Why So Many California Homeowners are Building an ADU in 2024 – And You Should Too!

by | Sep 30, 2024

In 2024, building an ADU (Accessory Dwelling Unit) continues to be a popular choice among California homeowners. From maximizing property value to generating additional rental income, ADUs offer numerous benefits that make them an appealing option for many. Moreover, recent changes in California’s housing laws and regulations have made it easier than ever to add an ADU to your property. Whether you’re looking to create a space for aging parents, accommodate adult children, or simply boost your property’s value, building an ADU could be the smartest move you make this year.

In this post, we’ll explore why so many California homeowners are jumping on the ADU bandwagon in 2024 and why you should consider it, too. We’ll also provide actionable steps to help you get started with building your own ADU, so you can take advantage of this booming trend.

1. What is an ADU and Why is It Trending in California?

Define ADU (Accessory Dwelling Unit) and Its Types

An ADU, or Accessory Dwelling Unit, is a small, self-contained residential unit located on the same lot as a primary residence. These units can take various forms, including:

  • Detached ADU: A separate, stand-alone unit on the property.
  • Attached ADU: A unit attached to the main house, often sharing a wall.
  • Garage Conversion: An existing garage repurposed into a livable space.
  • Junior ADU (JADU): A smaller unit, typically under 500 square feet, built within the main home, often sharing some facilities.

ADUs are sometimes called “granny flats,” “in-law units,” or “backyard cottages.” Regardless of the name, they provide a flexible living solution that can serve many purposes.

Why ADUs Are Gaining Popularity in California

Several factors contribute to the rising popularity of ADUs in California:

  1. Housing Shortage: California is experiencing a significant housing crisis, with a severe shortage of affordable homes. ADUs offer a practical solution by adding more living space without the need for large-scale development.
  2. Legislative Changes: Recent laws, such as SB9 and SB10, have relaxed zoning restrictions, streamlined the permitting process, and provided incentives for homeowners to build ADUs.
  3. Multigenerational Living: With the rising cost of living, more families are choosing to live together. ADUs provide a private, comfortable space for aging parents or young adults while maintaining proximity to loved ones.
  4. Sustainability and Smart Growth: ADUs promote sustainable living by utilizing existing infrastructure and reducing urban sprawl, making them an eco-friendly choice.

2. Top Reasons to Build an ADU in 2024

Generate Additional Income Through Rental Opportunities

One of the most compelling reasons to build an ADU in 2024 is the potential for generating rental income. California has a strong rental market, especially in cities like Los Angeles, San Francisco, and San Diego, where rental demand is high. An ADU can provide a steady stream of income by renting it out long-term to tenants or short-term through platforms like Airbnb.

With many local governments easing restrictions on short-term rentals, ADUs offer a flexible way to earn income. Additionally, rental income from an ADU can help offset your mortgage payments or provide extra funds for other expenses, making it a smart financial move.

Increase Property Value

Building an ADU can significantly increase the value of your property. According to real estate experts, homes with ADUs often sell for more than comparable homes without them. This increase in value can be particularly significant in California’s competitive real estate market. An ADU is a desirable feature for many buyers, offering additional space that can be used for rental income, guest accommodations, or home offices.

By adding an ADU, you not only enhance your property’s appeal but also make it more versatile for future buyers, which can lead to a quicker sale at a higher price.

Provide Flexible Living Space

ADUs offer incredible flexibility when it comes to housing options. Whether you need a guest suite, a home office, or a private space for a family member, an ADU can be customized to meet your specific needs. As life circumstances change, the function of your ADU can change with it—accommodating growing families, offering space for home-based businesses, or providing a comfortable spot for aging in place.

In a state like California, where the cost of housing is high and space is often limited, this added flexibility can be a major advantage for homeowners.

Meet California’s Sustainability Goals

California has ambitious sustainability goals, and building an ADU can help you contribute to those objectives. ADUs are typically smaller and more energy-efficient than traditional homes, reducing your overall environmental footprint. Many homeowners choose to build ADUs using sustainable materials and energy-efficient systems, like solar panels and water-saving fixtures, which align with California’s environmental standards.

By building an ADU, you’re not only creating additional housing but also promoting sustainable living practices that benefit the community and the environment.

Take Advantage of Updated Regulations and Incentives

California has introduced several laws to encourage the construction of ADUs, such as relaxing zoning laws, reducing fees, and streamlining the approval process. The state’s commitment to increasing affordable housing has led to regulations that make it easier for homeowners to build ADUs, including expedited permitting and fewer parking requirements.

Additionally, there are financial incentives available, such as local grants and tax breaks, to help offset the costs of building an ADU. With these favorable conditions, 2024 is the perfect time for homeowners to consider adding an ADU to their property.

3. How to Start Building Your ADU in California

Assess Your Property and Determine Feasibility

Before you start building an ADU, it’s essential to assess your property to determine if it is suitable for an ADU. Factors like zoning laws, lot size, and available space will play a significant role in deciding what type of ADU you can build. In California, many local jurisdictions have specific rules regarding the size and placement of ADUs, such as minimum setbacks from property lines, height restrictions, and parking requirements.

