California’s first ADU condo sale offers another path to homeownership

Backdoor Revolution: The Definitive Guide to ADU Development

I have been interested in ADUs for years ("DC and accessory dwelling units," "There are plenty of lots capable of accessory dwelling units in Upper Northwest," "Will carriage houses destroy city life as we know it?."  

And for a time did alley tours in Greater Capitol Hill.

Article from the Orange County Register.  From the article:

San Jose is home to the first accessory dwelling unit sold as a separately owned condo in California, city officials said, setting a potential template for a more affordable path to homeownership. But a lengthy rollout raises questions about whether the model can become a scalable solution to the state’s housing crisis — the sale comes more than two years after the state made such transactions possible.

The 749-square-foot, two-bedroom ADU on Josefina Street near downtown closed last month for $530,000. That’s about a quarter of Santa Clara County’s eye-popping $2.1 million median single-family home price in May, according to the California Association of Realtors. Real estate brokerage Redfin last month listed San Jose among the 10 most expensive U.S. housing markets, based on the share of median income needed to afford to buy a home.

ADUs, also known as in-law units or granny flats, typically have up to 1,200 square feet of living space and must include a kitchen sink, cooking appliance and separate bathroom.

The sale was made possible by a state law passed in 2023, Assembly Bill 1033, which allows homeowners to convert ADUs into condos and sell them separately from the main property, rather than just renting them out. Under the law, ADU condos come with their own property tax bills, but require an HOA agreement with the primary homeowner for common elements, such as roofs or driveways.

Historicity.  I have been intrigued by alleys, historic carriage houses, and ADUs for a long time.  First in terms of historicity.   

• DC Historic Alleys Building Survey, DC Historic Preservation Office
• "The American Alley, Part 1: A Hidden Resource," "The American Alley, Part 2: Origins of the American Alley," "The American Alley, Part 3: The End of the American Alley," "The American Alley, Part 4: Rediscovering the Forgotten Human Scale," Strong Towns/Resilience
• "History: Capitol Hill Alley Dwellings," Hill Rag

• and how on some properties there are historic carriage buildings that have been converted from horse stables to houses.  These are on regular house lots.  
• There are also some carriage houses on their own lots separate from a street facing lot, developed when the interior of large blocks were "programmed" with buildings separate from the street--often for "industrial uses" like stables, machining, storage, drayage, etc., 
• I learned from a guy I talked to once on a rear alley off of H Street NE who said that at the time (before DC liberalized ADU laws) it was legal for these buildings to have a "caretaker" apartment
• Interior blocks often were developed with housing to use up the space, make it profitable, and  sometimes as a way to provide mixed income housing--for servants, lower income people, etc.  
• (Later, instead of dealing with interior blocks, developers created intervening streets, such as Acker Place, Lexington Place, Morris Place, Morton Place, and Orleans Place between 6th and 7th Streets NE, Parker Street NE by Union Station, or blocks of rowhouses west of 5th Street NW in Manor Park like Quackenbos Street NW and Quintana Place NW)
• President's wife Ellen Wilson's claim to DC fame was her work to rid blocks of this interior  housing, probably because often the people settled there were African-Americans.

• Although some sections remained, like Millers Court NE and Brown's Court SE or on Capitol Hill and became models for building similar housing later 
• And because in upper NW, such as the lots east of 4th Street in Manor Park, the deep lots often have free standing garages or nothing, and could accommodate an ADU.  Our lot could, which I'd like to take advantage of some time.
• Transit access is key.  But I think it's best to focus ADU development within walking distance to a Metrorail station, to reduce the demand for driving.  Our house in Manor Park is about three quarters of a mile from Takoma Metrorail Station.

Affordable Housing.  Second in terms of the idea of adding "missing middle housing" and affordable housing. Missing middle housing is smaller types of housing vis a vis "normal sized" single family attached and detached houses.  In DC, it's not missing, it's just very expensive because all housing in DC is expensive.  And because there isn't a lot of it.  As noted above, it's mostly on interiors of blocks, and as a product of its time, pre-1900.

