Accessory Dwelling Units: A Solution for San Diego?

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Accessory Dwelling Units

by Mark Murphy

One Solution for San Diego’s Housing Shortage:

Accessory Dwelling Units

San Diego County has a critical housing shortage, in both rentals and affordable starter homes. The April, 2018 median sales price of detached homes in San Diego now stands at $640,000, while median sales price for attached condos and townhomes in same timeframe stood at $425,000 according to stats from the San Diego Association of Realtors.

These are among the highest prices in the country and leaves not only Millennials, but thousands of others in a lurch, when it comes to finding a home that the person or family can afford.

And that is where the creation of granny flats, garage apartments, guest houses and other accessory dwelling units may provide some solution for the critical housing shortage. In the past, many cities within the county had regulations prohibiting or limiting the building of these units, citing parking issues, zoning and other laws. In the past year or so, cities are actively encouraging the building of these accessory dwelling units, They can no longer ignore the brewing real estate crisis, that has already reached near-intolerable levels.

As the most recent chart from SDAR below shows, home prices are rising, market time or days on market is dwindling and the number of sales has subsequently gone down. People are afraid to sell, fearing they won’t be able to find a replacement property– and builders are no longer building “affordable” homes.

San Diego Home Sale Stats

 

Cities are not only responding to housing needs, they are also upgrading ADU rules to comply with a new state law that took effect early last year. SB 1069 effectively returned more power to homeowners to create accessory dwelling units and also reined in some of the onerous requirements and enormous fees set by local agencies.

According the the Voice of San Diego regulations set by San Diego are among the most consistent with spirit of SB 1069 in allowing for granny flats, but fees for building one can range from $4000 to over $80,000, depending upon the neighborhood and community. The cost issue is one that still needs resolution. And unless these costs can be reduced, rents for these granny flats and accessory dwelling units will obviously NOT be affordable–especially in high-rent coastal areas.

These regulations up-zone existing single family homes into two-unit zones, and two-unit properties into three-unit zones, which could help ease some of the housing shortage in our county.

 

Some of the key points outlined in SB 1069 include:

ADU cannot exceed 1,200 sq. ft
ADU can be standalone unit/house or be a converted garage
Reduced Parking requirements must meet several variables
Reduced Fees for water, sewer, utility connection
ADU can be built with Modular Construction, Site Built or built as a Manufactured Home
Fire sprinklers may be eliminated if main dwelling does not have sprinklers
ADU plus main residence must still meet local zoning Floor Area and Set Backs

Even Encinitas, which has struggled with affordable housing for years, now welcomes accessory dwelling units. In February, the Encinitas City Council approved rules that will allow for homeowners to build up to a 1200 square foot detached accessory dwelling unit as long as it is not bigger than the main house. Equally important, the ruling waives permit fees for owners, which could save up to $3,500. These units, however, will require leases of at least 30 days in order to discourage short term vacation rentals–which also contributes somewhat to the rental market shortage.

Finally, the cost for an accessory dwelling unit may have reduced permit fees, but there is still the cost of construction for the building of an ADU or the remodel of a garage. According to US Modular, Inc, construction of an accessory dwelling unit will start at around $110. per square foot, based on one with an average of 850 square feet containing 2 bedrooms, kitchen, bath and living area. However, prices from other contractors could vary greatly from this figure.

I can’t help but wonder what solutions lie ahead for our San Diego real estate market and the acute housing shortage we face today. Hopefully, Accessory Dwelling Units will provide some much-needed and creative relief.

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