San Jose and Berkeley Lead in Housing Innovation: ADUs Can Be Sold Separately

San Jose and Berkeley are pioneering a transformative approach to housing in California. These cities have become the first to allow Accessory Dwelling Units (ADUs) to be sold independently of the main property, a groundbreaking policy aimed at addressing the state’s housing crisis.

This policy (AB-1033) highlights the potential of ADUs in reshaping urban housing markets. By decoupling them from primary residences, San Jose and Berkeley have set a precedent for other cities, proving that innovation can meet affordability.

California Assembly Bill 1033 (AB-1033) introduces a groundbreaking change in how Accessory Dwelling Units (ADUs) can be managed and sold. Effective January 1, 2024, this law allows for the separate sale of ADUs from the primary residence under specific conditions. This is a significant shift from previous regulations.

Key Features of AB-1033:

1. Separate Sale of ADUs:
   • ADUs can now be sold as independent units, but only if local municipalities pass enabling ordinances.
2. Local Government Authority:
   • AB-1033 is permissive rather than mandatory, meaning cities and counties can decide whether to adopt these rules. As a result, implementation may vary across California.
3. Streamlined Investment Opportunities:
   • Unlike previous restrictions, this law opens the door for private developers and homeowners to capitalize on the increasing demand for housing by selling ADUs separately. However, compliance with local and state requirements remains critical.

This legislation represents a step forward in addressing California’s housing crisis by increasing flexibility in how housing is utilized and owned. 

Why is the New Policy (AB-1033) allowing ADUs to be sold separately a game-changer?

California’s housing market faces challenges that demand creative solutions, and the new policy allowing ADUs to be sold independently from their primary homes is a significant step forward. 

Here’s why this shift is both important and beneficial:

1. Promotes Affordable Housing

Separating ADUs from primary homes creates smaller, more affordable housing options. For first-time buyers or individuals priced out of the traditional market, this offers an accessible pathway to homeownership.

2. Unlocks Equity for Homeowners

Property owners can sell their ADUs as standalone assets, tapping into their investments without selling their main residence. This flexibility offers financial opportunities. 

3. Expands Housing Supply

By enabling ADUs to act as independent housing units, cities can maximize their housing stock without requiring large-scale developments. This approach utilizes existing properties to meet growing housing demands.

4. Encourages Sustainable Growth

ADUs typically require fewer resources to build and maintain than traditional homes. Supporting their separate sale encourages sustainable urban density while preserving neighborhood character.

5. Sparks Broader Policy Innovation

San Jose and Berkeley’s leadership in adopting this policy sets a precedent for other cities. As these changes prove effective, they could inspire broader legislative shifts across California and beyond, addressing housing affordability on a larger scale.

This policy doesn’t just redefine property ownership—it empowers homeowners, buyers, and communities. For developers and modular home advocates, this is an exciting opportunity to offer innovative, affordable, and sustainable housing solutions.

Roof and Realm stands ready to help homeowners and developers make the most of this opportunity, especially with modular ADUs perfectly suited for these changes. Start the process and Schedule your Free Phone Assessment today!