Californians In Cramped Quarantine Are Eyeing Building 'Granny Flats'

Even with California under a mandatory shelter-in-place order, United Dwelling has seen an increase in inquiries about building accessory dwelling units.

ADUs, granny flats, guest houses or mother-in-law units are tiny backyard homes ranging from 250 SF to 1,200 SF (depending on the local jurisdiction and exact home location) built on residential lots. They have long been touted as the solution to not only California's affordable housing crisis, but as a panacea for other lodging gaps across the nation.

Although the coronavirus has shut down the company's physical offices in Southern California, United Dwelling is still building ADUs, with an option that costs the homeowner nothing, in exchange for leasing a portion of their backyard and sharing a portion of the rent for 15 years. At the end of the lease agreement, the ADU is owned by the homeowner free and clear. 

Why United Dwelling has seen more inquiries lately is up for debate. Perhaps, because people are in their homes more, they are evaluating areas in their backyard where a second tiny home can be built or looking at their garage used as storage for a conversion into a studio or one-bedroom, CEO Steven Dietz said. He also suggested that given the volatility of the current economy, some are wondering if building an ADU and renting it out could help them weather the recession to come.

"All I can say is, despite a reduction of advertising and outreach, overall, in the last two weeks, we are experiencing an increase in our inbound call volume," Dietz said.

GreatBuildz partner Paul Dashevsky said given the current coronavirus crisis, there might be an increase in the number of people looking into building an ADU. Seniors living in senior housing across the nation has been hit extremely hard by the virus, and adult children who own property may explore building additional space.

"Especially with the coronavirus, you don't want your parents living in the senior community. You'd rather have them be close to you," Dashevsky said.

As more than 3 million Americans filed for unemployment due to the coronavirus's impact on the economy, proponents said this week that new laws in California that relaxed the building of ADUs could lessen the housing crisis once construction is back in full swing.

Last year, as part of an effort to boost the state's housing stock, Gov. Gavin Newsom signed several new laws that made it easier for homeowners to build as many as two ADUs, or convert existing garages, into tiny homes on their lot. In San Jose, the city allows multifamily properties to build separate ADUs on the lot. 

"There's a rise in the unemployment rate," said Leila Banijamali, the co-founder and CEO of Symbium, a proptech company that plots out ADUs for homeowners, planners and developers. "There's a lot of uncertainty. ADUs provide a naturally affordable form of housing and making a mortgage payment."

California has more than 17.5 million renters, and nearly 10 million of those are rent-burdened, meaning they pay more than 30% of their annual income on rent, the Haas Institute for a Fair and Inclusive Society at UC Berkeley found. Its report also ties the state's rising rents directly to the state's growing homelessness crisis.

"Housing insecurity, unmanageable rent increases and the threat of displacement carry deep consequences, since having a home is about more than just having shelter," the authors of the report state. "Home is a locus of opportunity — it shapes the access people have to good schools and jobs, clean air, safe neighborhoods, and upward mobility. In other words, a stable, secure home is essential to human health and well-being."

While multifamily developments can take years to plan or get permitted, the governor's new laws on ADUs make the lengthy building permit process much faster. Banijamali said previously, ADUs had to be processed within 120 days. As of 2020, that time has been cut to 60 days.

In places like San Jose, getting plans approved can take as little as 20 business days, the city's website touts. "There is a very strict timeline in which local jurisdictions' planning departments must approve these ADUs," Banijamali said.

Other localities are following suit. Municipalities from Alaska to Pennsylvania allow the building of ADUs, and Washington passed a law earlier this month that waived certain parking requirements for the dwellings. The city council in Corvallis, Oregon, passed new rules for ADUs earlier this month.

The idea continues to have have its fans in California as well. In the past three years, Los Angeles has received more than 13,300 requests to build ADUs, according to the LA Times. The Times reported that San Francisco is seeing the same kind of demand. 

"Gov. Newsom said we need 3 million homes [by 2025]," Dietz said. "It's a staggeringly large number. There happens to be 9 million R1 [residential 1] zoned properties in California."

Building an ADU is not cheap. Depending on the type, ranging from a ground-up to a garage conversion, the price can range from $80K to $400K. But Dashevsky said that price could go drop if the coronavirus sparks recession-level price cuts.

Dietz said during this time, many homeowners might be a little worried about their stable income sources. Sprucing up their home, converting a garage into a studio or building a ground-up ADU in their backyard could be the best solution. Not only will the homeowner's property value increase, but it could help tenants struggling to find a place to live. 

"A garage full of junk can be valuable real estate," Dietz said. "That should be a place not to store junk, but to make into a really great place to live."

CORRECTION, March 27, 1 P.M. PT: A previous version of the story misstated United Dwelling's agreement with homeowners. The story has been updated.