Recent Trends in California Accessory Dwelling Units

December 28. 2020

Since 2016, California’s state legislature has enacted multiple statutes expanding a homeowner's right to build accessory dwelling units (“ADUs”) and junior accessory dwelling units (“JADUs”) in response to the state’s mounting housing crisis. 

ADUs are known by many names including granny flats, in-law units, backyard cottages, and secondary units, and are viewed as an innovative and affordable option for adding much-needed housing in California.

JADUs, in turn, are created within the walls of a proposed or existing single-family residence and contain no more than 500 square feet. JAUs typically share central systems with the primary dwelling, contain a basic kitchen and/or small bathroom within the primary dwelling.

Assembly member Phil Ting (D-San Francisco) recently introduced Assembly Bill (“AB”) 69 attempting to address the limited construction loan market available to ADU proponents by establishing a program to assist homeowners in qualifying for ADU and JADU construction loans. Governor Gavin Newsom however returned AB 69 without his signature citing concerns with the bill’s potential effect on the California Housing Finance Agency (“CalHFA”) credit rating as AB 69 requires CalHFA to issue revenue bonds to fund the program, which may ultimately affect CalHFA’s ability to fund other housing initiatives according to the Governor's office. 

Notwithstanding, ADUs and JDUs are becoming increasingly popular as more and more California residents have started working from home during the COVID-19 pandemic, a trend that is expected to continue post-pandemic.  Continued expansion of ADU rights, therefore, has been proposed and continues to be proposed by California legislators to support the shift away from work in the more traditional commercial office setting. 

Prior to the COVID-19 pandemic, approximately 10 percent of workers spent any paid workday (or more than 8 hours a week) working only at home.  That figure had risen to over 45 percent during the pandemic.  With this trend expected to continue, future ADU and JADU legislation, therefore, should rightly focus on accommodating telework capacity in addition to the availability of residential housing stock. 

Andrew J. Chan is a Senior Counsel in Ericksen Arbuthnot’s Oakland/East Bay office, co-chair of the Firm’s Appellate Practice Group, member of the Firm’s Real Estate Practice Group, and a California licensed real estate broker.  He can be reached at (510) 832-7770 or achan@ericksenarbuthnot.com

Nicholas I. Myers is an Associate in the Firm’s Los Angeles office and a member of the Firm’s Professional Liability, Construction, Employment, Real Estate and Product Liability Practice Groups.  Mr. Myers can be reached at (213) 489-4411 or nmyers@ericksenarbuthnot.com.