I don’t pay too much attention to whatever spin the politicians put to these issues. That seems to be their job, to spin things in whatever way benefits them.
I agree with you that ADUs are unlikely to solve the housing crisis in CA, to the extent that a housing crisis even exists. Also agree that the affluent buyers snapping up 3M ranch houses in Silicon Valley will not be renting out their ADU to some some income stranger. But they will likely use it to house staff like nannies or caregivers, and to the extent such staff could not afford homes, they will be helping somewhat.
All I am postulating is that today’s affluent buyers in prime Silicon Valley will derive value from a 2nd unit or ADU, and hence would be willing to pay a premium to purchase one if it is a fully permitted structure that is up to code
Basically, you are anticipating use of ADUs as servant quarters. In many British colonies, the Bungalows of officers and higher rank holders used to have a servant quarter attached to the Bungalows. Let the ADUs be used like that. There will be demand for a more humane treatments of servants.
Basically, what i am trying to say are two things:
Housing Crisis in bay area does not exist. It is like climate crisis that exists only in the mind of highly educated people with PhD and Masters Degree .
The homes in Bay Area are priced right for the value they offer. Builders have been trying to tinker with the housing market for long. The way things are heading, I am worried Bay Area will end up with cells that no one wants to live in.
Yes, I am anticipating a demand for ADUs to be used as staff quarters in some cases, and or to house aging parents or young adult kids, or guest quarters in other use cases.
In Asian and South Asian countries, land is much more valuable and under pressure compared to US (yes, even compared to Bay Area). In those countries, rich families which own residential land in desirable cities tend to almost always develop them into multiple unit buildings that house extended family members. It is common to have 3-6 apts in a 5000-6000 sq ft lot, with 3-6 related family units occupying them, and maybe 1 set aside for staff. It is rare to find a ranch style 1500 sq ft single family home on a 6000 sq ft lot in say, Mumbai.
I am just saying that since the politicians in Sacramento have simplified ADU permitting and allowed up to 2 ADUs per SFH, affluent and strategic thinking families in Silicon Valley, many of whom have roots in Asian countries, will use ADUs as a back door way to convert their SFHs into triplexes that can be shared between family members or to house staff.
How you use your home is up-to you and the neighborhood you live. In east-side areas (San Jose - east of 101 ) , it is very common to see six cars crammed into a drive way. And probably dozens of people live in one single family home. Three family in some cases. And what happens in Mumbai, Hongkong, or Singapore is good for their conditions. American Dream is a three bedroom home with two car garages. It still is for most part.
Besides the ghost towns of China and you can find unsold apartment complex even in India where housing is driven mostly by private sectors. Though there is a demand for good housing, it does not mean people will buy pigeon holes. That is what I think may happen in Bay area if more homes come at the cost of quality of living. Smaller homes, narrower streets, car lanes converted to bike lanes, road dieting, convert parking garages into residential homes, eliminating parking from public transportation hubs. Urban disaster in making, if you can see.
Silicon Valley and much of Bay Area is no longer representative of America. Some places like East San Jose probably are a Mexico-America hybrid, and parts of Cupertino are Chinese/Taiwanese-American hybrid. What I mean is that Cupertino probably has more in common with Taiwan than US Mid-West.
Silicon Valley is competing with other top tier global urban centers like NYC, London, Shanghai, Seoul, Shanghai, Hong Kong etc. Our local real estate trends should also be measured against those cities rather than against St Louis, MO or Columbus, OH
I can clearly see a more common variant of “California Complex” affecting you. - Bay Area Complex, probably. Please try to understand what is meaning of California Complex . Bay Area is different! Different from What? I think we have discussed this several times before you joined this forum. Without US legal system, US defense, US markets, and intellectual base, the California would look much like what it was before merger into the USA in 1848 while it was part of Mexico. And Bay Area will probably look like Tijuana. The Bay Area is no different from Columbus or St Louis, and it is still very much part of the USA.
Agree. Guilty as charged. Been stuck in Bay Area during Covid travel slowdown, probably becoming myopic.
Yes, Bay Area is a product of, and benefits immensely from, the US legal and financial system. Similarly, London is a product of the British financial and legal system. The 2 areas still compete in three global arena for talent and ideas.
I am glad you can see the reality. Also, before you joined this forum, we discussed many other things. You mentioned London, Shanghai, Seoul, or Hongkong? I really do not know what these cities have to offer. People who can afford want to flee HongKong, I have read. May be you can enlighten us about the greatness of these cities. Bay Area will do well by just being the Bay Area. No need to mimic some other city. Personally, I like the Bay Area because it is not like the other august cities you listed.
The BA has resisted higher density for 60 years, starting with the Save the Bay movement run by Republicans. Without it we would have the population of Los Angeles. Immigrants left their crowded cities for a reason. I doubt even they would want to recreate them here.
towns have different setback requirements for ADUs - our friends are building one in Danville and it doesn’t have to be 5 feet from fence like rest of house so there is actually more room to builld
also homes with ADUs are getting up bid right now just due to the whole wfh thing / people really want a separate office - happened with this property we looked at - at the time the comps did not justify it selling for this $/ft2 - they scrubbed all the info from MLS for some reason but i was like 2100 ft2.
I would think that today’s buyers would pay a premium for a property with an ADU or 2nd unit, either to use as a home office given that WFH in some form is here to stay; or to house guests/family/staff.
Somehow I don’t subscribe to the view that ADUs add no value. Especially if the ADU is built according to code and with permits, it should be an asset, not a liability
Markets (a collection of buyers and sellers acting together to maximize the value in an exchange) decide what sells at what price. Government programs fail when bureaucrats and politicians (and private sector players who fund them ) think of themselves as the gift of the God to the humanity. What sells is decided by user demand and what sellers can supply. There is no other way to it. There is always a demand for something, and there is always a supplier for anything. Whether it materializes depends upon the price at which both seller and buyer can agree.
The ADUs have existed even before bay area cities started marketing them. Nothing new and seems like another failed government program. A friend of mine purchased a duplex deacdes ago. Rents one unit, and lives in the other.
I grew up in Berkeley. Tons of ADUs. Then called in-laws or granny units. Built for UC students. They were not regulated. Mostly students didn’t have cars so they are low impact. They filled a need and did well. Then rent control and regulations actually reduced the number. Government always comes up with problems not solutions.
I think your information is outdated. A friend who built an ADU (with permits) recently went thru a refi, and said that the appraiser assigned a value of 200k specifically to the ADU, over and above the main house+land value which was appraised as per the recent comps.
200k for what? How much per sf? How big was the main house? If it was more like a Duplex I can see it. But a 5000sf mansion won’t get much added value for a 500sf secondary structure. I have been dealing with ADUs for 60 years. Any transitory added value means nothing. I have two on my farm right now. When I bought them they had little value. Give me an extra $200k each and then I will believe you.
