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Living in California is not for the faint of heart… and we’re just talking about the housing crisis! According to CalMatters, “the median price of an existing single family California home [in March 2023] was $791,490, more than twice the national median of $375,700.”

If you’re a homeowner, then you hopefully know the value of your home and how much equity you’ve earned over the years. If you are a first time home buyer or have grown children looking to buy a home, then you also understand the struggle to save enough for a down payment for a home. There’s also the obstacle for many to determine how to affordably care for aging parents.Here are ways that secondary units can alleviate the housing crisis. Let’s talk Accessory Dwelling Units (ADUs)!

Affordable Housing

Let’s revisit that statistic in the opener: the average home in California costs $791,490! Ouch! And we’re not talking about the high cost cities like San Francisco, Danville, or San Jose. The average home in Concord will run you around $754,957 and in Antioch a home averages $609,513 as of this writing. This means that to purchase a home in Concord, a 20% down payment would be $150,991 and your monthly mortgage payment at a 6.5% interest rate would cost you $4,812. For the home in Antioch, 20% down would be $121,902 and the monthly mortgage payment at 6.5% would be $3,727. (This includes property taxes and homeowners insurance but this is just an example of your potential costs. Discuss your unique situation with a reputable lender so you can get accurate, current information customized to you.)

While 20% down isn’t usually needed (it can be as low as 3% in some cases), 3% is still $22,648 of $754,957! This causes many people to rent but the cost of rent has steadily increased over the past few years. RentCafe shares that the average cost of rent for an apartment in the San Francisco East Bay Area is $2,570. 

The ADU Revolution

Now that we have that out of the way, let’s talk about ADUs. ADUs are small homes that are built on a property with an existing home. They are complete homes with a kitchen, bathroom, and sleeping space and ties into your existing plumbing and electrical systems. They’re not sheds or the cheap frame kits that are sold by big box stores. They also sit on a foundation and are permanent which makes them different from a tiny home.

So what’s the cost of an ADU? Prices can vary based on size, finishes, and your property. For example, a studio ADU would cost less than a two bedroom unit, hardwood floors are more expensive than laminate, and a home on a hill with elevation complications could cost more. For argument’s sake, a studio ADU without upgrades on a flat parcel of land could run around $235,000. A custom ADU with two bedrooms can conservatively start at $300,000 and the sky’s the limit based on what the owner is willing to spend. So let’s meet at around $250,000 which seems to be a common starting point. I know, this is a lot of money! But let’s compare it to the average home in Concord or Antioch. It’s less than half the price of a home in Antioch and almost a third of the cost of a home in Concord. Again, talk to your lender to discuss your current mortgage rate and specific numbers, but a loan for $250,000 could be about $2,086 per month with a 6.5% interest rate and no down payment. This is still less than the average monthly rent payment and again, about half or less than half of the average home mortgage payments. 

Additionally, there are incentives for homeowners to add ADUs to their property. Homeowners with incomes less than CalHFA income limits could receive a grant. CalHFA explains“The ADU Grant provided up to $40,000 towards pre-development and non-reoccurring closing costs associated with the construction of the ADU. Predevelopment costs include site prep, architectural designs, permits, soil tests, impact fees, property survey, and energy reports.”

Be sure to discuss this option with your lender and ADU builder to see if you qualify or if other financial options are available.

Who Could the ADU Revolution Impact?

Multifamily real estate investing is becoming more and more popular as the cost of living continues to increase. We’re seeing grown children living with their parents for longer to try to save for that big down payment and we’re also seeing elderly parents being cared for by their children with the shocking costs of senior living facilities being so high. These are two of the main demographics that can certainly benefit from the ADU Revolution.

However, living under one roof is harder than it sounds. Both grown children and elderly parents likely want their privacy and independence. The homeowner also wants their space. An ADU provides separate housing options while utilizing your current real estate investment.

Renting out your ADU is another way that these houses can alleviate the housing crisis. Demand is high and rent is high. As a real estate investor, you could rent out your unit and have it pay for itself over time. You could also rent out your main home to a young family for a higher rental fee and as empty nesters, move into your new ADU. How would you use your ADU?

How Do You Get Started?

As the housing crisis continues, ADUs have become more accessible to the public. California law has relaxed some of its restrictions to promote more affordable housing in our state. ADU companies are also providing more options to accommodate customers and cutting edge technology can show you exactly where the ADU can be placed on your property.

Check out and give us a call at (888) 540-0238! We’re your one stop shop for all things ADU. From permits to construction to lenders and real estate valuations, we’ll walk through every step of the process with you. We also partner with insurance brokers, property managers, and landscapers so you have access to reputable professionals to make the best decisions for you and your family. We’re here to serve you!

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