Legalizing ADU Sales in California: A Game Changer for Affordable Housing and Real Estate Investment

In a progressive move toward addressing the pressing issues of housing affordability and expanding homeownership opportunities, California has recently enacted Assembly Bill 1033 (AB-1033). This landmark legislation legalizes the sale of Accessory Dwelling Units (ADUs) constructed on a property, a concept already familiar in cities like Seattle and Portland. This development is a win-win for housing advocates, homeowners, and those aspiring to enter the housing market while simultaneously enhancing the investment potential of ADUs.

Unlocking New Possibilities: The Power of Legal ADU Sales

The legalization of ADU sales under AB-1033 signifies a significant step toward redefining homeownership dynamics and creating a more accessible path to building equity. This new legislation is particularly beneficial for those looking to break into the housing market, as it offers an innovative approach to property ownership. By allowing the separate sale of the main house and the ADU, homeowners gain an unparalleled level of flexibility.

Investing in ADUs: A Promising Proposition

The introduction of AB-1033 has also amplified the appeal of ADUs as a sound investment. Recent reports from the Seattle area offer a glimpse into the remarkable financial prospects associated with ADU sales. Sales prices for these units have exhibited a remarkable range, from $399,000 for a 493-square-foot attached ADU to a staggering $825,000 for a 1,010-square-foot detached ADU. These figures raise eyebrows, and for good reason.

In comparison to the typical construction costs, which generally fall within the range of $200,000 to $300,000 for a detached ADU, the resale prices translate into an exceptionally high return on investment. Consider this: if you leverage the equity in your home to build an ADU for $300,000 and, after a year of design, permitting, and construction, you are able to sell the unit for $600,000, you are reaping a 100% return on your investment in just 12 months. This presents an outstanding opportunity to generate wealth and make the most of your property.

Affordable Housing at Its Core

While the sale prices of ADUs may appear substantial when viewed in isolation, it's essential to assess them within the broader context of the housing market. In regions like Seattle, where median home prices for single-family homes surpass the $800,000 mark, ADUs represent a relatively affordable entry point for prospective homeowners. This trend, offering a more cost-effective means of securing property, is expected to ripple throughout California and other housing markets.

The Road Ahead

The introduction of AB-1033 and the increasing popularity of ADU sales underscore a compelling shift in the real estate landscape. As traditional housing becomes increasingly unaffordable for many, ADUs emerge as a pivotal solution to foster more inclusive homeownership. By creating an environment where starter homes are not only accessible but also financially viable, the housing market can become more attainable for a broader spectrum of families.

In summary, the legalization of ADU sales is more than just a change in legislation; it's a transformative force for affordable housing, real estate investment, and wealth creation. The ADU market, previously overlooked, is now emerging as a dynamic arena that not only provides new opportunities for homeowners but also addresses the growing need for housing affordability in an ever-evolving real estate landscape.

Detached ADUs can now be sold as a separate unit in cities throughout California. This is a game changer for ADUs as an investment and as a way to address housing affordability.

A Better Built Environment

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A Better Built Environment

A newsletter written and curated by Lucas Gray. Thoughts from exploring cities around the world and working to create a better built environment. Topics cover architecture, design, transportation, urban design, technology, cities, parks, accessory dwelling units, designing places for people, and running a design business.

Who do we design for? What do we design for?

We design for the experiences you will enjoy in your home once it is finished. Our work isn’t about the object but rather about the outcome. When you hire us, we lead you through an iterative design process to craft the best home to meet your goals, ideas, and needs. The result of our work is not just a house, but rather it is a place for you to enjoy shared experiences, emotions, and memories.

