California Housing Crisis: ADUs to the Rescue
California is going through a major housing crisis. Review the new laws that streamline the new construction of ADUs to solve this issue.
California has been suffering through a major housing crisis in recent years. California’s housing shortage, rising housing costs, and a booming population have all contributed to the crisis.
Citizens and lawmakers are doing what they can to ensure affordable housing. From San Diego to Los Angeles to the Bay Area and everywhere in between, new legislation is helping turn the tables on traditional housing production and skyrocketing market-rate prices.
What Caused the California Housing Crisis?
The California housing crisis wasn’t caused by a lone, instigating event. Rather, a combination of several factors led to the extreme shortage in affordable housing.
To start, California is one of the most desirable states to live in. It boasts sunny shores and snowy mountains, often only a two-hour drive apart. The state’s attractions include entertainment, arts, amusement parks, and world-class dining.
In the twentieth century, zoning laws that were introduced limited building in residential areas and heavily contributed to sprawl, which has resulted in excess traffic and pollution. The effects of this are still felt today—two-thirds of Los Angeles marked as residential land are only allowed to be single-family homes, and it’s harder than ever to house everyone who needs it.
As the population soars and families grow, there isn’t room for everyone. Homes aren’t being (or can’t be) built fast enough to accommodate all residents. However, new government legislation, like SB 9, is attempting to fix these issues.
SB 9 is making strides, but it will likely be ADU construction that breathes new life (and living space) into Californian communities.
Read on for more information on how smarter properties are re-shaping the housing market landscape:
SB9 the California Legislature: What You Need To Know
Legislation passed by the California government has played a notable role in helping homeowners maximize their land. These laws allow families more freedom and flexibility in terms of additional construction.
Senate Bill 9 allows homeowners to split their lot and build an additional unit or units on traditionally single-family home R1 zone sites. In general, SB9 enables homeowners to build additional living space on their properties, which may contribute to the dwindling stock in the housing market.
How Is Senate Bill 9 Different from ADUs?
Importantly, splitting a lot is a different process than building an ADU, which sits within the existing lot. Since lot splitting feasibility is more constrained by the physical characteristics of the lot, building an ADU as an addition to an existing home is often more viable today.
Additionally, since SB9 is a more recent piece of legislation, lot splitting can be more ambiguous and more challenging than building an ADU through tried-and-true methods.
Financial Benefits of Building an ADU on Your Property
Accessory dwelling units (ADUs) have exploded in popularity in the past several years because they empower homeowners to make real estate investments that boost their property value. Creating new housing on your existing land turns an empty space into a reliable investment and usable space.
ADUs can be a somewhat daunting endeavor if you go it alone. Thankfully, new legislation has helped streamline the development of these housing units. These new laws make it even easier for the professionals at Cottage to deliver the ADU of your dreams.
ADUs are far different from tiny homes or mobile homes. ADUs provide personalized homeownership with unique designs that can be adjusted for any homebuyer. They also provide a sustainable solution to wasted land use and other critical resources.
These units are becoming increasingly attractive to Californians: ADU permits went from 1,269 in 2016 to 4,974 in 2017—a nearly four-fold increase in just one year. This continues in exponential form, with the latest reporting from 2019 listing a grand total of 14,702 permits issued.
Who Lives in ADUs?
ADUs are often rented to people in need of lower-cost housing, since they are cheaper than renting other kinds of units. This makes them great options for housing family members, as well as generating passive income while also providing a low-cost rental opportunity at a time when these are desperately needed.
People looking to buy a property for an elder relative or grown children are well-suited to ADUs. Constructing an ADU for such a relative is a cost-effective way to allow them to live in a private home close to their families.
In 2017, the homelessness rate among individuals aged 50 or older was 33.8%, and that number increased during the COVID-19 pandemic. Sudden or chronic disability in older individuals might encourage multi-generational households. ADUs are also a great housing option for loved ones with disabilities.
These not only aid the ongoing housing crisis but come to the benefit of young adults, as well.
ADUs and Housing Affordability
As parents age and their children start families of their own, an ADU to house grown children may be in order. This setup allows young adults to build a nest egg while maintaining privacy and space.
With the high costs of down payments, first month's rent, and rental deposits, more young adults are living with their parents than ever. According to Pew Research, over 50% of people aged 18 to 29 moved in with their parents after the COVID 19 pandemic outbreak. The figure stayed at 52% through July of 2020. The prior record was 48% during the Great Depression.
ADUs Have Been Doing This for a While
ADUs for multi-generational living is not a novel idea. Historically, regions with expensive land and little housing have developed their own versions of ADUs to aid a housing shortage.
Granny flats found in the British Isles and Australia are the modern ancestors and equal inspirations of the ADU. These housing types have a rich history dating back to another name: the dowager house. The dowager house served as a home for an estate’s widow when the heir was in a position to inherit the estate.
On the opposite side of the globe, casitas found across the Southwestern US and Mexico served the same purpose as the aforementioned granny flats. They were typically no larger than half the size of the original home, usually matching in aesthetics. More examples known by other names like in-law suites and backyard cottages can be found around the globe.
As people live and stay single longer, along with the housing shortage paired with a growing number of individual families that are smaller in size, ADUs can truly mean the opportunity to live in a place that would otherwise be unaffordable on a single person's salary.
The Solution to the Housing Affordability Crisis
ADUs do not only add units to a much-needed market, but they house a bevy of other potential benefits to the community. Many of these accessory dwelling units are near areas central to job locations and public transportation systems.
Given the state’s infamous high cost of living, homeowners being allowed to build additional housing on their existing property can save them on mortgage payments and provide an affordable living space for a potential tenant with a job nearby. It’s a situation that has tangible, positive outcomes for all parties involved.
New Homes, New Opportunities
As more parts of California are being developed and the tech boom continues, more and more people will be drawn to the new work in these spaces.
This is not exclusive to the areas surrounding San Francisco. With the Summer Olympics coming to Los Angeles in 2028, new infrastructure in previously underserved areas is providing a wonderful opportunity for homeowners to take advantage of housing innovations, including ADUs.
The housing crisis in California is as complex as it is urgent in scope. In turn, it would be irresponsible to say there is only one solution to this dire situation. A streamlined system to build more homes is a welcome healing balm to the current housing crisis.
They can also lean on the professional services offered by Cottage to work with these new ordinances to build accessory dwelling units that benefit both the property owners and their potential tenants.
Sources:
California's new laws are tackling the housing shortage | Pacific Legal Foundation
Seniors and Poverty/Homelessness Statistics | SeniorLiving.org
Senate Bill 9 | California Legislative Information
California's Affordable Housing Crisis: Why Prices Are So High and How to Solve It | Bloomberg