The City of San Jose has approved an accessory dwelling unit to be sold as a condo in a first-of-its-kind case.
The biggest municipality in the Silicon Valley approved a backyard ADU to be sold as a condominium, making it the first time in California that an ADU can be sold separately from a main house, the San Francisco Chronicle reported.
Assembly Bill 1033, a state law that took effect last year, paved the way for the approval, as the law allowed cities to let homeowners sell ADUs as condos. San Jose was the first large city in the state to adopt the law last July.
“ADUs are affordable by design and growing in popularity across the state, and now they can offer the most accessible form of home ownership too,” Mayor Matt Mahan said in a statement, saying the city’s ADU condo sale approval is a “proof of concept for California.”
The unit, located on Joséfa Street near downtown, was developed by Bay Area real estate firm AlphaX RE Capital. It plans to build dozens more hoping to pursue similar moves, saying it can “offer homeownership at more attainable price points, giving families the opportunity to build equity and long-term stability,” AlphaX founder and CEO Stephanie Yi said.
San Jose has permitted 1,500 ADUs since 2022 and issued final building permits for more than 1,110, according to the Chronicle. Other Bay Area cities like Berkeley and San Francisco are considering similar measures to help confront the housing crisis.
Homeowners in California and across the country looking to build ADUs could stand to benefit from a new bill proposed in Congress by former San Jose mayor and current congressman Sam Liccardo.
Last month, Liccardo proposed the Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act, which would provide government-backed, flexible financing options to help homeowners overcome ADU construction costs. The act would direct the Federal Housing Administration to provide government backing for second mortgages to finance ADU construction and would permit Fannie Mae and Freddie Mac to purchase and securitize those loans.