We design for you and your family, your friends and relatives, and all of the people who will call that house home over the years. We design for your children and grandchildren to have a space for play and exploration, a place to learn and grow, a place of belonging and joy. We design to make you feel relaxed, comfortable, and warm. We design to make you feel welcome, safe, and secure. We design for dogs who want a space to lie next to the fire. We design for cats who wander looking for the perfect location to stretch in the sun. We design for you to experience the passing of time through light and shadows moving across the floors and walls, notches on a door frame marking growth, and the changes each season brings to the surrounding landscape.

Although the house itself is an object and of course we want it to be beautiful and functional, it is our job to design for what happens within the house throughout its lifespan; the feeling you have when you return home from a long day at work, the joy of friends gathering for a shared meal, or the relaxation that washes over you when you escape the city to your weekend getaway. It is these moments that define our work.

We don’t design objects, we design experiences. Architecture isn’t about the physical house. Our work is about what each home will do for you and all the others that will spend time there. The result of our design process is the feelings and experiences you have enjoying life in your new residence with all of your friends, family, and loved ones. These outcomes are what makes us love what we do and what makes the process of design worthwhile.

Who do we design for?

We design for all of the people who will call each house a home. We design for everything that will occupy the space over time. We design for the landscape and the environment that surrounds each home, the ecosystem we are all apart of.

What do we design for?

We design for the emotions, experiences, and memories people will enjoy within their custom homes. Our work isn’t about the object but rather the life that happens within what we create.

Rendering of the interior of the Hill House. Floor to ceiling windows connect the room to the surrounding landscape while a courtyard garden carved into the house brings light and nature deep into the interior. High ceilings and a minimalist aesthetic make the spaces feel open and bright.

Why New York State Should Legalize ADUs

New York State is considering The Accessory Homes Act

I am excited to see that there is proposed legislation in New York State - The Accessory Homes Act - aiming to legalize ADUs statewide. Coming from Portland which has been at the forefront of the ADU trend, and Oregon which recently passed legislation to also legalize accessory dwelling units statewide, it is great to see that this housing type is spreading across the country. This is great news for New Yorkers.

This legislation is a huge win for the state of New York including homeowners, renters, affordable housing advocates, and landlords alike. It is rare to see legislation that will benefit such a wide spectrum of groups and businesses. And it is encouraging to see that elected leaders are looking for new ways to address housing issues facing our cities and towns by allowing for the addition of new housing typologies.

The Accessory Homes Act (S4547, A4854) would direct local governments to legalize accessory dwelling units (ADUs) in all areas that are zoned for residential use, thereby providing extra income for homeowners, new affordable housing, reasonable protections for tenants, and new tax revenue for local governments. The bill is backed by a diverse coalition of housing nonprofits, tenant activists, policy organizations, fair housing and immigrant justice organizations, and more

I’m particularly glad to see that part of this legislation calls for the state to make the permitting and approval process for these projects streamlined, reasonable, and affordable. This will go a long way in encouraging people to add accessory dwelling units to their properties across New York State.

Thank you to New York State Assemblymember Harvey Epstein and New York State Senator Pete Harckham for introducing this important legislation.

You can read the full bill here:
https://www.nysenate.gov/legislation/bills/2021/A4854

You can send a letter in support of the bill using this link:
https://actionnetwork.org/letters/tell-albany-to-legalize-accessory-dwelling-units?source=direct_link&

Benefits of ADUs:

• ADUs increase housing options both for renters, multi-generational living, and for those looking to downsize.

• ADUs are relatively affordable to build because there is no cost to the land.

• ADUs can provide rental income to families - helping them pay off mortgages or debt, have additional spending money, save for putting children through college, or plan for retirement.

• ADUs are inherently sustainable developments - they double down on existing infrastructure rather than requiring cities to invest in expanding utilities and roads. Being small, they also have lower demand for energy and water use.

• ADUs provide cities and towns with new residents and an increased tax base.

• ADUs can be beautiful - great design can make these highly desirable places to live.

• ADUs increase property values for homeowners.

