Welcome back LA Lovers!
In the last decade there’s been an increase in minimized, more affordable living. Many people motivated by the state of the economy have transitioned into tiny homes and ADU living depending on their lifestyles. In California a tiny home can either be built, permitted to stay permanently placed on a foundation or attached to a RV community on wheels. Those looking for a more standard concept with more flexibility to add onto property you already own I’d recommend ADU living.
Like fashion, most trends circle right back around. In 1982 ADUs had become a popularized way for cities to explore the development of smaller and affordable housing for single family zoning. Now with updated California constituted zoning laws construction has spiked from 1,100 in 2016 to 23,600 in 2021. The 2023 zoning law update with Senate Bill 897 promotes and extends the ADU provisions and requirements to cover other accessory structures, like pool houses or guesthouses.
So what is an ADU? According to the California Department of Housing and Community Development an Accessory Dwelling Unit (ADU) or Junior Accessory Dwelling Unit (JADU) is an effective method for contributing to the housing market in California. They’re often referred to as a granny unit, in-law unit or backyard unit because of its convenience for family members to stay on the same property with additional privacy. Most ADU owners enjoy the benefits of a low cost build in comparison to a traditional home and flipping that investment into residual income by renting out the additional unit. They can provide up to the same square footage as a condo perfectly fit for small families or independent young adults and seniors.
Investing in an ADU is a great addition for those looking to increase property value in their home. It’s reported that homes with ADUs sell for much more than standard homes, varying a 20% to 30% minimum increase in property value. Homeowners who aren’t in the market to sell can still explore the option to welcome additional income by using the equity in their home to finance an additional build. Those with no knowledge of the equity their property holds can easily calculate it by taking the properties market value as of today (not when purchased) and subtract any liens like a monthly mortgage rate. Regardless of how old, a well kept property will always appreciate in value and despite the condition of the real estate market, property generally increases with time throughout both bear markets and bull markets. An added build will always only increase your return on investment.
As always, I urge you to do the research that suits your own personal needs and financial goals. Assess your property to determine the best location or type of ADU. Factors like space, utility connections, and local zoning laws will dictate whether you should choose an attached, detached, or garage conversion. Ultimately, my hope is that with the continual increase in ADU construction, we will see that selling grandma’s house doesn’t always have to be the first option. There are alternatives that we can consider to generate income and increase the generational wealth passed down when we’re aware of the value we hold.
Until next time,
Los Angeles To The World 🧡
-Estates with Raevan Grace
More References:
Bear Market: The condition of the market in which prices fall 20% or more
Bull Market: The condition of the market in which prices rise 20% or more
Home Equity: The value of a homeowner’s financial interest in their home. The property’s current market value minus any liens that are attached to that property. The amount of equity in a house fluctuates over time as more payments are made on the mortgage and market forces impact the property’s current value.
Lien: A claim against assets that are usually used as collateral to satisfy a debt.
Single Family Residential: Single Family Residential is land designated for detached, single-family residential land use (one or two dwelling units per parcel of land) in both low and high density. This includes single-family homes and two-family detached dwellings, and usually includes single-family zones, low-density zones, agriculture zones (if single-family homes are permitted) or estate zones.