A very small house on Millers Court NE rents for $4,500 per month.  Middle housing indeed!

But the people who can afford to build an ADU might not necessarily want to provide AH.  According to a study in Greater Los Angeles ("The dark side of California’s backyard ADU boom: How much do they ease the housing shortage," LA Times):

He found that “ADU prevalence correlates with lower-income, renter-occupied, and younger households, denser populations, and areas with higher concentrations of non-white residents and registered Democrats.”

This type of housing is a form of what's being called "missing middle housing."  

In some weak markets like a neighborhood in Austin, Texas, ADUs are promoted to support multi-generational living and wealth generation through improving the value of a property by adding a unit, or to have a second income stream from the property to pay the mortgage ("Alley Flat Initiative fits small, green homes into unexpected places," CultureMap Austin, Alley Flat Initiative, Guadalupe Neighborhood Development Corporation). 

Some photos.

Parker Street NE -- the houses are narrow but still expensive because of the location.

Quintana Place NW -- the houses are more colonial, Tudor and not contiguous but in units of two because the National Capital Planning Commission ruled  sometime in the 1920s that rowhouses couldn't be contiguous (seen as an anti-African American policy decision)

Lexington Place NE -- the Queen Anne rowhouse style typified by the houses on Parker Street NE started to be succeeded by a more Craftsman form, often called Wardman style after the developer.  This transition started around 1907. ("What's in a Wardman? A Short Overview of DC's Most Prevalent Architecural Style," DC Urban Turf).

Millers Court SE is super well situated.  A block from the Supreme Court.  Two blocks from the Capitol.

Third, I've wanted to put one on our lot.  But ADUs aren't as cheap to build as people say.

1.  everyone says "oh, they're cheaper because you don't have to buy the land."
2. That's a little true, but the cost of permitting and new construction and financing is still high, over $250/s.f.
3. Plus the cost of installing electricity and water/sewage (and maybe gas).
4. They are hard to finance, although you can do it through a home equity loan I suppose.  And then the rents can't be super cheap because you have to pay off the cost of construction plus the various annual costs.

This is a garage on the rear of a lot on the 4400 block of River Road NW in DC.  It's a similar configuration to our lot in Manor Park.

The amounts of money cities offer to encourage ADU construction aren't very much and usually require renting out at less than market rates.

To facilitate this "the city" or nonprofit should create an ADU clearinghouse working with property owners to finance and build, and then with property owners and renters to facilitate rentals in a systematic way.

CDCs to build and finance at scale.  Gosh a good 12+ years ago I suggested the creation of a community development corporation that would operate city wide doing this.  Ideally, on our block you could build as many as 32 ADUs, they could go in on a block, with a city incentive too, and try to get multiple property owners to do it at the same time, to cut costs.

A number of firms do this now in the Midwest, such as ADU America, and in the Pacific Northwest and California (ADU Resource Center).

Pattern Books to make building ADUs easier.  Some cities have also created ADU pattern books to facilitate permitting and lower cost construction.  Often they include more modern buildings which don't appeal to me.  I prefer that ADUs match the prevailing neighborhood architectural style be it Queen Anne or Craftsman rowhouse, Colonial, etc.

-- ADU D.C. Homeowner’s Manual, Coalition for Smarter Growth

-- Philadelphia Rowhouse Manual (not on ADUs, but historic rowhouses, providing indirect guidance for how to do pre 1914 style ADUs)

-- A Pattern Book for Founders’ Place Neighborhood, Muscogee, Oklahoma, Oklahoma University-Tulsa Urban Design Studio

-- Del Ray Neighborhood Residential Pattern Book, Alexandria, Virginia

-- Accessory Dwelling Unit Guidebook, Boston Planning Department

-- A Pattern Book for Neighborly Houses, Habitat for Humanity, (I like the points about context sensitive development, it's not so much about ADUs)

-- ADU Pattern Book for Mid-Century Homes, Family Housing Fund

-- Building an ADU, Salt Lake City

-- ADU Pattern Book, MB Architecture

-- Changing Lanes: Laneway Suites in Toronto

Problems:  Some people don't want to share.  Granny flats/Yay or Nay.  Originally, were called "granny flats," with the idea that downsizing parents would relocate to an ancillary dwelling on their children's property

But some people don't want to share their lots.  "An Honest Conversation About Toronto Laneway Houses," Toronto Realty Blog.  From the article:

But why do people disagree on laneway housing? And what issues are at the forefront of the discussions? “An honest conversation,” i.s what I called this in today’s blog title, and that’s what I’m aiming for because I feel like the discussion about laneway housing in Toronto is merely getting started. 

