This California city is letting owners sell ADUs as starter homes. Will it be a housing revolution?

San José has become the first California city to allow homeowners to sell accessory dwelling units separately from their primary residence, marking a potential shift in how the state addresses its affordable housing crisis.

The San José City Council approved an ordinance Tuesday that takes effect in mid-July, enabling property owners to sell backyard cottages and converted garages as standalone starter homes at a fraction of traditional housing costs.

The move follows the passage of Assembly Bill 1033, which granted local governments authority to permit separate ADU sales while establishing the legal framework for homeowners to sell these units without transferring the underlying land.

Sacramento, Berkeley, and San Diego County are now exploring similar measures as housing advocates push for broader adoption statewide.

ADUs typically range from 600 to 1,200 square feet and include all essential features of single-family homes but cost significantly less to develop since no additional land purchase is required.

California has aggressively promoted ADU construction over the past seven years, removing local government barriers and granting homeowners rights to build qualifying units on their properties.

The policy shift addresses a critical gap in entry-level housing supply, particularly as high mortgage rates have made traditional homeownership increasingly unattainable for many Californians.

In Los Angeles County alone, nearly 60,000 ADU applications have been submitted, demonstrating substantial market demand for these alternative housing solutions.