Granny units will be springing up like mushrooms, “at no cost to taxpayers”.

I keep hearing that the new state laws relaxing restrictions on granny units aka Accessory Dwelling Units (ADUs) are a win-win.  Homeowners get extra income, while increased inventory gives hard-pressed renters a break.  All “at no cost to taxpayers”, according to the state senator who authored the bills.

There is no free lunch.

So what’s not to like?  California has a housing crisis, and ADUs are a relatively affordable, if drop-in-the-bucket, solution.  They encourage intergenerational living and help older homeowners age in place.  Seniors can spend their golden years living behind their kid’s home, or downsizing to their ADU and renting out the main house.  Adult kids just starting out can live with parents but still have their own space.

Accessory dwelling units work for lots of other deserving people too:  young families, students, nannies and just-plain renters.  And while grannies typically aren’t the cheapest rental housing, they’re not the most expensive.  And they offer a single-family neighborhood, the gold standard for most of us, at a discounted rent.

So it’s all good.  “We’re imagining that people will build these accessory dwelling units and rent them to the kindergarten teacher at their kids’ school–or to a grown child who’s just starting out in the workforce but can’t afford housing here”, says Kevin Zwick, CEO of Housing Trust Silicon Valley, a non-profit lender funded by JP Morgan Chase to encourage the building of ADUs, according to a recent San Jose Mercury article.

So what’s not to like?  Aside from the fact that this Hallmark movie ignores a few inconvenient truths, “at no cost to taxpayers”?

ADUs have been prohibited in most single-family neighborhoods for reasons that have nothing to do with boomer NIMBYism.  ADUs increase density in neighborhoods zoned for low density, and while low-density housing has become a symbol of boomerist entitlement lately in certain circles, the goal (achievable or not) of most people of all ages I’ve met is the relative peace and quiet of a single-family neighborhood.

It’s not just that there’s healthy, even overwhelming, demand for the low-density single-family lifestyle here in Silicon Valley.  It’s also that single-family homeowners have strong expectations about their inalienable right to quiet enjoyment, based largely on the old saying, updated for gender neutrality, that “a person’s home is his or her castle”.

Most people don’t take the idea quite this seriously.  But almost.

Now that restrictions have been relaxed, the Bay Area Business Council estimates that one in four of the Bay Area’s 1.5M homeowners are interested in building and renting an ADU.  If one-quarter of Silicon Valley’s homeowners build granny units over the next twenty years, it creates a significant and noticeable increase in noise, traffic and parked cars in neighborhoods sold (at a premium) as a refuge from noise, traffic and parked cars.

But hey! everyone has to sacrifice, right?  It’s an easy idea to buy in to, especially if you don’t believe in unintended consequences.  “At no cost to taxpayers.”

I’ve been in real estate for almost thirty years, nine as a property manager, and I know the challenges facing even a competent conscientious landlord, let alone a part-time newbie with minimal interest in, and aptitude for, the job.  As Zwick says, “the process of building, owning and renting out an accessory dwelling unit can be more complicated than it seems”.

The man is a master of understatement!

Owners of ADUs “have to understand…landlord issues and property management issues”, says Zwick, “and the community engagement issues” aka complaining neighbors.  Remember, these cautions come from a guy who wants people to build ADUs.  And he’s not a boomer.  I checked.

That’s lotsa potential “issues”.  Oh, heck, let’s call them “problems”.  Such as?  

Nine years of hands-on rental management tells me that the vast majority of renters are respectful of their neighbors, but it also tells me that there’s a small minority that doesn’t care and a larger minority that needs occasional guidance to help them care.

I also know that not every landlord cares.  I know that not everyone is cut out to be a landlord–willing and able to keep the good tenants happy and the bad tenants out.  I know that, as the industry expression goes, “it’s easier to move tenants in than to move them out”, even for professional property managers who know how to rigorously yet legally screen prospective tenants, know landlord rights and responsibilities, know when tenant behavior is unacceptable and have a landlord-tenant attorney on speed dial.

I suspect that a significant number of new ADU landlords–potentially as many as 400k in the Bay Area–clueless about good landlording and busy living their life, aren’t going to be quite as upset as their neighbor is about a noisy tenant whose rent pays Junior’s college tuition.  And the absentee landlords are likely to be even less upset.

And you can believe that the local jurisdictions–city and county code enforcement and police services–aren’t going to get involved in neighbor disputes, except to suggest mediation.  (“At no cost to taxpayers”.)  Which will be optional and nonbinding.  Baring a seismic shift in homeowner expectations and human social behavior, it’ll be neighbor against neighbor, mano a mano.

So for you ambitious young folks looking for a growth industry to hitch your wagon to, I have one word, and it isn’t “plastics”.  It’s “landlord-tenant law”, which is actually two words and twice the advice.

copyright © John Fyten 2017













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