Could “granny units” be a solution to California’s housing crisis? Some hope so.

Amanda Maher
Amanda Maher | 5 min. read

Published on September 19, 2017

The tiny house movement is nothing new. In fact, if you look back over the centuries, you’ll find that homes almost always tended to be smaller than we’re accustomed to today. Now that home prices have escalated, it seems as though more people are willing to swap square footage for more affordable housing.

That’s what makes California’s new “granny unit” ordinance so exciting. Traditionally, granny units, in-law apartments, studios, cottages, and other “accessory dwelling units” (ADUs) have been strictly regulated at the local level. Adding a granny unit onto a single-family lot was complex and time-consuming. By some estimates, the permits alone could run between $8,000 and $15,000! These fees made the prospect of building an affordable granny unit not so affordable after all.

Now, however, facing an extreme housing shortage, communities are starting to see how important “granny unit” can be in terms of chipping away at the state’s affordable housing crisis. New state legislation, effective earlier this year, requires California cities and towns to loosen their restrictions on in-law apartments.

In short, the law gives most single-family homeowners the option to build ADUs by right as long as they comply with certain guidelines.

Changes in Zoning Mean a Potential 10% Increase in Tiny Housing

In San Jose, California—one of the most expensive housing markets in the nation—Vice Mayor Rose Herrera has heralded the policy change.

“We need housing at all different levels. People who work in Silicon Valley can’t find a place to live,” she says. “This doesn’t take taxpayer money and empowers people by allowing single family homes to be part of the solution.”

Just recently, the San Jose City Council passed its own “granny unit” ordinance that eased restrictions on ADUs, effective January 1, 2018. Changes to the zoning code will include a reduction in the size of the lot required for a homeowner to build a granny unit; increasing the maximum size of granny units from 700 to 800 sq. ft.; and eliminating some parking requirements altogether.

Local resident Michael Learner is about to make the transition from homeowner to San Jose property manager. The 54-year-old is building a tiny cottage in his backyard for his 20-year-old son to live in. This will free up his son’s bedroom in Lerner’s 3-bedroom home, which he plans to rent for about $650 a month as a way of earning extra income. Lerner also views this as a way to insulate against an economic downturn, something that’s been in the back of his mind after he lost his tech job during the recession.

San Jose is the largest of the Bay Area cities to adopt such progressive policies regarding granny units. There are more than 175,000 single family homes in San Jose; if just 10% of these homeowners built an ADU on their lot, it could create upward of 17,500 badly-needed housing units for local residents. Best of all, these units would be relatively affordable, given their size.

“Granny Units” Help Homeowners As Well

Residents like Ira Belgrade are hopeful that other cities, like Los Angeles, will pass similar legislation.

In an interview with Business Insider, Belgrade details how difficult it was for him to get back on his own two feet after his wife of 13 years passed away unexpectedly. “It threw my life into turmoil,” he said, reflecting on how he was suddenly left to run their business and care for their 2-year-old son on his own.

Belgrade decided to convert his home office into an in-law apartment to rent for additional income. The only problem? His lot was just shy of the square footage needed to build an ADU under Los Angeles’ existing zoning code. Belgrade took a risk and decided to build the in-law apartment anyhow, making his unit one of the 50,000 non-permitted ADUs across the city.

“It totally saved me,” Belgrade says. He wouldn’t have been able to afford his mortgage otherwise.

In an effort to draw these illegal apartments out of the shadows, the San Jose City Council is considering giving amnesty to homeowners if they agree to bring their units into compliance with the new city code. “We want to make sure they are constructed properly and [will be] safe for people to live in them,” explains Herrera.

Whether Los Angeles will be as forgiving remains to be seen.

New laws continue to be unveiled at the local level across California, each with its own nuances. Nonetheless, we suspect that we’ll see granny units pop up across the state as more homeowners flirt with the prospect of additional rental income. And these homeowners, whether they realize it or not, will be making a significant contribution to the state’s affordable housing stock in the process.

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Amanda Maher

Amanda Maher is a self-proclaimed policy wonk who dabbles in real estate law. She holds a B.S. in Political Science and Sociology from Boston University, as well as a master's in Urban and Regional Policy from Northeastern.

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