California's Assembly Bill 1033 Opens Up Housing Possibilities

California, a state known for its innovation and progressive policies, is witnessing a transformative shift in its real estate market, thanks to the groundbreaking Assembly Bill 1033 (AB 1033). 

For years, ADUs have enriched California's housing options, ranging from converted garages to backyard cottages and unused portions of the main house. Traditionally, these secondary living spaces were available only for rent. However, AB 1033 is changing the game by allowing Californians to buy and sell ADUs as condominiums, offering a fresh perspective for both homeowners and potential buyers.

Assemblyman Phil Ting, a key figure behind this legislation, understands the immense potential that AB 1033 holds for Californians. Homeowners in participating cities now have the option to construct an ADU on their land and sell it separately, following the regulations governing condominiums. This not only broadens homeowners' choices but also aligns with the goal of promoting greater homeownership in the state.

However, it's important to note that local governments must opt in to the ADU-as-condominium approach for it to be a viable option within their jurisdictions. Homeowners building ADUs are also required to notify local utilities about the creation and separate conveyance of the unit, similar to newly developed condominiums.

One significant aspect to consider is that, like condominiums, the main house and the ADU will have two different property tax assessments. Assemblyman Phil Ting envisions that, initially, many ADUs going through this process will be sold to family members or close friends of the homeowner. As the concept becomes more widely accepted, it could evolve into a traditional real estate transaction.

Meredith Stowers, a loan officer at CrossCountry Mortgage in San Diego specializing in ADUs, sees the benefits of AB 1033 for both homeowners and prospective buyers. Retirees, who have paid off their mortgages but are living on limited Social Security and retirement funds, can benefit from this new law. Instead of downsizing to a smaller house, AB 1033 offers them the opportunity to earn supplemental income from their properties while creating affordable housing.

In some cases, retirees are even building ADUs in their backyards, moving into them, and potentially selling off their main homes. This innovative approach helps them leverage the equity they've built up in their homes while finding financial stability in their retirement years.

California's AB 1033 opens up exciting possibilities for homeowners and potential buyers, tapping into the value of ADUs not just as rental properties but as true assets for homeownership and financial security. With more cities embracing this change, we can expect a shift in the real estate landscape benefiting both homeowners and those in search of affordable housing solutions. If you're considering the ADU-as-condominium option, now is a great time to explore the potential it holds for you and your community.

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