second units — most notably parking requirements, setback requirements, and utility connection fees. An Accessory Dwelling Unit Memorandum published in December 2016 by the California Department of Housing and Community Development claims that these “changes to ADU laws will further reduce barriers, better streamline approval and expand capacity to accommodate the development of ADUs.” The legislation certainly appears to be accomplishing its goal of accommodating the development of ADUs. Statewide in California, building permits for ADUs increased 63 percent in 2017 compared to 2016, the biggest increase among 20 states with at least 100 ADU building permits issued in 2017, according to an ATTOM Data Solutions analysis of building permit data from Buildfax. Nationwide, building permits for ADUs were unchanged in 2017 compared to 2016. California had the most ADU building permits issued in 2017 of any state, with 4,352, followed by Oregon (1,682), Washington (1,110), Florida (944) and Maryland (872). “As affordability worsens, the incentive for homeowners to build ADUs becomes greater. But the cities just have to let them. That’s the only barrier,” said Holly Tachovsky, CEO at Buildfax, who noted that the rise in ADU building permits in some inventory- and affordability-challenged cities reflects a larger trend she has noticed in remodeling in the wake of the Great Recession. “Americans are now spending more money remodeling homes than they are building new ones. This flipped in 2009 and it has stayed flipped since then. The previous trend in all of recorded data before that — decades and

decades — was new construction dollars were more than remodeling dollars.”

You don’t want to tell the other miners where to look.” The Southern California developer was willing to provide a general, high-level outline of his strategy to the Housing News Report. He said he dove into the legislation and determined which type of streamlined ADU would work best for him as a developer and then identified cities that have a large number of properties with good potential for that specific type of ADU and are most accommodating to ADU development. “Go where they are going to roll out the red carpet for you,” he said, noting that some cities have resisted the statewide legislation. He highlighted Inglewood as one city that refused to issue any ADU permit in 2017 — confirmed by the ATTOM analysis of building permit data from Buildfax. “There are other cities that actively want this type of development. Go do development there.”

A “TON OF MONEY” IN ADUS Among 30 California metropolitan statistical areas analyzed, the biggest increase in ADU building permits was in Santa Barbara (up 314 percent). Three other Southern California cities posted increases in the top five among the state’s metro areas: Oxnard- Thousand Oaks-Ventura (up 179 percent); Los Angeles-Long Beach- Anaheim (up 127 percent); and San Diego (up 71 percent). One Southern California developer smells opportunity for a new niche in real estate development thanks to the state’s legislative changes. “I think there’s a ton of money to be made in these ADUs,” he said, asking not to be identified by name in the article to prevent other investors from copycatting his strategy. “It’s sort of like a gold mine.

The Promise and Pitfalls of Accessory Dwelling Units as an Affordable Housing Panacea

STATES WITH INCREASING ADU BUILDING PERMITS 2017 Year-Over-Year Percent Change In ADU Building Permits

California Hawaii Tennessee Washington Illinois Maryland Oregon Pennsylvania Florida North Carolina






14% 14%

by Daren Blomquist, Executive Editor and SVP, ATTOM Data Solutions



the development of accessory dwelling units (ADUs) in the hopes that real estate developers and single-family homeowners can create more affordable housing inventory one granny flat at a time. A trio of California laws that took effect in January 2017 is one example

of such an attempt to streamline ADU development. The laws (SB 1069, AB 2299, and AB 2406), encourage cities to ease some of the common hurdles to the permitting and building of accessory dwelling units (ADUs) — also known as granny flats, in-law units or just

paucity of affordable housing that threatens to inflame a burgeoning


homelessness crisis and trigger an exodus of well-paying jobs is forcing local governments to consider creative solutions to this intractable problem. One such solution is to streamline



30 | think realty magazine :: may 2018

thinkrealty . com | 31

Made with FlippingBook - professional solution for displaying marketing and sales documents online