Real Estate

Real Estate – John M. Lee

As housing prices soared with the current real estate cycle, the housing crisis has gotten worse and though many solutions have been proposed, the push for more Accessory Dwelling Units (ADUs) have gained some traction recently.

In 2014, a pilot program was started to allow the construction of ADUs in existing buildings in the Castro District. Since then it has spread out to all of San Francisco. ADUs are also commonly referred to as granny or inlaw units.

The benefits are many, such as a fast way of utilizing extra space and adding housing quickly. Because these typically are smaller units, they rent at a lower rate and provide much needed affordable places for tenants. In addition, they can provide extra income to existing owners or buyers looking for help on their mortgage payments. Also they can provide options for extended families that need to stay together, such as someone taking care of their elderly parents.

Most of the concerns have centered on adding density to neighborhoods. Some buyers complain that they purchased property in a single-family neighborhood, such as the Richmond or Sunset, just so they don’t have to deal with so many people. But given the housing crisis, legislators felt that it was more important to add density for the good of the City.

The intent of ADUs is good and initial requirements were that the space must be contained within the existing envelope of the building and no additional parking requirements and open space were necessary.

However, the permit process has been cumbersome because different departments within the City are looking at designs and factors that were important to them. The application might have to go through the Fire Department, Department of Building Inspections, Public Utilities Commission, Planning and Public Works. Sometimes a department would give an approval while another department required alterations, thus the plans would be bouncing between different departments and delaying the process while adding frustration to the homeowners in addition to costs and delays.

At the beginning of this year, SF Mayor London Breed made it a priority to streamline this process and cleared out the pipeline of more than 900 ADU applications within four months. All the departments are supposedly communicating with each other now to make the approvals easier.

So, are ADUs good for us or not? There are many positives, such as the ones named above. They also provide flexibility to homeowners who want to build them. For tenants, more housing can only mean lower prices with the increased housing stock. For the City, this means more dollars in the short term by collecting  permit fees and long term in increased property taxes. Also for people with unpermitted units, this can clean up the records so the unit will be legal and they will not have to worry about tearing it out and facing stiff penalties in the future.

The downside really is with the density this can create. I see that in some rare incidences, owners have put in multiple ADUs in the same building. This is especially common when owners are performing mandatory soft story retrofits. This can increase density by quite a bit.

Buyers who purchased properties in single-family home zoning districts might feel like they got cheated with the City allowing ADUs. They argue that they originally purchased in these locations for the peace and quiet of living away from downtown and that the action of the legislators hurt their property values.

More units mean more people and because there are no increased parking requirements, parking gets harder. However we are seeing an increase in our population of those who don’t own a car and who choose to take public transportation or use a rideshare service.

Will these ADUs solve the housing crisis? The answer is no, but it will provide some relief. The SF Board of Supervisors is working on other controversial legislation which will impact real estate. We will cover them in upcoming columns.

 John M. Lee is a broker for Compass specializing in the Richmond and Sunset districts. For real estatequestions, call him at (415) 447-6231 or e-mail johnlee@isellsf.com.

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