I’m in escrow to buy some property in San Diego. It’s a 10,000 square foot lot with 3 small, 100-year-old cottages on it in poor condition. But the location is very good, and it will have great views of the city, the bay, and the ocean! In a few years, I’ll build between 50-60 new apartment units at this location. How is this possible? Due to California’s massive housing shortage, new state and city initiatives released over the past few years have allowed for low density land to be converted to high density. Let’s review a few of those new programs:
ADUs: This is the program that seems most accessible to regular homeowners. If you own a house anywhere in California, you can build one or more accessory dwelling units. This unit will have its own kitchen and bathroom, can be between 150 and 1,200SF, and in most urban locations, will not need separate parking. You can rent it out or let your family live there. The rules first started rolling out several years ago, and subsequently have become more permissive with each passing year. The most common question I’m asked is, “Can I build an ADU?” Nearly every time the answer is yes. There are a lot of nuances to the building code, but you don’t need to know it all. All I need is your address and an idea of what you would like to build, and I can tell you if it’s possible. In recent months, getting bank financing to build ADUs has become a bit easier to get. My favorite axiom regarding ADUs in San Diego is, “You can’t afford not to build one!”
TPA: Transit priority areas allow you to unlimited ADUs up to your base zone FAR (floor to area ratio). Here’s an example: A real estate team member and I own a house with a 16,000 SF lot near SDSU. The house is located within ½ mile of a high occupancy transit corridor (read: bus or trolley route). The property zone allows for a 0.5 FAR, which means 16,000 x 0.5 = 8,000SF of living space could be built in this location. Prior to TPA, we could have built a 6,300 SF primary home, a 1,200 SF ADU and a 500 SF. But a house that big is overkill in this neighborhood of mostly 1,200 SF homes.
Currently we have a 1,200 SF home that is fully remodeled and being rented. 8,000 – 1,200 = 6,800 SF of additional living space we can build. Since it’s in the TPA zone, this allows us to build unlimited ADUs to a max combined size of 6,800 SF. We currently are working on plans to build 14 ADUs, each one will be 430 SF one-bedroom units. Although the building code does not require parking in this location, and there is ample street parking, we will have some parking on site. Another limitation is that every other ADU must be restricted to affordable renters only.
SDA: Sustainable development area zoning came out earlier this year (2023) and is basically the same as TPA, but it expands the radius to build unlimited ADUs to 1 mile from a transit corridor. Another coworker and I are now starting plans to build ~20 units on a 31,000 SF lot in central San Diego. The property currently has a home and an attached junior ADU.
Complete Communities: This is another program rolled out years ago to allow for multi-family development within ½ mile of business districts throughout San Diego. Unlike the ADU programs, Complete Communities increases the FAR of the properties in these zones. In coastal areas, the FAR is typically 2.5. Other communities have been upzoned to 4.0 – 8.0 FAR. Downtown San Diego has an unlimited FAR, hence the 40 story multi-hundred-unit buildings downtown that continue to be built! The property I mentioned at the start of this article is in a 6.5 FAR zone, which means I could build up to 65,000 SF of apartment building, up to 95’ tall, up to 77 units all with no parking. Due to other technical constraints (and market demand), the building likely will not be that big, nor tall, nor have that many units, and will likely have parking.
SB9: Senate Bill 9 was passed so homeowners can split their lot, build additional homes, and sell (or give) away the new smaller property. An ideal scenario would be as follows: your family owns a home with extra land on the parcel. They are willing to sell you a big chunk of it as a new separate parcel where you can build your own home. The benefit comes from the being able to acquire the land more affordably than having to buy land and a home in San Diego. Building a home still takes time and money, but the price to build is often ½ the cost (or less) than it would cost to buy a house in most areas of SD. This program is still fairly new and from the reports I’ve seen, a few SB9 lot splits have been submitted, but none have been approved yet. I’m sure that when the city planners figure out how to approve these, it could be useful for many people who want to keep their family nearby (especially adult children). As I’m writing this, I’m sitting next to a couple on an airplane who are flying from SD to Tennessee to visit their kids and grandkids who moved there due to our high cost of living. If they have the right type of property, maybe they could sell a portion of their land to their kids and bring them back to sunny San Diego! I have a detailed YouTube webinar that goes over the specifics of SB9, and you can figure out if your property would be a good fit.
SB10: Senate bill 10 is upsetting a lot of people who likely understand that California desperately needs more housing, but are saying, “not in my backyard!” (aka NIMBYs). This allows for individual cities to adopt up-zoning that would permit up to 10 units on residential land depending on lot size, with one unit for every 1,000SF of land. San Diego has not adopted this new policy yet, but it’s on the agenda to be voted on by city council in July 2023. Details are not firm yet and I’ll send out updates as we get them.
Determining if your property can benefit from these new rules can be a bit tricky, so here’s your invite to connect with us, share your address and we’ll tell you what’s possible!
On a personal note, I wanted to address all the frustration coming from San Diego homeowners that are opposed to some or all these measures to increase housing. Many people would agree that we do need housing, but they don’t want it happening in their neighborhoods. Objectively, if a city isn’t growing, it’s dying. Most of the housing in San Diego was built between 1920 and 1970. Now we have a city where a 170SF studio apartments cost $2,100/month! The only way to make housing more affordable is to increase the supply! Too much of San Diego has been zoned for single family homes and we need more density to leverage the efficiencies that come with the economy of scale. Please don’t let the voices of the vocal minority dissenters dissuade our city from building the housing we desperately need.