An Abodu Studio in Piedmont, California.
Courtesy of Abodu
California set aside $50 million in the state budget for homeowners building backyard homes.
The cash plays a “vital,” part of the state’s ability to increase housing supply, one expert said.
The state is short 2 million homes, and many experts think ADUs can ease the issue.
California is planning to pay homeowners to build housing in their own backyards.
The California budget, signed by Gov. Gavin Newsom in late June, includes a $50 million pot to incentivize more people to build accessory dwelling units, also called ADU.
It’s a revival of a previous program — though that one had a $100 million budget — that distributed funds through 2022, which aimed to increase ADU construction amid a dire housing shortage in the state.
Through that previous program, homeowners received grants of up to $40,000 to develop at least one additional housing unit on their property. The state had anticipated that all of the funding would be distributed to by the end of 2022, and expected 2,500 new housing units to be built, according to a bulletin.
“This money is vital,” because it’s one of few government programs that funds and incentivizes home construction, said Muhammad Alameldin, a policy associate at the University of California-Berkeley Terner Center for Housing Innovation.
It’s an affordable way for the state to promote housing construction, he added. ,
However, the guidelines for the current ADU grant program aren’t set, the Los Angeles Times reported. CalHFA, the department in charge of distributing said that they are still working out the details of how the cash will be doled out, and that there wasn’t a date set for applications to open yet, the Los Angeles Times said.
ADU financing is hard to find
Nearly 20% of all homes built in California are ADUs, according to data from the state’s department of housing. Over 60,000 permits were issued between 2018, when the state started rolling back legislation that made it possible.
But despite the fact that low- and moderate- income Californians are most affected by rising home prices, Terner Center’s research shows that the majority of Californians who put an ADU in their backyard live in wealthy enclaves of the state.
“While ADUS have potential to bridge the racial wealth gap and add financial stability for lower- and moderate income homeowners, to date comparatively affluent, and in many regions, whiter homeowners have disproportionately built ADUs,” Terner Center researchers said in their report.
That’s because it can cost a few hundred thousands dollars to build, and financing is hard to come by. Programs that make accessing financing an ADU easier also help to close this gap.
The only thing the state could do to spur more widespread development of ADUs across the economic spectrum is to provide a larger grant, which would cover more costs for those who have limited financing options, Alameldin said.