The Abridged version:
- The number of ADUs in the Sacramento region has soared.
- New state laws and plug-and-play floor plans make the add-on residences easier to build.
- Property owners considering an ADU should do their homework before proceeding.
Land Park homeowner Lisa Lilienthal wasn’t planning to convert her garage to living quarters when she and her husband bought their house in 2018. But when the pandemic hit, her in-laws began spending more time at her home with her husband, Gene, and their two children to avoid feeling isolated at their senior community in Davis.
At the height of the pandemic, they decided that her in-laws would finance a garage conversion they could live in. Lilienthal worked on the plans and hired a contractor, and in 2021 her in-laws moved in. They lived in the 575-square-foot one-bedroom accessory dwelling unit for three years until they needed to move to an assisted living facility.
Now, Lilienthal’s 26-year-old daughter and her boyfriend live in the unit while they save enough money to rent their own place in a market that’s expensive and challenging for young workers with two dogs. After they move out, Lilienthal’s 23-year-old son, who has Down syndrome, has his eye on it.
“It’s a real blessing to be able to use the space in this way,” she said. “Depending on how long we live here, one day we might use it for income.”
Lilienthal is one of 1,134 property owners who received a permit to build an ADU in the city of Sacramento from 2020 through 2024. Compare that to the previous five years, when a total of 143 permits were issued.
Call them granny flats, in-law quarters, backyard cottages. An ADU is a complete, secondary living unit on a property that also has a primary residence. Construction in the Sacramento region is booming, whether the units are added to earn rental income, house family, or host visiting friends.
A series of state laws enacted since 2016 created the boom as lawmakers intended, with the expectation that more small units built on lots with existing homes would increase housing supply and make rents more affordable. It’s too soon to say if the boom has driven down rents or resulted in fewer unhoused people. But plenty of contractors and designers have entered the market to meet steady interest from property owners now that bureaucratic barriers and legal limitations are largely gone.
New laws eased everything from allowing ADUs on lots zoned for single-family homes to eliminating parking requirements, setting a 60-day deadline for permit review, exempting units smaller than 750 square feet from local impact fees, and ending a requirement that owners live on properties with ADUs. As of Jan. 1, 2025, cities and counties must post pre-approved ADU plans on their websites, making it even easier for property owners to get their projects going quickly and keep costs down.
The city and Sacramento County have plans posted online, as do El Dorado County and the cities of Davis and Woodland in Yolo County. Placer County posted its plans in partnership with Nevada and Sierra counties, the cities of Nevada City and Grass Valley, and the town of Truckee.
About 15 ADUs have been built using the pre-approved plans in the city of Sacramento, Senior Planner Greta Soos said. Twenty-five property owners in the county have permits to build using the plans, Sacramento County Assistant Building Official Bob Ivie said.
Overall in Sacramento County, 428 ADUs have received permits and 236 have been constructed since 2020. Before the laws changed, the county saw about five projects a year, Ivie said.
ADUs are popping up in all reaches of the city from North Highlands to the Pocket to Meadowview, with higher concentrations in the older neighborhoods of North Sacramento, Land Park, Curtis Park, Oak Park, Tahoe Park, and East Sacramento, according to data Soos provided. Projects are evenly spread throughout Sacramento cCounty, Ivie said.
Lot sizes and finances dictate the scope of projects, contractor Daniel Loesch of DLC said. He’s seen everything from ADUs with more than 1,000 square feet and luxury finishes to junior ADUs that are attached to an existing home and share the bathroom.
Typical costs start at $275 per square foot and go up from there, said Sage Stark, a contractor who founded Cozy ADU two years ago. Many of the projects Stark builds use solar power to meet energy efficiency standards and ease connecting to the power grid.
Using existing home equity to finance the projects and their smaller scale make them more resilient to changes in the market and building costs than large projects with major home developers, Soos said. This year, the city launched a Small Developer Incubator Program for builders who want to work on small-scale projects that help address the housing shortage, and ADUs are part of the solution, she said.
It’s more difficult for lower-income households with less home equity to take advantage of the ADU rush, Soos said. Property owners in Sacramento, Yolo, El Dorado, and Placer counties received a total of $5.6 million in grants in 2023 to build ADUs through a program administered by the California Housing Finance Agency, but the state hasn’t allocated more money to the program since then, spokesman Eric Johnson said.
The ADU boom hasn’t been without its scandals. Anchored Tiny Homes, a Sacramento company that grew rapidly after its launch in 2021, had its operating licenses revoked in 2024 and is facing lawsuits from contractors, property owners, and the California Labor Commission. The company allegedly left contractors unpaid, projects unfinished, and property owners out thousands of dollars. Some consumers were skittish in the wake of the company’s collapse, but demand recovered quickly, Stark said.
Community members continue to raise concerns about ADUs, but the level of opposition has softened, Soos said. Lack of parking is the top complaint, along with loss of privacy. That’s especially a concern when an ADU is built up, for example above a garage, and neighbors don’t want a view into their own yards, Loesch said. Loss of green space and increased density also come up.
After an ADU is completed, it’s assessed for property tax purposes, Sacramento County Assessor Christina Wynn said. The office added 1,071 ADUs to the property tax roll from 2020 to through 2024, compared to 78 in the previous five years.
The average assessment for ADUs is $180 per square foot of gross living area, with assessments typically a bit higher for new construction and lower for conversions of existing space like garages, Wynn said.
Tips for building an ADU
Here are a few fundamental tips for planning, building, and owning an ADU from contractors, homeowners, and government officials who talked to Abridged:
- Research the costs of construction, ongoing costs like property taxes and insurance, and the market for ADUs whether you’re looking for rental income in the short term or resale value in the long term so you know if it makes financial sense for you.
- Get a thorough cost estimate that includes connecting the structure to electricity, sewer, water, and gas. Those connections sometimes cost more than the structure.
- Use resources from your local city or county like the eight-page guide from Sacramento County Planning and Environmental Review and the city of Sacramento’s ADU Resource Center.
- Screen contractors carefully. Ask them how their companies are structured and who will be on site each day. Get referrals from friends, family, or neighbors. Don’t accept estimates from anyone who hasn’t evaluated your site in person.
- Contact the assessor as soon as possible if you disagree with the newly assessed value of your completed ADU.
Laura Mahoney is a regular contributor, writing Dollars and Sense for Abridged.
