The lack of affordable housing in Southern California is a growing problem to which many in the real estate industry are trying to create solutions. Scarce available land on which to build, combined with a morass of development-slowing legislation, the construction-labor shortage, and high material costs have only made matters worse.
None of this is helping to stem the burgeoning homelessness crisis, and it could even trigger an exodus of well-paying jobs from the region and state, forcing local governments to consider creative solutions to this intractable problem, according to ATTOM Data Solutions. In this month’s housing news report from the Irvine, California–based firm, SVP Daren Blomquist cites a trio of California laws that took effect in January 2017 designed to streamline the building of accessory dwelling units (ADUs or granny flats). 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) — most notably parking requirements, setback requirements, and utility connection fees.
Those laws also preceded a spike in ADU building permits in the state, according to an ATTOM Data Solutions analysis of Buildfax data. California had 4,352 ADU building permits in 2017; the second-highest state was Oregon with 1,682.
But in Portland — the city with the most ADU building permits in 2017 at 1,540 — some say the promise of ADUs as an affordable housing solution has fallen flat. ATTOM Data quotes local developer, local real estate investor, and developer Justin Grubb as saying, “Portland is one of those cohesive love-thy-neighbor, liberal type of towns. Let the homeless guy live in your backyard. But there was a certain naivete to letting someone live on your property.” According to Grubb, Portland made a big push for more ADUs about three to five years ago, promoting them as a way to create more affordable housing in the city. “They discounted the cost for permitting the ADU. … They really were encouraging them,” he said, noting that his firm initially jumped on the ADU bandwagon. “We were doing them, we were putting ADUs in the basement; we weren’t ever doing stand-alones.”
But then some realities hit for homeowners and real estate developers — particularly in predominantly single-family residential areas attractive to families, according to Grubb, who said that because single-family homes in Portland tend to fall on the smaller side, it severely limits the size of the ADU that could be built given that an ADU cannot exceed 30 percent of the existing home’s square footage. This could become a problem in Southern California as well, especially since land scarcity and high costs could lead to smaller homes being built.
The upshot is that ADUs won’t completely solve the homelessness or affordability problem in California or anywhere else, but they can help ease it somewhat. Read the full report here.