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Dwelling Units Find Momentum in Shaky Real Estate Market


Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) are innovative and effective options for adding much-needed housing in California.

ADUs have been known by many names: granny flats, in-law units, backyard cottages, secondary units, and more. HCD is the state’s leader in local ADU ordinances, which — while optional — have grown exponentially in number as more cities, counties, and homeowners become interested in ADUs as one solution to increasing the supply of affordable housing. 

ADUs are an affordable type of home to construct in California because they do not require paying for land, major new infrastructure, structured parking, or elevators.

They can provide a source of income for homeowners. ADUs are built with cost-effective wood frame construction, which is significantly less costly than homes in new multifamily infill buildings.

ADUs allow extended families to be near one another while maintaining privacy. It can provide as much living space as many newly-built apartments and condominiums, and they’re suited well for couples, small families, friends, young people, and seniors. It gives homeowners the flexibility to share independent living areas with family members and others, allowing seniors to age in place as they require more care.

California’s housing production is not keeping pace with demand. In the last decade, less than half of the homes needed to keep up with the population growth were built. Additionally, new homes are often constructed away from job-rich areas. This lack of housing that meets people’s needs is impacting affordability and causing average housing costs, particularly for renters in California, to rise significantly. As affordable housing becomes less accessible, people drive longer distances between housing they can afford and their workplace or pack themselves into smaller shared spaces, both of which reduce the quality of life and produce negative environmental impacts.

Much of California’s housing crisis comes from job-rich, high-opportunity areas where the total housing stock is insufficient to meet demand and exclusionary practices have limited housing choice and inclusion. Professionals and students often prefer living closer to jobs and amenities rather than spending hours commuting. Parents often want better access to schools and do not necessarily require single-family homes to meet their needs. There is a shortage of affordable units, and the available units can be out of reach for many people. To address our state’s needs, homeowners can construct an ADU on their lot or convert an underutilized part of their home into a JADU. This flexibility benefits both renters and homeowners who can receive extra monthly rent income.

ADUs also give homeowners the flexibility to share independent living areas with family members and others, allowing seniors to age in place as they require more care, thus helping extended families stay together while maintaining privacy. The space can be used for a variety of reasons, including for adult children who can pay off debt and save up for living on their own.

New policies are making ADUs even more affordable to build, in part by limiting the development impact fees and relaxing zoning requirements. A 2019 study from the Terner Center on Housing Innovation noted that one unit of affordable housing in the Bay Area costs about $450,000. ADUs and JADUs can often be built at a fraction of that price and homeowners may use their existing lot to create additional housing, without being required to provide additional infrastructure. Often the rent generated from the ADU can pay for the entire project in a matter of years.

ADUs and JADUs are flexible forms of housing that can help Californians more easily access job-rich, high-opportunity areas. By design, ADUs are more affordable and can provide additional income to homeowners. Local governments can encourage the development of ADUs and improve access to jobs, education, and services for many Californians.

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