I keep hoping there will be a cool, high-quality tiny house at any price – even the ones over $200,000 here weren’t that spectacular (including the 3D-printed house made of recycled plastic bottles (65%) and fiberglass (35%) that cost $220/sf):
An interview with California state assembly member Phil Ting, the author of the $40,000 ADU grants, and the sponsor of many ADU bills in California. He authored AB 1033, which clarifies that anyone who wants to sell their ADU must file a condo map with the state. Turning your house + granny flat into a 2-unit condo will be the only way to get regular mortgages and title insurance so they can be sold separately, but it’s a major undertaking – how many people will process with a condo map?
Hat tip to Jorge for sending this in!
AB 1033 is the latest state law designed to develop a market for ADUs, and thus lessen California’s grinding housing crisis. However, past legislative attempts have not met with much success.
In 2021, the legislature passed SB 9, which allowed homeowners to split their single-family parcel into two lots and build up to two units on each lot. It went into effect in January 2022.
Earlier this year, UC Berkeley’s Terner Center, a housing policy research group, released a study following the progress of ADU development after the passage of SB 9. It looked at 13 cities where developing ADUs seemed to make the most financial sense for property owners and “found that SB 9 activity is limited or non-existent in these 13 cities.”
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1033
This is a nightmare for title insurance. If you want to get a clear and marketable title, the property would need to be officially subdivided, or turn into condos – which the new law did address:
(10) In addition to the requirement that a local agency allow the separate sale or conveyance of an accessory dwelling unit pursuant to Section 65852.26, a local agency may also adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and accessory dwelling unit or units as condominiums. Any such ordinance shall include all of the following requirements:
(A) The condominiums shall be created pursuant to the Davis-Stirling Common Interest Development Act (Part 5 (commencing with Section 4000) of Division 4 of the Civil Code).
(B) The condominiums shall be created in conformance with all applicable objective requirements of the Subdivision Map Act (Division 2 (commencing with Section 66410)) and all objective requirements of a local subdivision ordinance.
(C) Before recordation of the condominium plan, a safety inspection of the accessory dwelling unit shall be conducted as evidenced either through a certificate of occupancy from the local agency or a housing quality standards report from a building inspector certified by the United States Department of Housing and Urban Development.
(D) (i) Neither a subdivision map nor a condominium plan shall be recorded with the county recorder in the county where the real property is located without each lienholder’s consent.
Lenders aren’t going to give their consent, so in order to sell off an ADU, all you have to do is have a property with no mortgages, and file a condo map with the state and work it through the process for a few years!
Hat tip to ‘just some guy’ for sending in this ADU update – an excerpt:
For Millstone, making her ADU feel like part of the community was key. Small touches, such as tiling, hark back to the area’s Latino roots, while native California plants and materials are showcased. Although the ADU occupies a relatively small footprint of 650 square feet, high ceilings and carved terra cotta breeze blocks give it a roomy look and allow for airflow. She shares the space with her two little dogs, Stevie Nicks and Lindsey Buckingham.
Millstone hasn’t yet rented out the main house on her property. But she estimates that when she does put it on the market for full rental value she can easily pull in around $5,000 per month.
The ADU is separated from the main house by a small driveway and some bushes, making it feel like a separate residence. “It’s ideal,” Millstone said.
Link to Full ArticleThe article says it takes $300,000 to build an ADU, and I haven’t heard of any being built around here for under $100,000. But now you can buy an ADU kit for less than $40,000:
https://www.elledecor.com/design-decorate/trends/g14530560/tiny-houses-amazon/
I still think that there would be high demand for decent-quality tiny homes around $50,000. Of course, all of these guys have options at $100,000+, but I caught a few lower-priced models today:
Around the coast, the housing stock is finite – there isn’t any more room to build new houses. Whether they knew it or not at the time, everyone has bought their ‘forever’ home and aging-in-place has become the natural trend. The higher prices and rates have locked out the majority of possible home buyers, but there still aren’t enough homes to sell – evidenced by the relatively low inventory.
A month ago, there were 466 houses for sale between Carlsbad and La Jolla, and today we’re down to 422 active listings – in an era where other areas are reporting a surge in inventory. There is a real push to build granny flats to create more housing, but that isn’t going to help the resale market. In fact, the building of ADUs will actually make the real estate market WORSE by keeping more seniors aging-in-place, and limiting the resale inventory.
Higher rates and prices will only continue the shift of homeownership being for the elite – only.
From the AARP:
The COVID-19 pandemic has altered how people think about their lives and homes – which has collided with exponential growth in the number of older heads of households and renters. These trends highlight the urgent need to rapidly increase and improve age-friendly and affordable community and housing options.
AARP’s 2021 Home and Community Preferences survey found that over three-quarters (77%) of adults age 50 and older want to remain in their homes as they age. This desire is consistent across the lifespan with 63% of adults overall saying the same. The numbers of older adults wanting to remain in their homes as they age has remained relatively consistent for more than a decade and was not impacted by the pandemic.
Increasing the number of multigenerational households, providing more options like accessory dwelling units (ADUs) or “in-law units”, and encouraging renovations that support aging-in-place are all critical to support this desire.
