Starting Jan. 1, California cities can choose to opt in to a new state law that allows homeowners to sell an accessory dwelling unit (ADU) in their home or backyard as a condo, as lawmakers aim to increase the state’s share of affordable housing.
“The lack of home ownership opportunities in most California communities for working families is contributing to the State’s growing population of renters and driving families out of state so that they can buy a home,” said Assemblyman Phil Ting (D-San Francisco)—who authored the legislation—in a recent Assembly Floor analysis of the bill.
Backyard homes, converted garages, or what some call “granny flats,” have increased tenfold in the last several years, only accounting for about one percent of permitted new construction in California in 2017, and now 10 percent, or about 9,600 units built in 2022, according to a Senate analysis.
In the same analysis, lawmakers referenced a recent Bay Area survey that found ADU rent prices were affordable for residents who earn at least the area median income, which in the San Francisco Bay Area was around $128,000 in 2022.
Assemblyman Ting said California’s lack of affordable homes for middle class families prevents them from building wealth through homeownership and lowers housing stability, which he said has resulted from the state’s “historic discriminatory housing policies.”
According to the lawmakers, other data showed homeownership is the primary way American households accumulate wealth, with studies showing the net worth of homeowners is around 60 times larger than renters: $337,000 for homeowners and only $5,700 for renters. Statewide, the median home price is almost $800,000, which means only around 17 percent of California households can afford to purchase a median priced home.
The Bay Area Council—a business association advocating for the Bay Area and a co-sponsor of the bill—said the new law will help provide starter homes to California families.
“Local governments that want to allow smaller starter homes for sale will take this chance to use ADU law to create more affordable for-sale options in their communities,” the group wrote in the Senate analysis.
San Francisco Mayor London Breed, several pro-housing nonprofits, other government officials, and the city of San Jose all signed on in support of the new law.
But the California Association of Realtors (CAR), which is opposed to the new law, has said it should include an owner occupancy requirement, requiring those who purchase an ADU to move in within 60 days and occupy the home for at least one year.
“Many of the concerns C.A.R. had regarding this bill were addressed by the time the bill was signed. However, C.A.R. did not remove its opposition as we believe that local governments should have the option to impose owner occupancy requirements if they see fit, to ensure that as intended by this law, homeownership opportunities actually do increase,” CAR Senior Vice President of Government Affairs Sanjay Wagle told The Epoch Times in a recent email.
