REAL ESTATE IN SILICON VALLEY IS ABOUT TO GET MORE AFFORDABLE ! B Y M IRANDA J UNOWICZ DRE # 02019529
A cross the United States, communities are faced with the challenge of providing the housing needed to maintain affordability and accommodate future growth. In Silicon Valley, where real estate sale and rental prices are particularly high, the demand for flexible housing options has never been more urgent. The solution to the Bay Area housing crisis is, quite literally, in our backyards. Accessory Dwelling Units (ADUs) - also known as guest houses, in-law suites or granny units - are separate homes either attached or detached from the main house on a residential prop- erty, with their own kitchen, bathroom and one or more bed- rooms. On January 1, 2020, new laws went into effect statewide that streamlined the permitting and construction of ADUs in California. The new law allows for an 800 square foot ADU on almost any size lot, and requires the city to approve permits within 60 days of application. ADUs can be used as additional personal space, or rented out by the month or the year. Size, setbacks and parking re- quirements were rolled back to make the approval process much more simple. If you are a homeowner, buyer or a renter considering a move or a home purchase in Silicon Valley, here are some of the key benefits to consider. Existing homeowners can make their homes work better for them. An ADU can offer affordable, convenient housing for aging parents or college-age kids, an alternative to expensive assisted living options or college dorms. Some homeowners are designing ADUs that are best suited to their own elderly lifestyle, and ced- ing the main house to their younger generation. Families can stay close by, but still maintain privacy with separate homes. Alternatively, an ADU can be rented out and provide a source of reliable income and help to maintaining stability in an economic slowdown or during times of personal financial chal- lenge. By exploring these alternatives strategically, homeowners can meet both their long and short term needs, and enjoy their home more fully than ever before. ADUs are making property more affordable for new home- buyers A recent survey found that 70% of millennials in the Bay Pic: courtesy studio-shed.com
Area who want to buy a home have not done so because they can’t afford to buy. Even with impressive salaries, many Bay Area families simply can’t afford the home they want. An ADU gives real estate buyers the opportunity to focus their search not only on finding a great home, but also an in- come-generating investment. Mortgage lenders may consider rental income from an existing or planned ADU as part of the financing plan for a new buyer, thus affording them a higher borrowing limit. For many renters, this might just provide the path to owning their own home. Savvy homebuyers are already calculating the feasibility of an ADU as a key component in deciding which home is the best value for their investment and the best fit for their needs. ADUs speak to the lifestyle choices of millennial buyers. For many millennials, ADUs are a moral choice as much as
a practical one. Social con- sciousness and the value they place in a sharing economy can conflict with the notion of occu- pying large, energy inefficient properties and commuting long distances to work. Infill devel- opment – building more hous- ing on under-used parcels within existing urban areas that are already largely developed – is a cost-effective, traffic-reduc- ing and community-building
solution to temper years of urban sprawl. ADUs are better, cheaper and faster to realize than ever be- fore. The tiny house movement over the last decade has fueled a market of builders selling reasonably-priced, pre-fabricated homes, making ADUs more affordable than ever. Colorado- based Studio Shed is churning out stylish and customizable ADU kits in as little as 4-6 months, with installation an addi- tional 3-4 weeks. A 1000 square-foot ADU can cost as little as $250,000 including permits, foundation and construction. What’s more, specialized low-income housing lenders are offer- ing mortgages to finance the construction of ADUs, with the goal of increasing the housing supply. Rented out long-term at $2-3000/month, the return on investment is immediately clear. As a real estate agent serving Palo Alto, Los Altos and the surrounding peninsula communities, I am excited about the op- portunity ADUs present for all of us. For many, they are proving to be an integral part of securing the peace of mind and enjoy- ment that makes a house feel like a home.
Real Estate Special 2020 14
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