Strong Interest, Real Demand
The ADU revolution is still alive and well. This was the main impression that I took away from the ADU seminar that the ADU Resource Center co-hosted – alongside the Asian Real Estate Association of America’s Peninsula Chapter – last Saturday, March 21. We had a full room of homeowners and residents from across the area who came out to learn about the ADU process through a series of fireside chats with ADU experts and professionals.
Interest in ADUs across California continues to expand. At a time when California has struggled to produce enough housing to meet demand, ADUs have emerged as one of the few housing types showing strong year over year growth. Statewide, 1 in 5 new housing units permitted in 2024 was an ADU. In San Mateo County, where the ADU Resource Center is based, this proportion was a whopping 48%.
State Policy Expanding Access
This growth is due in large part of the California State legislature, which began passing legislation starting in 2016 to lower barriers to ADU permitting and approvals. Since then, new ADU laws have gone into effect every year. Last year, for example, AB1033 provided jurisdictions the option of allowing ADUs to be sold separately as condominiums (6 California cities have already implemented such policies, with others considering the same). That same year, AB2533 made legalizing unpermitted ADUs substantially easier.
This year, a significant development came from the Department of Housing and Community Development (HCD), the state agency charged with enforcing ADU laws statewide: in January, HCD issued an updated interpretation of State ADU Law, suggesting that applicants can now build up to 4 qualifying ADUs on a single-family lot.
More Paths, More to Consider
Meanwhile, the ADU industry – from architects and builders to permitting specialists and lenders – continues to expand. Today, consumers interested in building an ADU have a wealth of options to choose from: there are a variety of architecture firms specializing in ADUs; there is a vibrant sector of ADU design-build firms that provide end-to-end services; modular and panelized construction options continue to expand; and there have never been as many ADU financing options as there are today.
This growth has its pros and cons. For example, about 1 in 5 licensed California general contractors received their license in the last 5 years. This means that experience levels in the industry vary widely, making it even more important for homeowners to understand how to structure their projects, vet professionals, and flag risks.
Homeowners considering an ADU are navigating an ever-changing landscape of laws, products and firms. In this context, having a trusted, neutral resource to provide consumer education is critical to both empowering and protecting consumers.
Trusted Guidance Matters
The ADU Resource Center aims to be the go-to source for this kind of information across the county. We’ve found in our conversations with homeowners that most folks underestimate the cost and complexity of building an ADU. Our initial conversations with homeowners often feel like dumping a bucket of cold water on their backyard cottage dreams. Many homeowners come to us assuming an ADU will cost $100,000. In reality, projects in our region often cost significantly more once site work, utilities, and construction costs are factored in.
We always caution that ADUs are a major construction project. While they may be smaller than a typical single-family house, at the end of the day, they are still a house. That means that all of the complexity and much of the cost that comes with a new house – including managing utilities, addressing site constraints, and managing a team of professionals – also accompany ADU projects.
At the ADU Resource Center, we believe wholeheartedly in the promise of ADUs: they offer multigenerational living possibilities that are the norm in most of the world; they provide older adults the option to age in place; they create an income stream for homeowners while also adding much-needed rental units to the housing market; they don’t require the same level of infrastructure that new developments do, making them more environmentally friendly.
However, we are not here to sell ADUs: we exist to help consumers understand when an ADU is really in their best interests, how to set their project up for success, and how to foresee some of the challenges that might arise along the way. Industry can’t provide this kind of unbiased guidance. Neither can City staff, whose role is to ensure that ADU projects comply with State and local codes.
ADUs have become systematically important for helping to address the housing crisis in California. Ironically, ADUs are also the only housing type that is delivered in a fully distributed, small-scale way, with individual homeowners taking on the complex role of developers.
The ADU revolution isn’t slowing down. Homeowners are leading the way, and their need for trusted guidance has never been greater. Reach out to the ADU Resource Center to learn more, schedule a complimentary support call, or explore your property with a free feasibility consultation.
The San Mateo County ADU Resource Center is a free public resource aimed at helping homeowners understand the ADU process. If offers free tools, including a guidebook, webinars, and an up-to-date ADU calculator, funded by local jurisdications and community foundations.
