Under a new law, California homeowners starting next year can sell accessory dwelling units (ADUs) that are built on their property as condominiums, as state lawmakers strive to increase affordable homes in the state.
Assembly Bill 1033, authored by Assemblyman Phil Ting (D–San Francisco), was signed by Gov. Gavin Newsom Oct. 11 and allows cities to adopt a local ordinance that permits the sale of an ADU separate from the primary residence. Prior law only allowed ADUs built by qualifying nonprofits to be sold separately, and only for those earning what’s considered low-income, or below 80 percent of the median area income.
“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,” Mr. Ting said in a recent Assembly Floor analysis of the bill.
He said the lack of affordable homes for middle class families prevents them from building wealth and lowers housing stability, which he said has resulted from the state’s “historic discriminatory housing policies.”
Before 2017, ADUs—such as backyard homes or converted garages—accounted for less than one percent of permitted new construction in California, according to a recent Senate analysis. Since then, a new state law has allowed ADUs to be built on single-family lots, and now they account for about 10 percent of new construction, or about 9,600 units built in 2022.
A survey in the Bay Area found ADU rent prices were affordable for those earning the median area income, according to the analysis, which for the San Francisco Bay Area was around $128,000 in 2022.
Other data showed that 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, according to the lawmakers.
Those in support of the bill included several pro-housing nonprofits, activists, government officials—including London Breed, the mayor of San Francisco—and the City of San Jose.
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 offer 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 recent Senate analysis.
Some opposed to the bill, including the California Association of Realtors (CAR), argued the bill should have included an owner occupancy requirement, which would require those who purchase an ADU to move in within 60 days of purchase 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.