I believe when this legislation passes it will be great for New York State and I’m glad elected officials are working to allow these projects statewide. Although some may be concerned about this change and how it will affect the character of their neighborhoods, I reassure you that change is good as it shows we are making progress towards addressing some of the issues related to housing and affordability. WIth the nature of ADUs being smaller homes located on existing property, they have a minimal impact on the surrounding neighborhood other than introducing new neighbors and new customers for local businesses. I have experienced firsthand how ADUs, granny flats, or guest suites, have grown in popularity across Portland and become a highly desirable addition to properties. They have been supported by politicians, homeowner groups, housing developers, affordable housing advocates, and community groups. Each year the demand for these projects increase as people realize all of the benefits they provide. And each year more people advocate for more of these projects to be allowed as they see the benefits they bring to a neighborhood.

ADU Design Services

I have worked with clients on the design of over 60 ADU projects to date. Most of these are in the greater Portland, OR area but I’ve also worked on a projects in Seattle, and the Bay Area. Having returned to New York about a year ago I’m looking forward to advocating for these project types across the state, and working with people to add ADUs to their properties. There are a range of reasons ADUs benefit homeowners and renters alike. I have worked on accessory dwelling units aimed at aging-in-place and barrier free living. Others were targeting Airbnb or short term rentals to generate additional income. Some clients were looking to downsize and move into the ADU once their children moved out, or building granny flats for aging family members who needed additional care. Regardless of the use, ADUs are great assets for homeowners and renters alike. I even sell plans of pre-designed ADUs for those who would like to save some time and money compared to going with a fully customized design.

If you have any questions about ADUs, want to learn more about the cost of designing and building these project types, or would like to discuss design ideas for a specific project, please get in touch. I love answering questions and sharing my expertise in this wonderful project type. I’m also taking on new clients if you are looking for a designer.

The exterior design of the ADU is a contemporary twist on a traditional house form. The simple gable roof reflects the form of the primary dwelling while the cedar screen and trellis provides privacy, defines an outdoor patio, and shades the western sun.

The interior of this ADU is bright and open with a combined kitchen, livingroom, and dining area. The vaulted ceiling and large windows make the smaller dwelling feel spacious and introduces lots of natural light and views to the garden.

Purchase pre-designed ADU Plans here:
https://lucasgraydesign.com/adu-plans

The Importance of Designing for Acoustics

Below is an expert from my newsletter discussing the acoustics of the built environment. Acoustic design should extends into the places we call home. Too often, design focuses on the visual senses. We care so much about how things look or how light impacts a room that we forget the other senses that a design should consider. Acoustics in particular can turn a beautiful space into an uncomfortable place to live. Whether it is blocking the noise of the outside, creating a quiet place to read and think, or finding ways to introduce the sounds of nature into the interior, acoustics are something that are an important consideration as I design homes.

A snowy walk through the streets of Fort Greene, Brooklyn reminds me of my childhood. It has been 17 years since I have lived in a climate that has snowy winters and it is a pleasure waking up to snow blowing past our apartment windows, covering the surrounding rooftops, and accumulating on the streets. Snow transforms the city in many ways. Often overlooked and under appreciated is how it transforms the city’s acoustics.

I love cities and have lived in some of the largest and busiest urban centers in the world. From the frigid winters of Montreal to the heat of Bangkok, the crowds of Shanghai to the artistic hub of Berlin, the outdoor paradise of Portland to my current home in New York City, each place has it’s own character and pace of life. And each has it’s own soundscape.

Almost every morning in Portland I was unpleasantly awoken at sunrise by the screech of crows. Here in NY there is a constant drone of the noises of city life. Traffic roars along Flatbush; people unrelentingly express their love of car horns; sirens grow and fade as ambulances or police race through the streets; helicopters whirl overhead as they crisscross the sky carrying police or billionaires to some important destination. The biggest downside to life in a city is this constant noise.

