As California struggles with a chronic housing shortage, the humble Accessory Dwelling Unit, or ADU, is playing an increasingly important role in bolstering the Golden State’s housing supply.
ADUs are one of the few bright spots for the state’s housing market at a time of rising construction costs, high interest rates, and continued local resistance to greater housing density. These unassuming units, often basement apartments, backyard cottages, and converted garages, are far more affordable to build than other housing options and have become a politically palatable infill alternative to apartment complexes.
With median construction costs of about $150,000 in California, ADUs cost less than a third of traditional, federally subsidized affordable housing. As a result, the median ADU in the San Francisco Bay Area and Central Coast is affordable (costs less than 30% of income) for a low income family, 31% of ADUs in Los Angeles County are affordable, and large numbers of ADUs are affordable in other regions, as well.
Over the past eight years, ADU construction has skyrocketed. California went from about 1,000 ADU permits in 2016 to 5,000 in 2017 to 25,000 in 2022.
This boom did not come easily. Many local governments have resisted ADUs, fearing they would overcrowd single-family neighborhoods. While some of these concerns are legitimate, the state’s housing crisis has persuaded state lawmakers that cities must allow more housing construction, even in built-out areas — and ADUs are one way to achieve that.
California lawmakers have worked for decades to limit local governments’ authority to block construction of these units. The effort began in 1982 when the legislature prohibited cities from categorically barring ADUs. Local governments responded by placing what a report from the Furman Center at New York University called “cumbersome and unpredictable discretionary review requirements on applications for ADUs.”
Local resistance prompted the state in 2002 to mandate ministerial (rather than discretionary) local approval of ADU permits. Yet ADU production remained low.
Reforms in 2016 finally made inroads. That year, the legislature adopted two bills, AB 2299 and SB 1069. These required cities to allow ADUs on single-family lots. They also prohibited them from requiring design features such as direct pathways to the street and setbacks for garages converted into ADUs. These laws also eliminated parking requirements for ADUs near transit stops and for ADUs attached to existing houses; prohibited cities from requiring new water, sewer or utility connections for ADUs, or from charging utility fees for ADUs; and required ministerial permitting of ADUs to occur within 120 days.
More state laws followed, as legislators and advocates identified and removed other barriers to ADU construction.
Suddenly, ADU production surged across the state. According to the California Department of Housing and Community Development, ADUs will meet 3% of the state’s housing needs for the period from 2021-2028.
Yet this growth has been uneven. In a recent study, the Rose Institute of State and Local Government analyzed differences in ADU production in Long Beach, San Diego, Anaheim, Pomona, Ontario, and Corona in light of the state’s assessment of these cities’ housing needs. In Long Beach, the state’s per capita ADU leader, these units have met 5% of housing needs. By contrast, ADUs make up only 2.6% in Anaheim. Within the Inland Empire, only 1% of housing needs are met in Ontario, 1.1% in Corona, and 2.2% in Pomona.
The report found that variations in ADU production can result from several factors, including the local housing market. For example, Ontario, like other cities in the Inland Empire, is still developing outward into greenfield sites, potentially reducing the demand for ADUs due to the availability of new single-family homes.
Familiarity with ADUs also matters. Planners in Long Beach, a leading producer of ADUs, describe these units as part of the fabric of their city, and say the knowledge they have gained processing ADU applications helps them approve permits faster than in some other cities. By contrast, other cities have less experience with this form of housing.
Local policies can affect ADU production, as well. Although the state has limited local control over ADUs, standards can still vary on several important dimensions. This is where local governments can most make a difference.
To help meet housing production goals, cities should assess where their regulations may be holding back ADU production and consider loosening standards in those areas. In particular, local lawmakers should look closely at three factors: parking requirements, structural setback requirements, and fees.
Parking requirements can add significant costs to new development, making them infeasible for homeowners without access to large capital flows. Structural setbacks can make larger ADUs geometrically infeasible, limiting the variety of options available to would-be buyers and renters. Finally, fees place high up-front costs on ADU developers, who often are individual homeowners, further dissuading them from realizing their property’s potential.
Giving homeowners a little more wiggle room in how they build their ADUs could make the difference between catching up to statewide ADU production levels and missing out on a powerful tool to meet housing needs.
