Why Build An ADU in Los Angeles?
October 29, 2024
Chris Koss, AIA
It's no surprise that a majority of Angelenos would prefer to live in a walkable neighborhood offering transportation options and close to jobs, shopping, schools, entertainment, and parks. But for many, access to these walkable neighborhoods that meet all their needs has become all but impossible to afford. Couple these factors with LA's rapidly aging population and fewer households with children, and it's plain to see a strong demand for smaller homes in more compact neighborhoods. As a response, homeowners have built smaller houses or apartments on their properties as single-family residences. Call it a carriage house, granny flat, back house, in-law suite, or guest house but they all mean the same thing: accessory dwelling unit (ADU).
Whether you'd like to generate rental income, provide an independent home for family or friends, downsize, add property value, or simply add more livable space on your property, building an ADU is a leading form of renovation on single-family lots in California. Above all, ADUs are quickly becoming a leading contributor to housing supply in California. In fact, a California Department of Finance study revealed that ADUs accounted for 20% of new home construction 2023. This means one in every five homes built in California last year was an ADU. But why should you build one?
- ADUs provide community-friendly, essential workforce housing solutions for Californians and Angelenos who may not be able to afford single-family housing in the communities they serve. The restrictive zoning laws that shaped California’s housing landscape in the mid-20th century are now part of the problem. Enacted in the 1940s through the 1960s, these laws set aside large swaths of land for single-family residences and imposed minimum lot sizes. At the time, these laws were seen as necessary to control urban sprawl as cities like Los Angeles rapidly expanded into the suburbs. However, the large lots mandated by these zoning laws have ironically become ideal for ADU construction. Many homes sit on plots that could easily accommodate a secondary unit, and the relaxation of zoning regulations in recent years has allowed homeowners to take advantage of that potential. Long after the zoning laws enacted in the 40s and 60s, California has long grappled with skyrocketing home prices and limited inventory, issues that have particularly impacted the state’s largest cities like Los Angeles and San Francisco. The $900,000 median home price effectively shuts out all but the wealthiest buyers, forcing public servants - such as teachers, firefighters, police officers, tradesmen, and nurses - to move further away from their place of work.
- In Los Angeles, around a half million parcels zoned for single family housing account for approximately 70% of the city’s residential land, suggesting ADUs have the potential to significantly increase the number of housing units across the city. ADUs could do all this without seriously modifying a neighborhood’s built environment in the way that multi-residential apartments buildings would, thus limiting the potential homeowner opposition that multiunit developments projects receive.
- ADUs can directly and indirectly lower the cost of housing. Although many ADU rentals are typically priced at market-rate, some ADUs by increasing housing supply, housing prices should stabilize and become more affordable. However, in turning either their ADU or main house into a rental property, homeowners would transform into landlords with new obligations to their tenants. Not all homeowners want to, or know how to, manage a property rental but A-du Manage alleviates and simplifies property management, empowering homeowners to manage their own properties.
- High mortgage interest rates have only exacerbated the problem, reducing buying power for the average Californian and ostensibly inhibiting housing development. However, due to top-down legislation changes, it is now easier than ever for homeowners to build housing on their properties. As a result, more and more homeowners and investors are turning to ADUs as a solution to generate additional housing units without expanding urban sprawl. With A-du Build, we provide you with affordable, pre-approved design options that dramatically speed up the permitting & construction process.
Recent state reforms that make it easier to build ADUs have successfully led to a boom in their construction, with over 80,000 ADUs built in the last seven years, key legislative reforms were necessary to unlock their potential. In 2019, two bills—Assembly Bill 68 and Assembly Bill 881—significantly streamlined the process for building ADUs:
- AB 68 reduced the time it takes to approve ADU permits from 120 days to just 60 days and eliminated parking and lot size restrictions that had previously hampered ADU construction.
- AB 881 allowed property owners to build ADUs without having to live on the same property, making it easier for real estate investors to capitalize on unused land.
These changes opened the floodgates, with thousands of ADUs being added to the state’s housing market.
For homeowners and real estate investors in Los Angeles County, building an ADU is an attractive option. Whether to house family members or earn rental income, ADUs provide flexibility and economic opportunity.
If you’re considering adding an ADU to your property, now is the time. With favorable legislation and increasing demand for housing in urban areas, ADUs are proving to be a smart investment for the future of California’s housing market.
For California, which has long struggled with a severe shortage of affordable housing, the rise of ADUs is a much-needed win. Thousands of new housing units have been added, helping to address the housing crisis in a state where inventory is critically low. While ADUs alone won’t solve California’s housing woes, they are a step in the right direction.
