San Jose Homeowners Can Now Sell ADUs as Condos

The city of San Jose became the first in California to allow the sale of accessory dwelling units (ADUs) as condos, which supporters say will create a new supply of ‘starter homes’ for households looking to become homeowners. In a city where just 6 percent of residential land is zoned for multifamily housing, the policy could have a major impact on San Jose’s housing supply.

As Vicente Vera explains in San Jose Spotlight, the change was made possible by AB 1033, signed by Governor Gavin Newsom last year, which lets municipalities set their own rules on ADU sales.“With more than 1,400 new ADUs built since 2019 and thousands more in development across San Jose, city leaders hope to alleviate the affordable housing crisis with the help of existing homeowners.”

According to Rafael Perez, board president of the affordable housing advocacy nonprofit Casita Coalition, ADU condos typically sell for 40 to 60 percent of the average home price in their area. However, Todd Langton, executive director of homelessness nonprofit Agape Silicon Valley expressed concern that institutional buyers could take advantage of the law and suggested policies to prevent purchases by investors.

According to an article in The Real Deal, “Unlike the controversial Senate Bill 9, which allows homeowners to create two separate lots, a homeowner using AB 1033 must set up a homeowners association for the main house and ADU “condo.” Governing documents would determine how common areas, such as a shared yard, would be maintained and fixed.”