Moving Beyond Granny Flats: Other Use Cases for ADU Construction

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Riaz Capital is a real estate developer-operator addressing the changing housing needs of the Bay Area. Our mission is to provide convenient, premium-quality, and financially accessible workforce housing to our residents and to deliver on our goals for our business and investors.

In 2019, California was 49th in the nation for housing units per capita when it was 3-4 million units short of its target. While progress has been made, it isn’t enough - today, California is still 1-2 million units short of the demand. 


The California housing crisis is a product of zoning restrictions that have, until recently, prevented the construction of denser housing and promoted NIMBYism over the socioeconomic impact generated by the development of attainably priced housing. However, under Assembly Bill 2221 and Senate Bill 897, which were instituted to clean up the State ADU Law, Accessory Dwelling Units or ADUs can now easily be added to multifamily housing by converting storage rooms or parking spaces. 


ADUs are often dubbed granny flats or in-law units because they have historically been built within single-family dwellings to house family members. ADUs, often constructed in garages or in backyard outhouses or sheds, strike the perfect balance between closeness and privacy. Over time, ADU use cases have expanded beyond their original purpose of housing family members that earned them the monikers ‘granny flats’ and ‘in-law units’. By constructing and renting out ADUs, homeowners can create a source of rental income for themselves while making a dent in California’s massive housing inventory requirement. 


Property developers can also take advantage of density bonuses offered by the new legislation (such as 50% more units for inclusion of affordable housing) that facilitate ADU construction within multifamily housing complexes. Real estate developers can construct ADUs on undeveloped areas of sites, convert existing structures like carports and storage areas into ADUs, and subdivide large units into multiple smaller ADUs to increase overall rental area without investing in additional land. ADUs are seen as a promising way to add cost-effective housing inventory in a state that is badly in need of affordable low and middle income housing. 


 Since these legislative changes have taken effect, ADU construction has boomed; Los Angeles alone has seen a 202% increase in ADU construction from 2017 to 2021. By loosening restrictions on square footage, height and setbacks for ADUs, California’s new densification laws promote ADU construction.

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