July 20, 2024 - Assemblymember Phil Ting (D-San Francisco), Mayor Matt Mahan and housing advocates highlighted a new path to affordable home ownership today under a local ordinance that took effect this week. This Silicon Valley city became the first in California to opt into AB 1033 by Ting, allowing property owners to sell their accessory dwelling units (ADUs) as a condominium, separately from their main house. Both would then have shared obligations, but separate titles.
“I thank the City of San Jose for seeing the impact that my legislation could have across their neighborhoods. ADU ownership could provide a path for residents to buy their first home, or even allow our seniors to downsize. With this less expensive housing option available, increased home ownership can help build stronger communities,” said Ting.
ADUs are more commonly known as backyard cottages, in-law units or casitas. They offer homeowners a way to house family nearby or earn rental income. California is experiencing what can be a called a “backyard revolution.” The surge in ADU permits is in large part due to the state Legislature, which in recent years passed laws that made them easier and faster to build. Included in that package of bills was Ting’s AB 68, making the local approval process faster and removing the parking requirements. As Assembly Budget Chair, he also championed funding for a grant program that helps homeowners pay for pre-development costs, such as design and site prep.
Consequently, one of every five homes built in California last year was an ADU, according to state data. Just three years ago, they were just one of every ten new units. San Jose has been a leader in embracing ADUs and has streamlined permitting at the local level to make them easier to build. This has resulted in this city receiving twice as many ADU applications as Oakland and over four times as many as San Francisco.
Now, homeowners in San Jose can sell their ADUs. AB 1033 took effect this year, but cities have to take the extra step and opt into the state law. The San Jose City Council took action last month to do so, opening the door for its residents to buy starter homes, effective this week.
“We all know that homeownership has become unattainable for far too many residents in San Jose and across our state,” said Mayor of San Jose Matt Mahan. “We need to keep the American Dream alive by bringing the innovation inherent to our region into our housing policy, and this new ordinance does just that. San Jose will continue to lead the way, but we can’t solve this crisis alone – I am looking forward to seeing other California cities follow suit.”
Berkeley appears to be the next city poised to approve an ordinance to opt into AB 1033 with Sacramento and San Diego County exploring the idea.
"As homebuyers across the state face an extreme shortage of starter home inventory, we applaud Mayor Mahan and the City of San Jose for creating new possibilities for homeownership,” said Rafael Perez, Board President of the Casita Coalition. “ADU condos have proven successful elsewhere, providing much-needed inventory that is more affordable than traditional single-family homes. Families in San Jose will now have more options for housing themselves and other generations on properties with an ADU. We hope other cities and counties will follow San Jose's lead!”
“The ability to sell my ADU is yet another reason this addition to my backyard was one of the smartest things I’ve done. Not only has it increased the value of my property, it also generates more rental income than I expected,” said Joyce Higashi, San Jose homeowner.
“With my in-laws having recently decided to move into my ADU, they were excited to hear the news that I may be able to subdivide my property, giving them the option of buying the ADU as their own home one day. It’s a win for both of us,” said Dan Kearnan, San Jose homeowner.
Source: Assemblymember Phil Ting
