New San Francisco ADUs could soon be sold as condos
Faced with some of the highest home prices in the country, many San Francisco residents find owning a home is a distant dream.
But a new proposal would allow owners of granny flats or accessory dwelling units (ADUs) to sell them as condos, a move that could create more affordable homes throughout the city.
Supervisor Joel Engardio, who represents the Sunset District, told the Chronicle his bill to allow new ADUs to be sold separately as condos is likely to go before the Board of Supervisors in the next two weeks.
The Sunset supervisor said the law would apply only to new ADUs to protect tenants in the hundreds of ADUs that have been built in the last decade.
Engardio's proposal is possible because former State Assembly Member Phil Ting, D-S.F., passed a state law that went into effect last year that allows cities to pass legislation to permit the sales of ADUs. San Jose and Berkeley have already passed similar legislation though it's unclear if any ADUs have sold in those cities.
Engardio said the law also would incentivize the construction of new homes without increasing building heights, a point of contention under Mayor Daniel Lurie's proposed rezoning plan, which calls for higher densities in west side neighborhoods.
'We are trying to create new housing in our city, and that can be controversial,' Engardio said. 'But there's a way to create housing without changing building heights. There's thousands of longtime San Franciscans in the Sunset and on the west side that could benefit from this.'
Despite a lackluster record of building large residential projects, San Francisco has seen an uptick in ADUs. Starting in 2014, city leaders began easing regulations on building ADUs, including a law that legalized ADU construction across all neighborhoods.
The Chronicle found that developers built more than 600 ADUs between 2014 and 2022. Updated numbers weren't immediately available.
The 2022 analysis found that in the Bayview, Oceanview and Visitacion Valley, homeowners are building traditional granny flats to add to their properties while developers are converting garages, storage areas and basements to build ADUs on multifamily properties downtown and in the city's north.
Openscope Studio Principal Mark Hogan — whose development firm focuses on infill projects and ADUs — said the San Francisco legislation would open up new 'starter homes' for people priced out of the current homebuying market. He said more homeowners might be interested in building ADUs if they were allowed to sell them.
'This law would allow people who couldn't otherwise afford to buy in the Sunset to finally buy a place,' Hogan said. 'It would also give people the option to build a second unit and downsize to sell the main house. It's really a great idea.'
Still, Hogan said the law doesn't do anything to address the hurdles associated with building ADUs, such as high construction and labor costs. It can cost on average about $100,000 to $200,000 to build a low-end ADU in the Bay Area, while it could cost upwards of $500,000 for a high-end ADU, according to the construction firm Clever Design and Remodeling.
The recently created Sunset Chinese Cultural District included the sale of new ADUs as one of its key strategies to retain the cultural heritage of the community.
Lily Wong, director of the district, said she hopes the Sunset will be a model to other neighborhoods in welcoming new development without displacing existing communities.
'The Sunset has been fortunate to have people that have been here for decades, but we also know there's a lot of people who are house rich but cash poor,' Wong said.
Wong said Engardio's bill will give those families more options to age in place and continue receiving community support. She said the hurdle now is making it financially feasible for working class homeowners to build ADUs in their backyards.
'This isn't a silver bullet legislation,' Wong said. 'We need to think about how we build them, how homeowners go through the process, how nonprofits can support people. Financing. Permitting. All of it people need help on. It can't end here.'
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