With Regulations Loosened, Granny Flat Construction Soars in California

Since the state passed regulations loosening restrictions on accessory dwelling units (ADUs), backyard homes have become a growing business in California, where housing is scarce and land is often prohibitively expensive. "California homeowners built some 12,000 backyard flats in 2019 — more than double the number permitted just two years earlier and a ten-fold increase since the state passed its preemption laws," writes Kriston Capps in Bloomberg CityLab.

With the rise of pre-fabricated, pre-approved houses made available by companies like Bay Area-based Abodu, building a backyard accessory unit is becoming easier than ever. "Its smallest offering, a 340-square-foot studio, starts at $189,000 — significantly cheaper than a similar stick-built house, according to CEO and co-founder John Geary. For select cities in California, Abodu promises that it can finish an ADU, from permitting through construction, in as little as 30 days." Cities like Los Angeles and San Jose have pre-approved designs such as Abodu's in an effort to streamline permitting for homeowners.

While construction slowed during 2020, "ADUs could be a rare bright spot in California and a few other places," with permit applications for "granny flats" continuing to increase. With 51% of ADUs serving as long-term rentals, the trend could help increase the availability of affordable rental housing in formerly single-family neighborhoods.