White House Urges ADU Expansion
The White House convened a virtual event focused on making it easier to build accessory dwelling units (ADUs) in order to increase the supply of affordable housing. Panel speakers included UC Berkeley Professor Emerita and University of Toronto School of Cities Director Dr. Karen Chapple, HUD FHA Office of Single Family Housing Deputy Assistant Director Julienne Joseph; Fannie Mae VP of Engagement and Impact Mike Hernandez; Special Assistant to the President for Housing and Urban Policy, Domestic Policy Council Erika Poethig; Burlington, Vermont Mayor Miro Weinberger; Portland State University Director of the Institute for Sustainable Solutions and Urban Sustainability Accelerator Robert Liberty; TMG Partners Partner Denise Pinkston; AARP VP of Family, Home and Community Rodney Harrell; Deputy Director of the National Economic Council Bharat Ramamurti; Umpqua Bank EVP of Home Lending Kevin Skinner; Genesis LA President and CEO Tom DeSimone; and Housing Trust Silicon Valley CEO Noni Ramos.
Dr. Chapple shared research showing that regulations allowing ADUs work to increase housing supply: In California alone, between 2018 and 2020, 23,000 ADUs were built and 34,000, permitted. As of the beginning of 2022, there are between 40,000 and 50,000 ADUs in California, and ADUs comprise 11 percent of all residential building permits issued in the state, according to Denise Pinkston. The majority of ADUs (39 percent) are built as long-term rentals, with another 23 percent serving as rentals for in-laws.
The panel showed evidence that construction costs for ADUs are less than 50% of those for single-family homes, and that the majority rent for less than market rate, even to arm’s length tenants. Benefits included adding housing using existing infrastructure; creating potential income streams for low-income homeowners; increasing diversity of housing types in affluent neighborhoods also increasing fair housing; providing a pathway to legality for unpermitted space. Major challenges that remain include lack of financing for ADUs, state regulatory barriers, local zoning restrictions, FHFA regulations, and the building capacity of local governments and the design-build industry. In terms of finance, conventional loan products are not designed for ADUs, with the inability to underwrite against unrealized rents, so almost half of homeowners use cash or credit cards to finance ADU construction. New loan products are needed.
For more information, watch the recording: https://pitc.zoomgov.com/webinar/register/WN_OBYym7eQT1SOyCToucX4MA