The hidden drawbacks of California's yard-based Accessory Dwelling Unit surge: Assessing their effectiveness in alleviating the housing scarcity crisis.
California's Accessory Dwelling Units (ADUs) Boost Housing Growth but Impact Varies
Accessory dwelling units (ADUs) have become a significant contributor to California's housing growth, accounting for approximately one-fifth (20%) of the state's new housing units in 2024, according to California Department of Finance data. However, their overall impact on alleviating the critical housing shortage is complex.
In 2024, California increased its housing stock by only 0.84% (about 125,000 units), with ADUs making up approximately 25,000 of these new units. This significant chunk of limited housing growth is a positive development, yet not all ADUs increase available housing for new residents—some are used by the homeowners themselves or left vacant.
The construction and use of ADUs vary across cities. For instance, San José has seen rapid ADU growth, with construction permits doubling in five years and about 1,100 final permits issued for ADUs since 2022 in a city of nearly 1 million people. San José also pioneered laws allowing ADUs to be sold independently from the main house, potentially expanding affordable homeownership options.
ADUs are often viewed as valuable investments that increase property values, costing hundreds of thousands of dollars to build. They offer a practical strategy for coping with California’s rising housing costs and limited supply. Government policies and acts like California's ADU regulations and the SUPPLY Act encourage ADU construction to help address housing shortages, signaling continued support and growth of this housing type.
However, research suggests that ADUs are usually priced at or above market rates and have limited viability as a solution to California's housing crisis. A 2024 research project for UCLA's Lewis Center for Regional Policy Studies found that ADU prevalence correlates with lower-income, renter-occupied, and younger households, denser populations, and areas with higher concentrations of non-white residents and registered Democrats.
The city of Los Angeles increased its housing stock by 6% between 2020 and 2025, the third-highest figure among Los Angeles County's 88 cities. L.A. County permitted more accessory dwelling units per capita than any other county in the state. The San Diego Assn. of Governments calculated that 85% of permitted ADUs in San Diego County were renter-occupied units.
In summary, ADUs are an important and growing part of California's housing supply that can help mitigate the housing shortage, though their effectiveness depends on how they are used and where they are located, with cities like San José leading innovative approaches to maximize their impact. However, their high costs and market-rate pricing limit their potential as a comprehensive solution to California's housing crisis.
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