San Jose ADU law brings back starter homes - San José Spotlight

San Jose has become the first California city to allow accessory dwelling units to be sold as condominiums, implementing a new policy that housing advocates say could significantly expand homeownership opportunities for residents previously priced out of the market.

The move follows Governor Gavin Newsom's signing of Assembly Bill 1033 last year, which permitted cities to break away from longstanding state restrictions that prohibited the separate sale of ADUs, commonly known as granny flats or backyard homes.

The policy change comes as San Jose grapples with an affordable housing crisis, with more than 1,400 new ADUs constructed since 2019 and thousands more in development.

Housing advocates report that ADU condos typically sell for 40 to 60 percent of traditional home prices in the same neighborhoods, creating a new category of starter homes for first-time buyers.

The Casita Coalition, a statewide affordable housing advocacy organization, developed the model policy that San Jose used to draft its local legislation, drawing from successful implementations in cities like Austin and Seattle.

While housing advocates celebrate the potential for increased homeownership opportunities, some experts express concern about corporate investors potentially purchasing ADUs in bulk, similar to patterns seen with single-family homes across the Bay Area.

San Jose's adoption of ADU condo sales is expected to influence other California cities to implement similar ordinances as they seek solutions to address housing affordability challenges.