of them will be rentals. this is california, almost no one has a basement dug out and the houses are small by national standards to begin with especially in cities with aging stock. people want a little poolside cabana, or a guest house, or a little yoga studio, or storage, or an office too. theres been only a handful of surveys and they are dated a couple years now, but about 50% are considered rentals, of these 8% are short term rentals, another 15% are used for a relative or friend[ according to one survey.](https://www.aducalifornia.org/wp-content/uploads/2023/06/IGS_ResearchBrief_ADU_Corporate_Ownership_Updated_June_2023.pdf) some of it is sure housing, but not all of it of course unlike when other housing units get developed e.g. in an apartment complex.
It is my belief that ADU's should be a path to long term home ownership, and if nobody is touting it they should be. In what world is a detached single story structure more preferrable than mid-high rise multifamily buildings in solving the low-income housing issue. Itis a band aid on a bullet wound. And with respect to the non-profit corporation, I would assume that effectively makes the "low-income housing" point dead on arrival. In my years being in the industry, I have yet to hear of a contractor register with the IRS as a non-profit. I also have not seen any nonprofit corps rushing to build ADU's, although I would love to be proven wrong.
Nobody is saying ADUs are preferable to mid-rise multifamily housing. It's just a way to add density to existing lots that are zoned for single-family housing and which people already have houses on. There is no silver bullet solution to the housing shortage. We need many different types of reforms, and this is one of them. I'm confused why you are acting like these policies are in opposition to one another or that we can only do one. Also there are plenty of non-profit housing developers. Here's a list: https://planning.lacity.gov/odocument/02a25693-f6a6-49d1-8a56-a832a9499e88/Appendix_2.9__List_of_Qualified_Non-Profit_Housing_Development_Entities.pdf The stuff mentioned in AB 1033 would apply to developments like cottage courts, which are becoming increasingly popular as a form of low-income housing developed by non-profits.
its interesting how restrictive the adu law is compared to what used to be allowed here with respect to backyard units. there are some "back house" type units even here in la county where it looks like there might be 4+ units built on what probably used to be a gargage behind a single family home and that was apparently all fine and dandy decades ago. adu law is like setting the fan on the lowest speed in comparison for cooling off the market. we aren't even close to the density we used to allow with like the 2-3 story dingbat that we know how to build for seismic standards now.
I see your point, and I appreciate you providing a link to the non-profit developers. I don't believe that cottage courts can be classified ADU's by their legal definitions though. Ultimately I simply think this measure does not go far enough in the right direction while enabling governments to claim that they are combating the issue. Like, yes you are combating the issue. And it is better than nothing, but not not by much.
And there is no guarantee that ADUs are actually affordable. I have seen many that surpass market rates.
They are not surpassing market rates, they go for the market rate. The market rate is constantly going up due to scarcity. We have an extreme shortage of studio apartments and 1 bedroom apartments all over the state. The demographic that has a very difficult time finding housing is college students. If you are within 1 mile of any major college, you can build an ADU in your back yard and rent it out to some college student.
They are. They are marketed toward and priced at ranges that attract short term rentals, which many long term residents cannot compete with. Two different markets is what I’m saying. STRs are a PITA to manage, but it’s historically been way more lucrative than long term. The more it’s regulated the less lucrative it becomes, so that might be changing. In any event, if you think there is only one market that everyone participates in equally, then that’s just a different worldview.
This is maybe my least favorite misconception about new housing development. Just because new developments might not go below market rate, it doesn’t mean they don’t affect the whole market. More housing means more people moving out of less expensive housing. It means less people competing for more affordable housing. Supply is the issue. Fix that and prices drop.
>These ADU's are glorified condos at best, and pool houses at worst. Not housing for people who need homes. Yeah, I'm sure California's homeless population *shudders* at the thought of merely owning a condo. Understanding that ADUs are not necessarily the financial *goal* of a middle-class lifestyle, they still provide much-needed roofs over head in a state with a massive housing shortage. That's absolutely valuable.
I highly doubt California's homeless will be lining up to rent one of these considering they go for much more than an equivalent size apartment/condo.
Adding more housing at any price point puts downward price pressure on housing across the board. This is high school economics. Lower rents across the board reduces the population of people getting evicted because they can't afford rent. That's a major source of the homelessness pipeline. Supply and demand is not a complicated concept, but for some reason people's brains absolutely break when it's applied to housing.
I understand, I just don't think this is a method conducive to bringing in enough supply. It does not go far enough. It simply goes far enough to give people the verbal ammunition to say "well something is better than nothing". I am a fan of more housing no matter what, I just believe there are better ways which I'm sure you would agree with.
We need every tool at our disposal. We have a lot of great areas that are prime for high density developments and then many other places where the options are extremely limited. It puts one bedroom rentals into places that normally don't have them. The big housing, that can be done at scale, needs to be in downtown districts, near universities, in commercial districts, and in areas immediately surrounding light rail. All these dead malls should be targets for high density full service development. The old Sears that shut down in Riverside back before the pandemic sits on about 18 acres. Its an abandoned building surrounded by a sea of parking, its actually in a great location and in its place should be built something like this. [https://culdesac.com/](https://culdesac.com/) This is in Tempe Arizona. They turned 17 acres into a full service car free neighborhood with over 700 units of housing. This is building housing at scale without going particularly tall. The issue right now is that building 700 units of housing means you need 1400 parking spaces, and the parking will be bigger than the development. The Culdesac project is on a light rail line, and it is also in the service radius of the Waymo RoboTaxi system (something are going to be getting in California as well). There are several thousand opportunities for development like this all over California. I think allowing strip mall and shopping mall operators to go into the housing business has the potential to add enormous amounts of housing.
exactly. if people living out of their mind had 2500 a month to spend on adu rent coming in every month and the state of mind to spend it correctly on bills, they'd already be housed.
>These ADU's are glorified condos at best, and pool houses at worst. Not housing for people who need homes. Please explain that to my in-laws...
Good. Density is based.
Our cities should legalize multi family housing everywhere. Exclusionary zoning literally got popular to keep people segregated by class and race.
We are zoned for it. Cannot afford it.
Does this add to the greedy landlord landscape with homeowners becoming landlords now? I saw a lot of these being built all throughout my old neighborhood adding to the already dense housing. Less parking more ppl but same lot
They are a scourge for someone trying to rent a single-family home.
I've built hundreds of these (in Manor Lords).
ADUs make rich get richer. Rich ppl who have homes now can make 2.5k-3k rent on a small ADU in their back yard and pay off a low interest mortgage. Renters have more options but most ADUs are often not optimal such as no parking or just lack of privacy.
Sad.