 A client of mine remarked last weekend, “I have no problem if somebody else wants to build a laneway home on our street. But I don’t think I’d take one if it were free. I don’t want somebody living in my backyard with a window that looks out to where my kids play, and I don’t want to park my car under their living room.”

The LA Times has a series of articles on ADUs, and many involve multi-generational families, so sharing the lot isn't an issue.  And sometimes it's not for granny, but for the adult children. ("She couldn’t afford L.A. rent after law school. Her parents’ ADU came to the rescue").  

There are many in the Belmont Heights neighborhood of Long Beach.  We stayed in one as an airbnb.  A less than one mile walk to the beach...

For others, it's an ancillary studio not to be rented out ("Thanks to a tiny ADU, an L.A. home transforms into a stunning art gallery and studio," "Surprising ADU with tricked-out garage, rooftop deck matches family’s playfulness").  This is a big issue now with work from home.

But for unrelated people, if they aren't into the idea of having renters, an ADU may not be appealing.

Problems:  Financing.  It's still difficult to get traditional financing.  And adding an ADU if you have a mortgage, you have to notify the lender. ("Should I take a bridge loan to build an ADU?," LA Times); 

Problems:  Parking.  DC requires that building an ADU doesn't reduce parking on the lot.  In an area like Manor Park, this is dumb because there is plenty of street parking.  Less so in rowhouse neighborhoods in the core.  Basically, people can create "parking pads" that double as patios. Also see "A Koreatown parking protest: Tenants stage sit-in to protest loss of parking to make way for ADUs," LA Times.

Green Alley initiatives.  Separately, a number of cities are pursuing "green alley" initiatives where they are focusing on plantings, stormwater capture, and sometimes placemaking (" In Miles of Alleys, Chicago Finds Its Next Environmental Frontier," New York Times, "To Battle Floods, Cities Revive Their Long-Forgotten Alleyways,"JSTOR, "Cities Give Alleys New Life," Governing).  

-- Chicago Green Alley Handbook

In the early 2000s I read an article in (I think) Southern Living about Calder Loth, then State Architectural Historian for Virginia, and his initiative planting flowers in his alley in the Fan District ("The Self-Taught Gardener: Division Street," Berkshire Edge).

Alley repaving.  DC had a green alleys program but it never did much.  

Separately the Department of Transportation created a program still in operation that actively repaves alleys, many of which were in disrepair, with a polyglot of materials, using brick or asphalt block where it had been in use.  

Except that originally they only used red brick, and some alleys originally had yellow brick or other treatments.  I know I called for a change in this to be more historically accurate and they did change, according to this Instagram post.

This image shows yellow brick on the alley, and red brick fronting the sidewalk/apron to the street.

There is an alley off North Capitol SE, where one of the abutting property owners put in (or maintains) historically accurate cobblestones, with a brick track for "carriage wheels."  

Although, if you walk on cobbles, like some streets in Georgetown, it's not comfortable.

Placemaking and retail laneways initiatives.  ("Hidden in Plain Sight: Activating Urban Alleys," MRSC)

-- Living Alleys Toolkit, Austin

For at least 15 years, Melbourne has been reactivating alleys as retail spots.  In the US, larger real estate projects are often using the laneway concept as a way to activate interior spaces and add a fun element to the development.

Sydney, Austrailia

Retail laneways initiatives.   

-- Melbourne's Revitalized Laneways, Gehl Architects

-- Pocket Book of Melbourne Laneways

-- "Australia’s laneways investment is breathing new life into its cities," Monocle

-- Pioneer Square Alleys Design Manual