The construction of so-called granny flats—known as accessory dwelling units, or ADUs—has increased from just 1 percent of California’s new permitted construction in 2016 to one in every five new homes last year, according to recent data.
Nearly 23,000 ADUs were built last year, according to the state Department of Finance, increasing California’s total by 10 percent.
The units have become popular because they increase property value and add space or a place to escape, homeowners say.
Los Angeles County homeowner Sicola Elliott converted her garage into a two-bedroom ADU, which she plans to rent to her kids.
“The housing market is so crazy, we wonder where would they ever rent their first apartment, or even be able to move out and not struggle? If you’re going to pay somebody else’s rent, might as well pay this rent,” she told EpochTV’s “California Insider.”
Homeowners like Elliott can also sell their ADU separately from their property, if cities opt into a new state law.
Since Jan. 1, cities have had the option to adopt Assembly Bill 1033, which allows homeowners to sell their “backyard cottage” as a condo, benefiting the seller and those looking for a more affordable home, wrote Assemblyman Phil Ting, author of the bill, in a 2023 Assembly Floor analysis.
The San Francisco Democrat said a lack of homeownership opportunities in the state has forced working-class families to move elsewhere for their purchase.
Since the new law was passed, San Jose became the first to opt in, passing an ordinance that became effective in July.
“We need to keep the American Dream alive by bringing the innovation inherent to our region into our housing policy, and this new ordinance does just that,” San Jose Mayor Matt Mahan said in an announcement at the time.
ADU developer Dennis Robinson told “California Insider” that recent laws that have made permitting ADU projects easier have enabled him to complete around 60 units in four years.
“So many people, so much interest. I really can’t see this going away anytime soon. It’s just too many people are benefiting from the ADU boom,” he said.
A 2017 state law limiting city and county restrictions on ADUs for residentially zoned parcels first sparked the ADU boom, according to the same analysis of Ting’s bill. Another law by Ting, Assembly Bill 68, has helped speed up local approvals and removed parking requirements.
Robinson, who also developed Elliott’s garage conversion, said he has around 30 projects underway and receives multiple requests every week.
He said permits usually take three to eight months and construction can take three to four months for garage conversions or four to six months for backyard builds.
Garage conversions tend to be smaller, around 400 square feet, while the backyard alternatives can reach 1,200 square feet or more and sometimes reach two stories, he said.
What’s the Catch?
According to a study released in January by the South Bay Cities Council of Governments, laws meant to streamline the approvals of such homes to increase housing stock, including affordable housing, haven’t done exactly that.About 50 percent of ADUs in the state are occupied by a friend or relative of the homeowner and go for an average rent of $1,834, which is more than the rent limits for low-income households, which earn less than 80 percent of the area median income, the study found.
The state Department of Housing and Urban Development says rents shouldn’t exceed more than $1,388 for a three-bedroom apartment for low-income residents in Los Angeles, where individuals earning $77,700 or less or a family of four that earns less than $110,950 are considered low-income.
Costs aside, others say ADUs can lower quality of life for existing homeowners by adding density to neighborhoods, reducing parking, reducing privacy, and putting a strain on resources like water.
“There is a strain on infrastructure, from the perspective of electricity, water, sewage, trash,” Costa Mesa Councilman Don Harper told “California Insider.”
He said allowing ADUs in neighborhoods also adds stress for emergency crews.
“Our police departments and fire departments are going to be stressed by that added density, and there’s no accountability for that at all,” he said.
As an investor himself, Harper said another concern is that other investors may start purchasing properties to build ADUs to turn a profit, to the detriment of existing homeowners.
“ADUs are encouraging investors to come in and build rental properties, and so your beautiful home you bought in your neighborhood, you may be living next to an ADU and a renter,” he said.
Neighbors for a Better San Diego, a grassroots organization whose mission is to protect single-family neighborhoods, said they fear the same.
Organization Chair Geoffrey Heuter told “California Insider” the organization isn’t against ADUs built the way they were intended, for individual homeowners, but doesn’t support investors taking advantage of the system.
“There’s a difference between having ADUs scattered throughout a community where the burden on infrastructure, street parking, and all those aspects are evenly distributed through a community,” he said during the episode.
He said the issue is when investors come in and “suddenly concentrate” a lot of ADUs in a neighborhood that wasn’t designed for it.
Long-Term Payoff
Real estate investor Desmond Price told “California Insider” host Siyamak Khorrami that he built an ADU in his backyard as an investment and rental property and was surprised by his neighbors’ receptiveness.“Surprisingly, a lot of my neighbors were witnessing the construction of the ADU and were inquiring about what’s going on,” he said.
Price said he was open and transparent throughout the process with his neighbors and now two of them are building their own on the same street.
“When they saw the finished result and saw what could be done, they were in support of it,” he said.
Including permitting fees and construction costs, Price said his ADU cost him about $305,000 to build but in the long term will pay off.
“At the end of the day, in 20 or 30 years, my kids [will say] good thing he bought that house,” Price said.
