San Diego County ADU sales rules draw praise from building industry

New San Diego County rules allowing homeowners to sell accessory dwelling units separately from their primary residences could provide another path to homeownership, according to the Building Industry Association of San Diego County.

County Supervisors recently adopted an ordinance implementing Assembly Bill 1033, which allows homeowners to convert accessory dwelling units, commonly known as ADUs or granny flats, into condominiums and sell them separately from the main home.

The county's action applies to unincorporated areas. San Diego City Council adopted its own AB 1033 ordinance last year, with the rules taking effect Aug. 22, 2025.

Before AB 1033, homeowners generally could rent ADUs or use them as additional living space, but could not sell them independently of the primary residence.

Under the new framework, an ADU can have separate ownership and a deed, potentially allowing buyers to obtain conventional financing and providing homeowners with another way to tap the value of their property.

"The county's housing shortage puts homeownership out of reach for many working families and young buyers, and AB 1033 is poised to help tackle this problem," said Aimee Faucett, president and CEO of BIA San Diego.

Faucett said the law could create more attainable homeownership opportunities without requiring construction of new housing lots.

The rules also could give older homeowners and families additional options. A homeowner could build an accessible ADU, move into it and sell the larger primary residence, potentially using the proceeds for retirement. Others could remain in their primary home while selling the ADU separately.

Meredith Munger, a loan officer and ADU financing specialist with CrossCountry Mortgage, said she expects San Diego homeowners to explore the financing and ownership structures made possible by the law.

Some local homeowners already have plans to use the new rules.

Stephen Stone, a senior homeowner in Bonita, built a backyard ADU during the COVID-19 pandemic. He plans to move into the smaller unit and sell his primary home, using the proceeds to help fund retirement, according to BIA San Diego.

Brian Chan built an ADU on his single-family property. After he and his wife had a baby, they decided she wanted to stay home full time. Chan plans to sell the ADU as a separate condominium, use the proceeds to pay off the primary mortgage and reduce the household's monthly expenses, the building trade group said.

The potential value of separately sold ADUs was demonstrated recently in San Jose, where a 749-square-foot, two-bedroom backyard unit sold for $530,000, according to BIA San Diego. That was substantially less than the city's median home price, which was about $1.4 million.

The San Jose sale provides an early example of how separately owned ADUs could expand homeownership options in high-cost California markets. San Diego County officials and housing advocates will see whether similar sales develop locally as homeowners begin using the new rules.

The County Board of Supervisors also took action Aug. 20 on measures aimed at supporting first-time homebuyers and giving existing tenants in ADUs the first opportunity to purchase their units.