ADU State and Local Law

We’ve been long-time supporters of the Pacific Legal Foundation, a nonprofit legal organization that defends Americans’ liberties when threatened by government overreach and abuse. My brother worked there after he and the PLF Executive Vice President, John Groen went to school at Claremont Men’s College (the three of us played on the rugby team for two seasons!).  Our good friend Larry Salzman is their director of litigation, and I appreciate him passing along the latest links to the ADU laws below.

AB68 is the state law that overrides local building and zoning codes, requiring ADUs to be permitted throughout the state subject to various conditions about health, safety, and nuisance.  It allows for one attached, and one detached ADU be added to every SFR property. Here is the law:

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB68 

The was augmented last year by AB 670, which prohibits homeowner’s associations from unreasonably withholding their permission to allow their members to develop ADUs in HOA-run communities.

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB670 

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PLF just petitioned this case to the California Supreme Court, asking it to decide whether all power to restrict ADUs is preempted by state law or whether local governments retain some discretion to deny the permit applications that meet state law standards.

The city of San Marino adopted building code restrictions that forbid homeowner Cordelia Donnelly from adding an ADU over her garage. Because state law dealing with ADUs fully preempts local restrictions, Cordelia has asked the California Supreme Court to recognize her right to create more housing. Story here:

https://pacificlegal.org/case/donnelly-v-city-of-san-marino/

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Larry has also found a ADU builder he likes who has just opened a local office:

https://www.gjgardner.com/orange-county-home-builders/granny-flats.aspx

ADU As Investment Property

A two-year-old, Culver City, California-based startup called United Dwelling aims to tackle the affordable housing problem using data, creativity, and underutilized garages and backyards.

United Dwelling plans to eventually build thousands of Accessory Dwelling Units, which are basically 369-square-foot studio homes. The company said its units benefit homeowners who are looking for ways to supplement their income as well as tenants looking for low-cost housing options.

United Dwelling uses data to identify potential lots that would be suitable for its units. It targets mostly low-and middle-income neighborhoods, with some exceptions for workforce housing. The company at first was going to just remodel garages but discovered quickly it’s much easier to tear down old ones and start fresh. So that’s what it does. It replaces those garages with small, affordable and zero net carbon homes in low-density neighborhoods with no out-of-pocket costs to property owners.

It then sets a rental price for the newly built unit and manages the property on the homeowner’s behalf, keeping a share of the rental income. Upon completion of construction, United Dwelling gives the homeowner the option to buy the unit back from the company for just under $88,000. To keep the costs of construction down, United Dwelling aims to build at least five units within a two-mile radius in the same time frame. Its initial focus is on the Los Angeles region with plans to eventually expand to the Bay Area and other locations once its solidifies its process, according to Dietz.

Specifically, the company plans to build over 150 of its detached studio homes in Southern California in 2020 and over 1,500 in 2021 (assuming construction can continue moving forward as an essential function per Los Angeles COVID-19 policy).

“Affordable housing is one of the most daunting challenges facing California and other parts of the county that is both entirely man-made and completely solvable,” Dietz said. “Here, we can do something that’s incredibly relevant. The opportunity is truly immense. Affordable housing is pretty easy. All you need is inexpensive land and construction, and capital.”

Link to Article

Top Gun House Moved

They finally moved it!  Hat tip Bode

The Victorian cottage in Oceanside featured in the popular 1986 movie “Top Gun” was moved to a permanent new home at the Oceanside Beach Resort on Thursday.

Built in 1887 by Dr. Henry Graves, the home is one of the few “folk Victorian-style” homes in San Diego County. It featured in the movie as the oceanfront residence of Tom Cruise’s co-star Kelly McGillis.

S.D. Malkin Properties, which broke ground for the 384-room Oceanside Beach Resort in 2019, is spending nearly $1 million to relocate and restore the well-known cottage.

“By restoring this iconic house and having it as a key feature at the new Oceanside Beach Resort, we celebrate the future of Oceanside by referencing the past and preserving its history,” said Jeremy Cohen, director of S.D. Malkin Properties.

The house was moved from its original site after groundbreaking to allow construction of the resort, which is the largest oceanfront development in San Diego County in the past decade. Since then, the house has undergone extensive restoration, including structural improvements and cosmetic detailing.

Leslee Gaul, president and CEO of Visit Oceanside, said the home “has been a draw for visitors all over the world, so we couldn’t be more thrilled to have it restored and once again accessible to the public.”

Situated on 600 feet of beachfront at Mission Avenue and North Pacific Street, the Oceanside Beach Resort is set to open in the spring of 2021.

Link to Article

Top 30 Markets Affected

We are #24 on the Top 30 markets to be affected by the coronavirus, which is pretty far down the list – and we’re still relatively affordable when compared to other higher-end areas.

For those who are thinking of moving to a more affordable area and aren’t affected by the statistics, here are my favorites that still have a 2020 median SP under $300,000, in order of how they rank on the list:

Las Vegas – $283,000 (1st)

Miami – $275,900 (5th)

Orlando – $245,000 (6th)

Ft Myers – $235,000 (8th)

Fresno – $265,000 (12th)

Lakeland FL – $193,000 (13th)

Memphis – $145,000 (21st)

Jacksonville – $210,000 (25th)

Daytona Beach – $202,000 (26th)

Phoenix – $288,000 (28th)

And their surrounding suburbs might be an even greater value!

https://www.usatoday.com/story/money/2020/05/20/cities-on-the-verge-of-a-covid-driven-housing-crisis/111782790/

Move to the Suburbs?

