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Department of Finance Report: One in Five New Homes in California Are ADUs

Department of Finance Report: One in Five New Homes in California Are ADUs

Accessory Dwelling Units (ADU) in California have more than doubled in the last half-decade, making the yards of one in five single-family homes into multi-unit properties.

California has experienced a rapid increase in ADUs since the state Legislature lowered building barriers in 2017 to resolve the housing crisis. The number of ADUs has increased from nearly 8,500 units in 2020 to more than 22,800 units in 2024.

According to data from the California Department of Finance, one in five homes is an ADU. Property owners have expanded building projects in their backyards to accommodate family members are be used as rental units.

Since 2017, lawmakers have passed several bills to increase the availability of housing for residents statewide. Assemblymember Phil Ting (D-San Francisco) passed AB 68 in 2019 to help residents acquire ADU permits in no less than 60 days. Lawmakers passed AB 881 the following year, allowing property owners to build ADUs on rental properties and preventing communities from requiring landlords to live on the property.

However, housing advocates argue that the state needs to build a wider variety of housing including apartment buildings. However, expansion plans for affordable housing are restricted by the lack of land near developed areas and local zoning laws that limit building in infill areas.

“Our biggest challenge in California is that so much of our zoning is for single-family homes, which makes it next to impossible to build any new housing,” said Ting.

“This is the one housing product that you can actually build in these single-family neighborhoods,” he said.

These affordable housing units are popular in cities such as Berkeley, San Jose, and Oakland. Developers have helped fuel the increase in ADUs, companies such as BrightSky Residential used new legislation to build a 71-home subdivision with a total of 141 units with no requirement to change zoning on the property. Newer development companies such as Abodu sell pre-manufactured ADUs starting at $228,800 for a 340-square-foot studio. Some companies even offer custom-built ADUs that cost approximately $500 per square foot without water and electricity connection.

The state recently passed legislation that allows homeowners to sell ADUs as condos separate from their properties, starting in July this year.

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