To start, check with your local planning department or use online zoning tools to confirm whether your property is eligible for an ADU. It is also crucial to consider site-specific conditions like access to utilities, the slope of the land, and any existing structures that may affect the construction process.

Find the Right ADU Contractor

Choosing the right contractor is one of the most important decisions you’ll make when building an ADU. Look for ADU contractors in California who specialize in these types of projects and have a solid reputation for delivering high-quality work on time and within budget. A contractor with experience in building ADUs will be familiar with local regulations, permitting processes, and common construction challenges specific to California.

Ask potential contractors for references, check their credentials, and look at examples of their past work. It’s also important to get multiple quotes to compare costs and timelines. A qualified contractor can guide you through the entire process, from design to construction, and help you avoid common pitfalls.

Understand the Costs and Financing Options

The cost of building an ADU in California can vary widely depending on factors such as size, design complexity, materials used, and location. On average, building an ADU can range from $100,000 to $300,000 or more, depending on these variables. It is crucial to create a detailed budget that includes all potential expenses, such as design fees, construction costs, permits, and utility connections.

To finance your ADU, consider options like home equity loans, construction loans, or refinancing your mortgage. Additionally, some local governments in California offer grants or low-interest loans to encourage ADU construction, so it’s worth exploring these opportunities. Consulting with a financial advisor can help you find the best financing option for your situation.

Navigate the Permitting Process

Obtaining the necessary permits is a critical step in building an ADU in California. Each city or county has its own requirements, but generally, you will need to obtain a building permit, which covers the construction, plumbing, electrical, and mechanical aspects of the project. In addition, some jurisdictions may require design review approvals or historic preservation approvals if your property is in a designated area.

To navigate the permitting process smoothly, work closely with your contractor and consider hiring an experienced permit expediter who understands local regulations. Having accurate and complete plans and documentation will help avoid delays and ensure your ADU complies with all applicable building codes and zoning laws.

4. Real-Life Success Stories of California Homeowners with ADUs

Examples of Homeowners Who Built ADUs and Benefited

To understand the potential benefits of building an ADU, let’s look at some real-life success stories:

  • Case Study 1: Maximizing Income in Los Angeles

    Jane and Tom, homeowners in Los Angeles, built a detached ADU in their backyard to create additional rental income. Within months of completing the ADU, they rented it out to a local professional, generating over $2,000 per month in rental income. This extra income not only covers their mortgage payments but also provides additional financial security.

  • Case Study 2: Multigenerational Living in San Diego

    Maria and Carlos wanted to create a comfortable space for their aging parents while maintaining privacy for both families. They built an attached ADU in San Diego, allowing their parents to live independently yet close by. This arrangement has strengthened family bonds and saved thousands on assisted living costs.

  • Case Study 3: Sustainable Living in the Bay Area

    Sarah, a homeowner in the Bay Area, built a small, energy-efficient ADU using sustainable materials and solar panels. Her ADU has not only provided a place for guests but also serves as a rental during peak travel seasons, generating income while promoting eco-friendly living practices.

Lessons Learned and Tips for New ADU Builders

These homeowners faced various challenges but found solutions by working with experienced contractors, researching local regulations, and planning meticulously. Some key takeaways include:

  • Start with a clear vision and budget.
  • Work with professionals who understand local ADU requirements.
  • Be flexible with your timeline and prepare for potential delays.
  • Explore all financing and incentive options to offset costs.

5. Common Mistakes to Avoid When Building an ADU

Overlooking Zoning and Building Regulations

A common mistake homeowners make is not fully understanding local zoning laws and building codes. Each city in California has its own rules regarding ADU construction, and failing to comply can result in costly fines, delays, or even demolition. Always check with your local planning department before beginning any work.

Underestimating Costs and Timelines

Another frequent mistake is underestimating the total cost of building an ADU. Be prepared for unexpected expenses, such as utility upgrades or additional permits. Similarly, many homeowners underestimate the time required to complete the project, especially when accounting for design, permitting, and construction phases. Building an ADU is a significant undertaking that requires careful planning and realistic expectations.

Failing to Hire Experienced ADU Contractors

Not hiring an experienced contractor can lead to poor-quality construction, code violations, and increased costs. Always choose a contractor with proven experience in ADU projects in California. Verify their credentials, check references, and ensure they are licensed and insured.

Conclusion

Building an ADU in California in 2024 offers a range of benefits, from generating rental income to providing flexible living space and increasing property value. With favorable regulations and financial incentives, now is the perfect time to consider adding an ADU to your property. By understanding the process, choosing the right contractor, and avoiding common mistakes, you can successfully build an ADU that meets your needs and enhances your home’s value.

Next Steps

Ready to explore your ADU options? Contact Builders Now for a consultation! Our team of experts specializes in ADU construction, navigating California’s regulations, and delivering high-quality results tailored to your needs.