Last year, one out of every five homes built in California was an accessory dwelling unit, or ADU. Just three years ago, the rate was half that. While Ukiah’s increase hasn’t been as dramatic as the statewide surge, we have seen an uptick.
Here’s why. In places like the San Francisco Bay Area, much of the land has already been developed, so people need to create more housing in already-established residential areas. In the Ukiah Valley, we still have undeveloped land. However, land availability doesn’t tell the whole story.
Construction costs here in the Ukiah Valley aren’t much less than construction costs in more populated areas, while housing sales prices are markedly different. When you calculate the return on investment (the cost of building versus the cost of what you can get in return), it’s no wonder that we’re not seeing much local construction—and that people would opt for smaller dwellings like ADUs.
The building cost per square foot in major metro areas in recent years was estimated as follows. Sacramento was $300 to $330. Los Angeles was $400 to $480. San Francisco was $500 to $800. San Diego was $480 to $800, and San Jose was $300 to $450.
Ukiah’s construction costs are probably similar to Sacramento or San Jose, yet our median home price is about $450,000, while Sacramento’s median price is closer to $550,000, and San Jose’s median price is a whopping $1,750,000. You can see why people build in San Jose when the costs are comparable, but the resale value is sky high.
In addition to a lack of land and the high cost of building, ADUs have started popping up all over the place because recent changes to state law significantly reduced regulatory barriers to ADU construction. As often happens, the government’s prior restrictions had unintended consequences, so now the government must undo the limitations it imposed.
While I am (almost) always a fan of less regulation, I do not think it’s right to pull a bait-and-switch on homeowners. If you paid a premium for a house in a neighborhood zoned for single family homes with the assumption that there would not be high-density development, it seems unfair to suddenly allow more residences.
With the addition of ADUs, there are more people in a space originally planned for fewer people. If I bought a house on a 6,000 square foot lot on Ukiah’s Westside, and then neighbors on all sides put in ADUs, my quiet neighborhood could see a dramatic increase in car and foot traffic, noise level, and even the number of pets on the sidewalk. It could also see a dramatic drop in the availability of street parking.
And more people means a bigger demand on municipal services such as police, fire, sewer, electricity, and others. Keep in mind, the electrical grid was engineered to serve a specific number of homes in a given neighborhood. Between an increased number of people wanting electricity and the environmental movement to outlaw gas, our electrical delivery system may not be able to keep up.
The upside of ADUs is that they increase our housing stock, which we need. More houses will help keep rents and housing prices down. Economics 101 says the law of supply and demand actually works.
After weighing the pros and cons, if you decide to build an ADU, here are some things to consider. Do you want an attached or detached ADU? An attached ADU means dividing your existing home so it can support two households. This may include adding a kitchen or simply installing a deadbolt between two parts of the house.
Or you can opt for a detached unit. This will be more expensive, and it requires a lot big enough for two dwellings. While restrictions on ADUs have decreased, they still exist. Be sure to get a building permit and adhere to current building codes as you embark on this endeavor.
In some cases, it is legal to build an ADU and then subdivide and sell the ADU separately from the property your house sits on. This is not something I advise unless you have a strong constitution. There are significant hoops to jump through in most cases.
Truly, the biggest challenge to building in the Ukiah Valley is the lack of residential zoning for single family homes. If you look at a zoning map of Mendocino County, a huge percentage is zoned for agriculture, range land, and public (state or federal) land. In my opinion, demand should drive zoning.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.