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California's housing market, particularly in major cities like San Diego and Los Angeles, faces significant challenges characterized by limited inventory, affordability issues, and rising rents. However, recent legislative measures such as Assembly Bill 68 & 434 (AB 68 & AB 434), Assembly Bill 1033 (AB 1033), and Senate Bill 9 (SB 9) are designed to tackle these issues and create new opportunities for homeowners, buyers, and the broader real estate market.

Inventory Shortage

• Statistical Insight: As of 2023, San Diego and Los Angeles are facing a combined shortage of over 500,000 housing units (California Housing Partnership).
• Impact: Limited housing inventory drives up property prices, making homeownership increasingly unattainable.

Affordability Crisis

• Statistical Insight: The median home price in San Diego is approximately $900,000, and in Los Angeles, it’s around $850,000, far above the national average (Zillow, 2023).
• Impact: High prices limit access to housing, particularly for first-time buyers and low-income families.

Rising Rents

• Statistical Insight: Average rent in San Diego has increased by 36% and in Los Angeles by 30% over the past decade (Apartment List, 2023).
• Impact: Rent increases outpace wage growth, exacerbating housing instability and homelessness.

Assembly Bill 68 & 434 (AB 68 & AB 434)

• AB 68: Allows homeowners to add two additional units (an ADU and a JADU) on residential lots, promoting the development of triplexes.
• AB 434: Mandates that cities have pre-approved ADU plans by 2025, streamlining the approval process and reducing bureaucratic delays.

Assembly Bill 1033 (AB 1033)

• AB 1033: Permits the separate sale of ADUs from the primary residence, allowing for individual ownership of ADUs and primary homes, which can stimulate the housing market.

Senate Bill 9 (SB 9)

• SB 9: Facilitates the conversion of single-family homes into duplexes and allows for lot splits, significantly increasing the potential housing stock in urban areas.

Increased Housing Supply

• Impact: Legislative measures are expected to significantly boost housing inventory, helping to meet demand and stabilize prices.
• Statistical Insight: The potential for an additional 1.5 million housing units statewide, with a significant portion in San Diego and Los Angeles (California Department of Housing and Community Development, 2023).

Increased Affordability and Qualification

• Impact: More housing units lead to more affordable options, improving access for low-to-moderate income families.

Additional Income for Homeowners

• Impact: Homeowners can generate rental income from ADUs, improving financial stability and offsetting mortgage costs.
• Statistical Insight: Homeowners in San Diego and Los Angeles can see rental income increases of up to $2,500 per month from ADUs (RentCafe, 2023).

Multi-generational Living

• Impact: ADUs provide flexible living arrangements for extended families, enhancing family support and reducing living expenses.

Increased Property Value

• Impact: Properties with additional units often see higher market values, benefiting homeowners' equity.
• Statistical Insight: Properties with ADUs in Los

Angeles and San Diego can see an increase in value by 20-30% (Redfin, 2023).

Homeowners

• Gain additional income, improved property value, and flexible living arrangements.

Homebuyers

• More housing options at potentially lower prices, improving access to homeownership.

Realtors

• Expanded inventory and new market opportunities drive business growth.

Contractors

• Increased demand for construction and renovation services.

Lenders

• New financing opportunities through HELOCs, cash-out refinances, construction loans, and home improvement loans.

AB 68 & 434

Single Family Homes:

• One ADU (up to 1,200 sq. ft.) and one JADU (up to 500 sq. ft.) per lot.
• One detached ADU up to 1,200 sq. ft. on the same footprint as an existing structure.

Multifamily Dwellings:

• Multiple ADUs within existing structures.
• Two detached ADUs on a multifamily lot.

AB 434:

• Requires cities to have pre-approved ADU plans by 2025, simplifying the approval process.

AB 1033:

Separate Sale of ADUs:

• Allows ADUs to be sold separately from the primary residence, potentially increasing property sales and ownership opportunities.

SB 9:

Duplexes and Lot Splits:

• Permits conversion of homes into duplexes and lot splits with ministerial approval.
• Projects must meet specific criteria, including urbanized area designation, parking requirements, and local short-term rental regulations.

• HELOCs, Cash-Out Refinance, Construction Loans, Home Improvement Loans
• Note: Financing agencies typically allow only one ADU per property despite state allowances for two.

California's legislative efforts are paving the way for significant changes in the housing market, particularly in cities like San Diego and Los Angeles. By increasing the housing supply, improving affordability, and creating new income opportunities, these measures promise to address some of the state's most pressing housing challenges. As more homeowners and developers embrace these opportunities, the real estate landscape in these cities will continue to evolve, offering hope for a more sustainable and accessible housing future.

• California Housing Partnership
• Zillow
• Apartment List
• California Department of Housing and Community Development
• RentCafe
• Redfin

These statistics and insights underscore the pressing need for ADUs and other legislative measures to address the housing crisis in California's major cities, offering a multi-faceted approach to urban living and economic stability.