Snow changes all of that. Traffic dissipates as people huddle indoors. With less traffic, there are fewer car horns, reduced tires on the roads, and less emergencies needing attention - thus fewer sirens. Flights are grounded leaving the sky clear of human made sounds. Meanwhile the falling snow blankets the city with an acoustic carpet, deadening the audible soundscape.

It is refreshing, and a reminder that cities are more pleasant without the rumble and rattle we all make. The quiet streets are a joy to wander down. In the park you hear the deadened sounds of children laughing as they sled and play in the snow. An occasional dog barks. You hear the slight wind or creak of trees. The snow muffles the intruding sounds beyond the park’s borders.

We need to remind ourselves that cities don’t have to be so noisy. We can design places that have better acoustics and thus create better places to live. We can restrict traffic - either by closing streets, removing lanes, or implementing congestion pricing. Adding protected bike lanes would encourage people to drive less. Charging for parking and subsidizing public transit would further reduce car use. Electric vehicles can replace the roar of combustion engines. It would be an easy political win to ban helicopters as they are completely unnecessary and only serve a tiny handful of people.

The design of our streets, public spaces, and buildings can consider the acoustics of the urban environment just as they respond to climate, weather, and other functions. While we currently focus on how things look, we rarely discuss how the built environment impacts how things sound. I hope this changes.

Cities can be places where the noises of nature outweigh the sounds of human. Sirens and traffic could be the exception rather than the dominant force in the urban soundscape. I’d rather hear the sounds of wind, the songs of birds, or simple have quiet spaces to walk and think, even when I’m in the heart of a dense urban environment.

Subscribe to our newsletter here: lucasgray.substack.com

Op-Ed: Why ADUs Are A Great Benefit To NE Portland

By Lucas Gray

Accessory Dwelling Units, or ADUs, are secondary residences that can be built on any residential property in Portland. As housing costs continue to rise, many neighbors search for affordable housing for themselves or loved ones and ADUs can provide wonderful places to live while being much cheaper than buying a house in today’s market. They are also great ways to earn rental income for homeowners, potentially allowing people to stay on their property even if the neighborhood gets more expensive. In short, ADUs are great investments that help build wealth and provide much needed housing. They can be an important part of creating diverse and thriving communities.

We have been working in NE Portland over the past five years to help people navigate the design, permitting and construction process for ADUs. We find ADUs to be great ways to address our housing shortage, while preserving the neighborhood character that we all enjoy.

Here are a few reasons we think ADUs are a great fit for Portland and something that everyone should consider adding to their property:

• ADUs create opportunities to provide housing while preserving neighborhood character.

• ADUs are sustainable - by doubling down on residential areas with existing infrastructure and services (preventing urban sprawl).

• ADUs give homeowners an opportunity to capitalize on their current investment (their property) and build wealth, provide passive income, and help people plan for retirement.

• ADUs allow for multi-generational living and aging-in-place

• ADUs are a popular way to downsize while remaining in the community you’ve grown to love.

Most of the time ADUs are detached buildings (like a backyard cottage), but an ADU can also be created within a renovated basement, attic, or garage. Each property and family is unique, so we work with our clients to talk through all of the options available and find the best solution to their situation - based on budget, existing conditions of the property, and what their goal is for the new structure.

Like any investment, there are associated are costs. ADUs are not cheap - we find they cost between $200,000 and $300,000 in the Portland market, depending on size, complexity, finishes, etc. However, some more luxurious projects have come in well above that range. This cost is relatively similar regardless of whether you are building new or renovating. Renovating basement or garages into an ADU is not necessarily cheaper than a new building, as often it is more complex to work within an existing structure. In general, new, detached, ADUs are the simplest to build but we have worked on all sorts of ADUs to date.

We are passionate about ADUs as they can be economic, social and environmentally sustainable housing opportunities. If you have any questions or are considering building an ADU, we offer a range of free resources on this website and even sell ADU Plans for those looking for a cheaper faster way to get an ADU project started.