Question of the week: Can we build and ADU on our lot?
- ADUs, or Accessory Dwelling Units, are an integral part of the State of California’s plan to expand affordable housing throughout the state. As such state laws regarding ADUs supersede local zoning and building codes and ordinances.
- If you own a residential mixed-use zone property you can build an ADU with minimal restrictions on lot coverage.
- Here are some of the state regulations that local agencies must adhere to when property owners present applications for the construction of ADUs.
- Local agency cannot establish a maximum size of less than 850 square feet, or less than 1000 square feet if the unit contains more than one-bedroom.
- Local density ordinances are not in effect for ADUs. For example, is only one unit is permitted on a 5000 square foot lot by local ordinance, an ADU is not considered as an additional unit (yes, the Accessory Dwelling Unit is not considered a unit).
- Lots with multi-unit structures, or in historic districts, are not exempt for the regulations and ADUs must be permitted. The local agency can enforce what type of windows or roof you home in a historic district must have, but cannot prevent a non-historic designed ADU.
- Starting in 2023, two-story ADUs are permitted in many circumstances. Of the various allowances for multi-story ADUs the one that will perhaps impact most in Southern California is that the maximum height for an ADU will go from 16 feet (not high enough for a two-story dwelling) to 18 feet if the property is within one-half mile of a major transit stop or high-quality transit corridor. In Long Beach for example, most of the residential lots in the city meet this requirement.
- There can be no parking restrictions to prevent the construction of an ADU. If a garage or other parking structure is converted to, or removed and replaced with an ADU, the local agency cannot require off-street parking.
- Local agencies, nor “common interest developments” must allow ADUs to be rentals. If you live in a gated community with a Home Owners’ Association that does not permit rentals, if you build and ADU you can rent it.
- Good news for those building ADUs, state law mandates that local agencies must act on a permit application within 60-days. If the act is to deny the application, the denial must state why the application was denied and corrective action that can be taken to meet approval.
This is a simplified set of points regarding ADU regulations in California, the main take-away is your local building department must approve most applications and do so within 60-days.
With the overwhelming majority of homeowners having a lot of equity in their properties and very low interest rates on their mortgages, the optimal financing method for building an ADU is using a Home Equity Line of Credit (HELOC, from WR&MU in 2021, Should we get a HELOC). After your ADU is completed, start monitoring the mortgage market to find the right time to refinance to possibly consolidate your existing mortgage and HELOC. Even though the new rate may be higher than you existing mortgage, the math may make sense to refinance.
ADUs add value to property, and possibly income to the property owner. With the significant elimination of local building codes and ordinances many homeowners are constructing mother-in law quarters, granny units, casitas, and mini-homes on their properties to add value and room for their families.
The California Department of Housing and Community Development has a handbook for those interested in diving deeper into ADU development.
Have a question? Ask me!
Shove the corks back in the champaign bottles? Last week markets celebrated the news that the Consumer Price Index dropped below 8% in October. Evidently, the less higher prices encouraged consumers. Retail sales surged 1.3% in October, not getting the message from the Federal Reserve that their objective is to slow down the economy. A large part of the increase was due to higher oil prices, which pushed gas station sales up 4.1% for the month. Absent gas and auto sales, other retailers reported a 0.9% increase in spending, with restaurants up 1.6%, double the inflation rate.
Markets slumped on the news, as the robust spending by consumers supported large rate increases from the Fed. However, Target announced that it expected slower holiday sales and warned that profits will be impacted. As one of the top retailers in the country, the warning from Target concerned investors that October might be an anomaly and slower consumer spending, which the Fed desires, will slow the economy, possibly into another recession.
Rates for Friday November 18, 2022: Stable rates! For the first time since the week of August 12th we have back-to-back lFridays with the 30-year conforming rate showing no change.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.25% Flat
30-year high-balance conforming 6.625% Flat
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
Don’t forget to take your turkey out of the freezer and put in your refrigerator to defrost in time for Thanksgiving. The rule of thumb is 24-hours for every 5-pounds of frozen bird. If you want a defrosted 20-pound gobbler on Wednesday to start your brine, rub, prep, moving the Butterball from the freezer to the fridge on Saturday should have you in good shape.
True empty nesters, Leslie and I will be enjoying a 16-pound turkey with all the sides and accompaniment with Sammy…well he won’t be enjoying anything but a few turkey scraps…due to odd year when normal attendees at our Thanksgiving table have other familial obligations on the same year.
I wish you and your family a wonderful Thanksgiving.
Have a great week,
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog