Accessory Dwelling Units (ADUs) have become a vital solution to California’s housing challenges. With recent legislative changes and increasing affordability concerns, ADUs offer homeowners an opportunity to maximize their property’s potential while contributing to housing supply. Here’s an in-depth look at ADUs, their benefits, financing options, and the laws shaping their growth in California.
What is an ADU?
An Accessory Dwelling Unit (ADU) is a secondary residential unit located on the same lot as a primary home. ADUs, sometimes referred to as granny flats, in-law units, or backyard cottages, can be attached, detached, or converted from existing structures like garages. These units are fully functional living spaces, equipped with kitchens, bathrooms, and private entrances.
Why Are ADUs Important in California?
California faces a severe housing shortage, with high home prices and rental costs pushing many residents out of the market. A 2023 report from the California Legislative Analyst’s Office suggests a shortage of around 1.4 million units in urban areas. The California Department of Housing and Community Development (HCD) mentions a shortage of 1.3 million.
ADUs help address this issue by:
- Increasing Housing Supply – ADUs create additional housing options in urban and suburban areas without requiring new land development.
- Providing Affordable Rentals – These units often serve as lower-cost rental housing compared to traditional apartments.
- Supporting Multigenerational Living – Families can use ADUs to house aging parents or adult children, keeping loved ones close while maintaining privacy.
How Local Ordinances Are Being Overruled by State Laws
Before recent legislative changes, local governments often imposed restrictive ADU regulations, making it difficult to build. Some examples of local ordinances that have been overridden by state law include:
- Large Minimum Lot Size Requirements – Some cities required lots to be a certain square footage before allowing ADUs. State law now prohibits such restrictions.
- Excessive Setbacks – Cities like Los Gatos and San Marino previously required setbacks of 10-20 feet, which discouraged ADU development. State law now limits rear and side setbacks to 4 feet. Additionally, for conversion of existing structures, no additional setbacks are required.
- Owner-Occupancy Requirements – Cities once required homeowners to live on the property where the ADU was built. This requirement has been removed under state law.
- Parking Requirements – Many cities required homeowners to provide extra parking for ADUs. State law eliminates parking requirements if the ADU is within ½ mile of public transit.
Can Local Governments Override State Law?
No, local governments cannot override state ADU laws. Cities must comply with California Government Code Section 65852.2, which mandates that local jurisdictions allow ADUs and adhere to the state’s streamlined permitting and setback requirements.
However, cities can still regulate:
- Architectural design (e.g., requiring ADUs to match the main house).
- Height limits (but they must comply with state minimums).
- Historic property restrictions (some historic districts impose additional review processes).
If a local ordinance conflicts with state law, the state law prevails, and cities must update their codes to comply.
How Many ADU Permits Are Issued Annually?
ADU construction has surged across California:
- 2015: ~1,000 ADU permits issued
- 2017: ~5,000 ADU permits issued
- 2019: ~15,000 ADU permits issued
- 2021: ~20,000 ADU permits issued
- 2023: Over 26,000 ADU permits issued statewide
Where Are ADUs Growing the Fastest?
Some regions have seen a significant increase in ADU construction, particularly:
- Los Angeles County – Over 6,000 ADU permits annually.
- Bay Area (San Francisco, Oakland, San Jose) – High home prices make ADUs popular.
- San Diego County – ADU construction has soared due to city incentives and housing demand.
- Sacramento & Fresno – Increased affordability challenges have driven more homeowners to build ADUs.
What is the Average Size of an ADU?
- Typical range: 400 – 1,200 sq. ft.
- Most common size: ~750 sq. ft.
- Garage conversion units tend to be smaller (350-500 sq. ft.).
How Much Do ADUs Cost Per Square Foot?
- Average Cost: $250 – $500 per sq. ft.
- Typical Total Cost:
- Garage conversion: $80,000 – $150,000
- Detached ADU: $150,000 – $400,000
- Luxury ADU: $400,000+
The Role of Prefabricated ADUs in Faster Construction
ADU building companies now prefabricate most of the unit in a factory before transporting it to the site, where final assembly takes place:
- Factory-built structures – Prefabricated ADUs are manufactured off-site, reducing labor and time delays.
- Craned into place – Once transported, the ADU is lifted and placed onto a foundation.
- Faster completion – On-site work (utilities, finishing touches) is completed within weeks, not months.
- Companies offering prefabricated ADUs:
- Abodu – Delivers move-in-ready ADUs in as little as 30 days.
- Mighty Buildings – Uses 3D printing to construct ADUs rapidly.
- Acton ADU – Specializes in custom backyard cottages.
- Cover – Provides high-tech, customizable ADUs designed with AI-assisted layouts.
How Are ADUs Used? Rentals vs. Multigenerational Living
- About 50-60% of ADUs are used as rental properties, providing extra income for homeowners.
- 30-40% of ADUs house family members, such as elderly parents or adult children.
- A smaller percentage serve as home offices, guest houses, or vacation rentals.
Summary
ADUs are reshaping California’s housing landscape, offering homeowners rental income, multigenerational living options, and increased property value. With state laws encouraging ADU development, the trend is expected to continue growing.
If you’re considering building an ADU, be sure to explore financing options, prefabricated designs, and local regulations to streamline the process.