At least this was based on a survey, rather than ivory-tower speculation:

Where people choose to live has traditionally been tied to where they work, a dynamic that through the past decade spurred extreme home value growth and an affordability crisis in coastal job centers. But the post-pandemic recovery could mitigate or even produce the opposite effect and drive a boom in secondary cities and exurbs, prompted not by a fear of density but by a seismic shift toward remote work.

Now that more than half of employed Americans (56%) have had the opportunity to work from home, a vast majority want to continue, at least occasionally.  A new survey from Zillow, conducted by The Harris Poll, finds 75 percent of Americans working from home due to COVID-19 say they would prefer to continue that at least half the time, if given the option, after the pandemic subsides.

Two-thirds of employees working from home due to COVID-19 (66%) would be at least somewhat likely to consider moving if they had the flexibility to work from home as often as they want.  Only 24 percent of Americans overall say they thought about moving as a result of spending more time at home due to social distancing recommendations.

Many employed Americans are trying to square the desire to work remotely with the functionality and size of their existing homes.  Among employees who would be likely to consider moving, If given the flexibility to work from home when they want, nearly one-third say they would consider moving in order to live in a home with a dedicated office space (31%), to live in a larger home (30%), and to live in a home with more rooms (29%).

A Zillow analysis finds 46 percent of current households have a spare bedroom that could be used as an office.  But that percentage drops off by more than 10 points in dense, expensive metros such as Los AngelesNew YorkSan JoseSan Francisco and San Diego, where far fewer homes have spare rooms.

When it comes time to move, home shoppers who can work remotely may seek out more space — both indoor and outdoor — farther outside city limits, where they can find larger homes within their budget.

“Moving away from the central core has traditionally offered affordability at the cost of your time and gas money. Relaxing those costs by working remotely could mean more households choose those larger homes farther out, easing price pressure on urban and inner suburban areas,” said Zillow senior principal economist, Skylar Olsen. “However, that means they’d also be moving farther from a wider variety of restaurants, shops, yoga studios and art galleries. Given the value many place on access to such amenities, we’re not talking about the rise of the rural homesteader on a large scale. Future growth under broader remote work would still favor suburban communities or secondary cities that offer those amenities along with more spacious homes and larger lots.”

Zillow Premier Agents from Silicon Valley to Manhattan say anecdotally, they’re seeing the early beginnings of a shift.

“We are seeing more buyers looking to leave the city,” said Bic DeCaro, a member of Zillow’s Agent Advisory Board serving Washington, D.C., and Northern Virginia.  “Buyers, who just a few months ago were looking for walkability, are now looking for extra land to go along with more square footage.”

Keith Taylor Andrews, a small business owner in Denver, started home shopping on Zillow the week Colorado issued a stay-home order.  The first-time homebuyer is now under contract on a house in Fayetteville, Arkansas that he plans to use as his home office.

“We learned from COVID-19 that we could operate our business remotely,” said Andrews, who has 40 employees working from home. “Arkansas is a good place to move, it’s economical and there are far fewer people.  It feels like a breath of fresh air to get out of the city.”

http://zillow.mediaroom.com/2020-05-13-A-Rise-in-Remote-Work-Could-Lead-to-a-New-Suburban-Boom

Coming-Soon-in-MLS Report

The new Coming Soon feature in our MLS has been available since Tuesday.

Since then, there have been 32 new listings of houses between La Jolla and Carlsbad.  Eight of the 32 have been inputted as Coming Soon (not active listings).

The common reason for having Coming Soons is to try out the price, and to build anticipation among realtors like a movie trailer does with moviegoers.

My random thoughts and observations:

Because the policy forbids any showings of the homes, the MLS agents will want to know when showings will be available. But the MLS doesn’t provide a box for that date, and none of the eight agents mentioned a date either.  We know that Top Gun 2 is being released on December 23rd – which builds anticipation.

Four listings include the showing instructions as if they don’t know the policy, or are openly flaunting it. Will they allow showings today while listed as Coming Soon? I don’t know, but it looks like it.

Three listings had no photos, which would be expected of a listing that is in the works – it would be natural to follow with photos once the listing is ready.  But it’s hard to build anticipation without visual aids.  The movie trailers come with photos and video:

But the big question is what will the listing agents do when an offer is submitted during the Coming Soon period, subject to inspection? There are no written rules in the policy, so it is an individual choice.

Do you tell the buyer’s agent to wait until it’s active? Or do you take it to the sellers and negotiate a deal?

When do you let the buyer see the interior? Do you show before coming to an agreement, which would be smart but against the rules? Or do you make the deal, and then show them the interior and stay within the rules (it would be a pending listing now, not coming soon). Or once you receive an offer, do you flip the listing into active status so every agent and buyer can have a shot?

We have no rules, and no precedent.

We should ask the listing agents to answer these questions in the listing, so agents know what to expect.

If we don’t, here’s what will happen.

Buyer: Thanks for that coming-soon listing, it’s exactly what I want. Can I see it?

Agent: No.

Buyer: Can I buy it?

Agent: I don’t know.

Buyer: Send them a full-price offer.

Agent: Ok, but I’m not sure what will happen.

Is that sequence good for anyone involved?

While the MLS was cordial to respond to requests from brokerages to create a Coming Soon category, we need to go further.  Let’s clearly define the rules of engagement, for everyone’s sake.

Pac Pal

This megamansion with two safe rooms and a retractable roof for stargazing, isn’t listed for sale. Instead, the Pacific Palisades house is hitting the market as a rental asking $350,000 a month.

The master suite, accessed via a retinal scanner, has a custom-designed roof that retracts to reveal the sky, either entirely open or through glass. It can also be used as a projection screen to watch movies in bed.

“You feel like you are sleeping outside,” he said. “It’s like a campfire environment right in your own home.”

Link to WSJ Article

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