Build Back Better LA

Chris Koss, AIA — February 27, 2025

In recent years, Accessory Dwelling Units (ADUs) have surged in popularity across California, offering a viable housing solution to the state’s mounting affordability crisis. With the median home price in California reaching an astounding $900,000, both citizens and legislators are seeking alternatives that can ease the strain on potential homebuyers. Enter the ADU—a cost-effective, versatile solution to provide housing in urban areas without the need for new land.

According to a California Department of Finance study, ADUs accounted for a remarkable 20% of new home construction in 2023, which means that one in every five homes built last year was an ADU. This is a significant jump from 2020, when ADUs comprised just 10% of new builds. The growing popularity of these secondary units reflects a broader trend: necessity driving innovation.

California’s Housing Crisis: The Elephant in the Room

California has long grappled with skyrocketing home prices and limited inventory, issues that have particularly impacted the state’s largest cities like Los Angeles and San Francisco. The $900,000 median home price effectively shuts out all but the wealthiest buyers, and public servants—teachers, firefighters, police officers—are often forced to move further away from the communities they serve.

High interest rates have only exacerbated the problem, reducing buying power for the average Californian. As a result, more and more homeowners and investors are turning to ADUs as a solution to generate additional housing units without expanding urban sprawl.

Zoning Laws: A Double-edged Sword

The restrictive zoning laws that shaped California’s housing landscape in the mid-20th century are now part of the problem. Enacted in the 1940s through the 1960s, these laws set aside large swaths of land for single-family residences and imposed minimum lot sizes. At the time, these laws were seen as necessary to control urban sprawl as cities like Los Angeles rapidly expanded into the suburbs.

However, the large lots mandated by these zoning laws have ironically become ideal for ADU construction. Many homes sit on plots that could easily accommodate a secondary unit, and the relaxation of zoning regulations in recent years has allowed homeowners to take advantage of that potential.

Legislation Paved the Way

The ADU boom didn’t happen overnight. Key legislative reforms were necessary to unlock their potential. In 2019, two bills—Assembly Bill 68 and Assembly Bill 881—significantly streamlined the process for building ADUs:

             - AB 68 reduced the time it takes to approve ADU permits from 120 days to just 60 days and eliminated parking and lot size restrictions that had previously hampered ADU construction.
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             - AB 881 allowed property owners to build ADUs without having to live on the same property, making it easier for real estate investors to capitalize on unused land.
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These changes opened the floodgates, with thousands of ADUs being added to the state’s housing market. Some homeowners built ADUs for family members, while others saw them as an opportunity to generate passive income through rental properties.

A Win-Win for California's Housing Market

For California, which has long struggled with a severe shortage of affordable housing, the rise of ADUs is a much-needed win. Thousands of new housing units have been added, helping to address the housing crisis in a state where inventory is critically low. While ADUs alone won’t solve California’s housing woes, they are a step in the right direction.

For homeowners and real estate investors in Los Angeles County, building an ADU is an attractive option. Whether to house family members or earn rental income, ADUs provide flexibility and economic opportunity.

If you’re considering adding an ADU to your property, now is the time. With favorable legislation and increasing demand for housing in urban areas, ADUs are proving to be a smart investment for the future of California’s housing market.



Sources:
- California Department of Finance, New Construction Report, 2023
- Legislative Information, AB-68 Accessory Dwelling Units