The Benefits of Having ADUs in California 2024

With a unique blend of sustainability and affordability, many California property owners have shifted towards embracing Accessory Dwelling Units (ADUs) as an alternative to traditional housing over the past years. Its flexibility and versatility appeal to new families, young professionals, and retirees seeking affordable and convenient housing options.

With this demand, ADUs make up approximately 20% of newly constructed housing units across the state and it continuously grows over the years. In 2022, more than 24,000 permits were issued in California for ADU construction, 7,000 of which were from Los Angeles alone. This offers an estimated 253% increase from the total permits issued throughout the state in 2019.

The substantial rise in ADUs can be traced back to California's proactive measures and reforms to simplify the process for property owners to build ADUs while also addressing the state's housing crisis.

In 2019, California enacted six pivotal ADU laws that significantly fueled the demand for these units, and in the last quarter of 2023, the state passed four laws that made it easier and faster for property owners to build and sell their ADUs.

What are the benefits of having Accessory Dwelling Units (ADUs)?

ADUs offer a fully equipped living space—complete with a bedroom, kitchen, and bathroom—attached or detached in a primary dwelling. It initially served the needs of relatives, caregivers, or the elderly who sought proximity to their families while enjoying a separate living space and convenient access to the main property.

Today, with the implementation of progressive ADU laws in California, property owners are now encouraged to build ADUs for these benefits:

Generate additional income

California ranks the second-largest tenant population in the country, with roughly 17 million people or 44% of its residents are renters. With this high demand for rental homes, property owners can secure extra income by renting their ADUs.

Under the newly enacted AB 1033 in October 2023, ADUs not only offer a steady stream of rental income but also the potential for a quick return on investment by allowing the unit to be sold separately from the main home.

More sustainable and easier to build than traditional homes

ADUs require fewer resources for construction and maintenance compared to conventional housing projects. In California, the default maximum size of an ADU is 1,200 square feet, and although some local municipalities have the authority to adopt their own ADU size requirements, these homes have a considerably lower size than the state's average of around 1,900 square feet. This indicates that ADUs consume less energy for heating and cooling, leading to lower utility expenses and diminished carbon emissions.

Additionally, building ADUs is quicker and minimizes disruptions for homeowners, allowing them to make use of their investments sooner.

Offer affordable housing options

ADUs present affordable housing options in California as they incur lower construction costs than traditional homes. These cost efficiencies position ADUs as a viable solution for individuals and families seeking affordability while maintaining proximity to offices, schools, or other amenities.

Boost property values

ADUs boost property values in California by contributing to the overall appeal and functionality of a property. This is primarily because ADUs provide additional living space that adds versatility to the property, making it more appealing to a broader range of potential buyers and renters.

Serve various purposes

ADUs exhibit flexibility by serving various purposes beyond selling or renting. They can transform into a guest house, a home office, a residence for caretakers, or even a studio. This adaptability makes ADUs well-suited to the evolving needs of property owners.

To Wrap It Up

ADUs are not just an alternative housing solution but also a pivotal response to the housing crisis while offering a stream of income for property owners.

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Sources:

California Budget & Policy Center | California Department of Housing and Community Center ADU Handbook

Disclaimer: The information provided here is for informational purposes only and is not intended as legal advice. For specific legal inquiries or guidance on Accessory Dwelling Units (ADUs), please consult with a qualified legal professional. Learn more about ADUs here.