Single-Family Home Turned Rental Complex: The Future of California Suburbs?

Single-Family Home Turned Rental Complex: The Future of California Suburbs?

Instead of hunting for easy house flips, Mr. Spicer said, he’s on the lookout for homes on abnormally large lots with a flat, neglected yard that is primed to start building on. Anything with a pool is out of the question, he said. A home with an elaborate garden can work but costs extra to rip out.

“If it’s all dirt back there, that’s the golden ticket,” he said.

Mr. Spicer’s turn of fortune was a byproduct of California’s efforts to fill its housing shortage. Over the past five years the Legislature has passed a half-dozen laws that make it vastly easier to build accessory dwelling units (A.D.U.s) — a catchall term for homes that are more colloquially known as in-law units and granny flats.

Cities have lost most of their power to prevent backyard units from being built, and state legislators have tried to speed construction by reducing development fees, requiring cities to permit them within a few weeks and prohibiting local governments from requiring dedicated parking spots. In contrast to the battles over S.B. 9 — this year’s duplex law, which was branded a bill of “chaos” that would “destroy neighborhoods” and be “the beginning of the end of homeownership in California” — the A.D.U. laws passed with no comparable controversy.

“‘Granny units’ doesn’t sound intimidating,” said Bob Wieckowski, a state senator from the Bay Area city of Fremont, who has passed three A.D.U. bills since 2016.

Last year, San Diego’s City Council voted unanimously to expand on state law by allowing bonus units, sometimes as many as a half-dozen per lot, if a portion are set aside for moderate-income households. Development has exploded on cue.

California cities issued about 13,000 permits for accessory units in 2020, which is a little over 10 percent of the state’s new housing stock and up from less than 1 percent eight years ago. The effect is already visible throughout Southern California: four-unit buildings rising behind one-story bungalows; prefabricated studio apartments being hoisted into backyards via crane; blocks where a new front-yard apartment sits across the street from a new backyard apartment down the way from a new side-yard apartment.

In response to the new legislation, entrepreneurs have started a host of companies that specialize in helping people plan, design and build backyard units and the coming wave of duplexes. Venture capitalists have put hundreds of millions of dollars into start-ups like Abodu, which is based in Redwood City, Calif., and builds backyard units in a factory, then delivers them on a truck. Until recently, their business was driven by homeowners building A.D.U.s on their property. But over the past year there has been a surge in interest from upstart developers like Mr. Spicer, according to interviews with planners, lenders and contractors.

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