“We really didn’t intend selling them,” says Kevin Regan over the phone from the northwest of Ireland.
Converting a slice of airplane into a sleek and durable home office had been a personal project in 2021, but after his sister-in-law put photos of the cabin on social media, requests rolled in and things started to snowball.
Now, Regan and his business partner Shane Thornton — both builders by trade — have started their own company named Aeropod, recycling commercial airplanes into home offices, glamping pods and ready-made accommodation.
They’ve only spent €100 (about $110) so far on advertising (the company’s still “brand new out of the wrapper!,” says Regan) but they’ve already sold 11 pods and are preparing to have more shipped to wherever clients want them.
Airplanes are built to last. Strong, thickly insulated, and made of sturdy aluminum alloys. And with some 15,000 aircraft estimated to be due for retirement in the next 20 years, there’s a steady supply of them available for dismantling and recycling.
There wasn’t an obvious winner at the TinyFest – everyone is asking full retail for their product, and it makes you think that going custom is a better choice. And they all do custom!
The TinyFest comes back to the Del Mar Fairgrounds this weekend, starting at 10am. I’ll be in search of ADUs that can be fully installed at home for a reasonable cost – here was my tour from 2020:
The best thing about 2021 for Kayla? Her new boyfriend Frank, who is a great guy and quite a golfer too!
Natalie signed with a new talent agent and has high hopes for next-level work in the new year. Dancing on a concert tour would be ideal, all while being our marketing director!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I said that pricing will likely seem a lot higher this year.
With few recent sales to guide them, sellers and listing agents will wonder how much can they get away with on price. There are tales of a old blogger guy being wildly successful with his transparent open bidding, but other agents aren’t experienced in conducting a slow-motion auction and don’t have the guts.
Instead, the list prices will be getting packed.
When sellers wonder how high, it will be easier to lump 10%, or more, on top of the initial guess (which was probably +5% optimistic already). The zestimate, or other automated valuation, that is higher and supports the dream will be collected as proof!
But it’s the METHOD of selling that makes the +10% possible.
Bidders are turned against one another and compete for the prize. Their ego takes over and directs the bidding……and the contest is on, with no ceiling.
Will a list price that starts at 10% to 15% higher than comps produce the same results as my slow-motion auctions? Maybe, but only with the homes that are highly upgraded with all the bells & whistles and have a superior location. The real creampuffs.
The early buyers will have to tolerate such sloppy pricing, but for those who are already frustrated from not buying a house in 2020/2021, it won’t matter and they will grab whatever they can. It virtually guarantees that the first 1-3 months of the season will be scorching hot.
But there will come a day when we run out of those buyers, and the frenzy conditions will be over.
I’m sticking with my +15% appreciation, and it all happens in the first half of 2022.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Two new laws that address the housing crisis begin today (above).
Baby boomers are another year older, and more will need help with living. The multi-gen home buyers will grow in numbers, and granny flats will be an ideal solution. Many will buy a suitable property with grandma’s money, and take care of her until the end.
Some multi-gen home buyers will cope with finding an existing single-family home and adding their own granny flat. But the real opportunity will be for those sellers of properties that already have an ADU. Because the supply is low and the need is very high (and because grandma’s money came a little too easily), the prices paid for homes with existing granny flats will be excessive. There will be a separate category of comps too – those with ADUs, and those without, with a pricing differential of 10% minimum.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
This could be the year that buyers have to pay for their own agent.
I don’t think many agents can make a case of why they are worth it – or at least demonstrate why they are worth as much as 2% to 3%. It would be cool to develop buyer-agent squads who are experts in their field and are worthy of compensation – and can prove it. But most will just fade away, or open up a shop of discount door-openers who don’t offer much, but get paid up front.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Another political season starts in 2022, which means an increase in the vitriol and hate. The perceived volatility will cause a few people to move to areas which are better suited for their political leanings, especially if there are riots – which is what it would take to get laid-back San Diegans to reconsider a move. It may not cause a surge of additional sellers here, but it could create more demand for homes in those politically-friendly destinations.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The difficulty of buying homes out-of-state is already tough enough, and now they are more expensive – with some now 30% to 40% higher. It could be the game-changer for potential sellers and even be the reason why the inventory has been so tight recently.
We don’t know what it will take to get more homeowners to sell.
In the past, record-high prices did the trick, but today’s prices are setting new records every month – and inventory is in decline. How many current homeowners in San Diego wouldn’t sell at any price? 80%? 90%? That’s a problem, and I’ll say that it’s something we’ve never faced before until the last few months.
At the same time, the number of San Diego County detached-home sales in 2021 will probably rank as the #2 of all-time, behind only those in 2003. There were 28,319 detached-home listings last year, and 25,029 sales, which is incredibly efficient. Virtually everything is selling!
But only 12,936 of those listings came in the second half of 2021, and if we continue at that pace or lower, it will be excruciating for buyers – and send prices to the moon.
The optimum number of listings will probably be in the 30,000 to 35,000 range. Having a small surge in listings will drive the market crazy with activity…..and force sellers and buyers to Get Good Help!
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
