San Luis Obispo and California’s New ADU Laws

[Owen Schwaegerle]

Let’s be real. California has a housing crisis. It has for years, and that is one of the reasons the prices of homes are so high here. Development of new homes is so costly that it makes it challenging to create new inventory. The fees, permits, and soft costs of getting ready to build a home can sometimes be $70,000 or more before you even break ground. That cost is baked into the price. Then you have your hard costs for construction, which can sometimes run you $225/SF or more. You add the cost of the land and you can see how quickly a home can become $500,000+. If you're a developer, in order to compensate for the risk and the costs to build, it makes more sense to create high end products. Fancy homes sell for more than affordable homes, so oftentimes there will be more development for higher end homes than affordable homes.

Another way to help meet the need for housing units is through accessory dwelling units (ADUs). ADUs are all the rage right now. The state passed several new bills that allow for ADUs to be added to property easily and more effectively. If you think about it, the concept makes sense. Most homeowners already own the land and have the space, so now they can easily add an ADU to their property to rent it out or let the family move in. AB 670 allows for the development of ADUs in planned unit developments. AB 881 would allow you to convert a garage to an ADU, and essentially allow you to take away parking for the creation of an ADU and not be required to replace it. You are now able to get up to one attached ADU or two detached ADUs on lots that have a single family home or 2-4 unit structure. These progressive laws are incredible for California. They will allow more housing units to be developed quickly and affordably.

We are currently looking to add an ADU in San Luis Obispo. It has been a much simpler process than in years past. I'd like to hear if anyone has experience doing this and what your experiences were like?

There is always an opportunity to build wealth in real estate. One of the best ways to do so at this time might be to add an ADU to your property. With all that is shifting in the world, having multiple streams of income has never been more needed. Investing in real estate to create passive streams of income that build wealth over time is one of the best things you can do.