Berkeley Approves ADU Sales in New Bay Area Housing Push

Accessory dwelling units are poised to become the hottest new housing model in Berkeley after a thumbs-up from city officials.

The Berkeley City Council approved a proposal that would allow property owners to sell structures such as backyard cottages, basement apartments and other ADUs as condominiums, Berkeleyside reported.

Under the new ordinance, property owners will be able to get fast-tracked approval to turn their ADUs into condos without having to go through a public hearing or appeals process. Owners also won’t have to pay fees that the city usually charges to convert units from rental apartments to condos. Homeowners will have to submit a map to the city outlining how they would split up their property. The measure also gives tenants in some older rent-controlled ADUs a three-month window to make the first offer to buy their units.

City leaders hope that offering ADUs for sale will help create more opportunities for homeownership in the notoriously expensive East Bay city. The median price for a single-family home is approximately $1.4 million and nearly no new condos have been built in decades, according to Berkeleyside.

“We’re trying to create more housing inventory that’s available for less than $1 million — and hopefully substantially less than $1 million,” Council member Brent Blackaby said at a meeting Tuesday night where the Council approved the change.

Berkeley homeowners have warmed up to ADUs as a source of rental income or space for family members such as older parents, hence the common “granny flat” nickname. Since 2018, the city has issued an average of about 100 building permits for ADUs each year.

The change makes Berkeley the latest Bay Area city to embrace selling ADUs as condos. Last year, the San Francisco Board of Supervisors unanimously passed an ordinance allowing the construction and sale of the small units on homeowners’ lots.

Federal lawmakers have taken notice of ADUs’ role in making homeownership more attainable. Last summer, California Rep. Sam Liccardo — who represents San Jose — and New York Rep. Andrew Garbarino proposed the bipartisan Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act, which provides government-backed, flexible financing options to help homeowners break ground on ADUs. The legislation also directs the Federal Housing Administration to provide government backing for second mortgages to finance ADU construction and also permits Fannie Mae and Freddie Mac to purchase and securitize those loans.

— Chris Malone Méndez