I believe the Main house was 3/2 ~1500 sq ft, appraised at 2.5M, ADU ~ 450 sq ft, appraised at 200k. Total 2.7M. West San Jose with Cup schools.
200k is ~ 8% of (primary res + land) value. Seems reasonable
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You proved my point. The main house is valued at $1666/sf . The ADU at $444/sf. Would have been much smarter to add the extra sf to the main house.
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I notice some owners try to value converted nursery (replace some glass with walls) like part of main house.
How do you value a shed installed in backyard?
I know of one case where the buyer was required by the city (San Jose) to demolish an illegal ADU. (2018). The ADU and the main home were in bad condition. Buyer fixed lot of things (almost remodeled) in the main structure before moving in.
Have you heard of a case where the buyer demolished an ADU after purchasing a property?
I don’t agree. In these areas, just the value of the land is 1.5M for a 6000-7000 sq ft lot. So when the main house is valued at 2.5M, it’s more like 1.5M for the land and 1M for the improvements, I.e., the 1500 sq ft house.
Now, had the owner constructed an ADU or expanded the main house, the added value would have been about the same, as long as the work was done with permits in both cases
He would not have got 450x1666 = $750000 extra value had he expanded the main house by 450 sq ft by adding a bedroom+bath suite. He probably would have got the same $200000 extra value.
A 2.5M house does not go to 3.25M overnight just by adding a bedroom+bath. Neither will it go to 3.25M overnight by adding an ADU
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Home Prices are complex. Homes sell at around the average selling price of the homes in street it is on. Even if you gold plate your home, the prices will only deviate around the average. So, if you want to get Atherton prices, you will have to sell in Atherton, not in Milpitas. That is why it is said you have to chose your upgrades carefully and wisely if you want to get better selling price for your property. If you want to enjoy the upgrades for yourself, then do not worry about the price too much.
Well stated. When it is an expansion of the main house or ADU or new kitchen, the best reason to do it is so the homeowner can enjoy it and it enhances their lifestyle.
Added value is irrelevant especially if one will not sell for many decades. Only matters to get the best interest rate in a refi
And also to be remembered, when you sell a home, you just do not sell the and and the structure on it. You sell neighborhood, community, school, shopping, employment, noise, hazard, and culture around it. Unfortunately, the seller cannot control most of the factors that affect the price of the home.
Also very true. To that extent, we are blessed to live and own in the Bay Area, which is a desirable place that many people from all over the nation and world would like to buy into.
You arrive at conclusions very fast. 350 Millions Americans live outside Bay Area (some participate regularly on this forum). They feel they are blessed too.
I did not say that someone living in Chicago or Atlanta should not feel blessed to live and own where they are. Many people all over the nation probably feel blessed with their circumstances. I just said that we who live and own here in the Bay Area should feel blessed for our circumstance here. I believe in always being grateful for whatever one has, and not either be envious of someone who has more or look down or someone who has less.
In 95124 , Are the ADU’s are not assigned any separate addresses ?
You are wrong. Look a 2000sf houses and see what they are priced at. Been at this for 60 years. Have knowledge from my grandfather who bought BA rentals since 1935. Follow your own path. But the smart way is to buy a house with an existing ADU… building one now is crazy. You will get on old one at a discount. My farm bought in 2019 has a 2500sf main house and a 3000sf barn with 2 ADUs totaling 2000sf. The main house was worth $600k the barn with two apartments worth only $150k( much less than the cost of construction). House across the street with similar 2500sf size house went for $600k. Similar 4500sf houses were selling for $1.1m. I got the same conditioned sf for $750k with the 1000sf of storage thrown in for free
Earlier in this discussion thread, someone said that the true value of a property is set in the marketplace by what a buyer is willing to pay and seller is willing to sell for.
Appraisal for a refi is just an estimate, not too meaningful.
While there are houses of different sq ft selling, there are practically no houses (or very few) sold which have a recently constructed, permitted ADU. That’s because the new laws which simplified ADUs are still very new.
So, let’s just table this discussion for 10-15 years - by then there will probably be more houses with ADUs selling and it may be easier to answer how much value an ADU adds to the property.
Very True. And an appraisal is not even required for a refinance if the Loan to Value (LTV) is small, say less than 50% going by Zillows guesstimate.
Very few of the 150,000 predicted potential ADUs have been built in the BA. I would guess less than 1000 since they were named and promoted starting in 2013. A truly abysmal solution to the housing shortage of 3 m statewide. Politicians love to promote them. But how many have they built for themselves… zero.
Here are the SF numbers. Less than 100 per year.
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The housing shortage in the bay area is a political talking point. There are enough homes in the bay area. Plenty of them is available. The problem is for someone wanting to buy a home in Cupertino at the price of homes in Manteca.
Someone should start a thread how does the drought affect the bay area housing market
California water: Mandatory restrictions coming to Santa Clara County as feds cut water supply
Accessory Dwelling Units Being Steadily Built Throughout the City | Potrero View
You have cited an article published in 2019 - it is now 2021
The new statewide laws that greatly simplified the ADU permitting process and reduced costs, were only passed in late 2019, and became effective in Jan 2020.
I will repeat that we should really have this debate in about 10 years. By then, we will have enough data to know if the 2019 laws enhanced ADU construction, and also by then we are likely to have more comps of sold properties with ADUs, so that we can more accurately assess how much value an ADU adds to a Silicon Valley SFH.