KTVU Fox 2: San Jose charters new path for homeownership by allowing ADU condo sales

Jesse Gary, KTVU Fox 2

SAN JOSE, Calif. -  With the stroke of a pen, San Jose city leaders on Thursday staked their claim as the first California city to allow accessory dwelling units to be sold as condos.

New opporutnity for homeownership

What they're saying:

"We're making sure that the dream of homeownership is alive and well by bringing the innovation inherent to our region into our housing policy," said  Mayor Matt Mahan.

He and others touted a two-bedroom, two-bath ADU behind a home near downtown as the next evolutionary step in real estate. Woman-owned Alpha Real Estate was one of the first firms to jump at the opportunity to enter this emerging market.

"We want to be the first that's trying it because we believe in housing flexibility for homeowners," said Chief Asset Management Officer Jia Li.

The new path forward was enabled by a new law. Enacted last year, AB 1033 removed the prohibition that prevented homeowners from selling their ADU. Now, these smaller properties can be put on the market like a condo — but instead of a million-dollar price tag, they can be sold for several hundred thousand dollars.

"We're excited that this opens up a new possibility. It also means an infusion of cash for that primary homeowner who may, themselves, have financial needs," Mahan said.

Why you should care:

During a morning news conference, Mahan said that over the past six years his city has built more than 7,500 new homes, with 20% being ADUs.

Officials said San Jose's streamlining of red tape makes it easier to build here than in neighboring Oakland or San Francisco.

"Seeing these projects come to life and demonstrating the ways we're working to really address the housing crisis and offer new pathways to homeownership throughout San Jose is truly a rewarding part," said Chris Burton, the city's Planning, Building & Code Enforcement director.

Alpha Real Estate executives said there are nearly 100 more ADU projects, such as the one on the 1200 block of Vine Street, in their pipeline. They're betting the legal change will redefine what's considered a starter home.

"Before, they couldn't afford any single-family homes or townhomes. And now they have an opportunity to own a home here in San Jose," Li said.

The city has two people dedicated to working with homeowners to crunch the numbers and see if building or converting an ADU makes financial sense through its "ADU Ally Program."

Those who sell their ADU must create a fee-free homeowners association agreement with the buyer to spell out responsibilities and boundaries.

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