New Optional Calif Law Allows ADUs to Be Sold Separately – Will San Diego Adopt It?

By Phillip Molnar / San Diego Union-Tribune Subscriber-only/ Nov. 19, 2023 

A new law allows Californians to buy and sell ADUs as a separate entity. The question is — will cities in San Diego County go for it? The optional statewide law, AB 1033, was signed by Gov. Gavin Newsom in mid-October, and allows accessory dwelling units, sometimes called granny flats, to be sold separately — and, presumably, at a lower price than your average home. The thinking is it could give low- to moderate-income Californians a chance at homeownership.

Now, it’s a matter of what municipality wants to enact the law when it takes effect in January. All cities, from Chula Vista to Carlsbad, would have the option to include the law — but the fact that it is voluntary could pose some political headaches. San Diego Mayor Todd Gloria recently lost a bruising battle to enact the optional statewide law, Senate Bill 10, which aimed to change some single-family housing zoning. …

A question for any municipality in San Diego County, and its residents, will likely be how much an ADU will cost as a separate unit. One place to find an example is Seattle, which has had a similar law on the books for several years. A Seattle city report in March showed 15 ADUs that sold for much less than the traditional single-family house in front. They weren’t exactly cheap, with one ADU going for $680,000 while the home in front sold for $1.2 million. Most of the sale examples had similar prices.

There are no real-world examples in California yet, but bill author Assemblyman Phil Ting (D-San Francisco) envisions a scenario where a homeowner breaks off an ADU spot for an adult child or close friend. Rather than spend money on rent, the buyer — who might not have been able to afford a house or condo — instead can start building equity. It’s bound to get complicated from there: The homeowner and ADU owner would need to set up a homeowners association to cover the cost of shared spaces, such as a driveway, pool or shared roof. It wouldn’t be as extensive as an HOA in a big townhouse development, but it still adds another layer of paperwork. The home and the ADU would have separate property taxes. …

Chris Thornberg, economist and founding partner of Beacon Economics, said the new law was “cute” but was another example of California politicians making a small tweak to housing laws without taking any serious action. He said minor changes over the past decade make it look like governing bodies are working hard but it hasn’t increased residential building. He said zoning changes, to things like retail, would actually make a difference, unlike minor ADU laws. “We continue to sit around with this idea that retail should be a sole-use option on a hunk of land,” he said. “If they passed a law that said every hunk of retail land is mixed-use then, boom, problem solved. You have to force density, but they have yet to do that.”

ADUs have been a cornerstone of planning success in recent years. Following California reforms in 2019, permits for ADUs increased 61 percent over the next three years, said the [right-wing] Cato Institute. However, other changes have been hard to come by, especially locally.

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