San Diego is experiencing a significant uptick in the construction of Accessory Dwelling Units (ADUs), also known as granny flats, backyard cottages, or in-law suites. These self-contained residential units, either attached or detached from the primary residence, have become a popular way to offset rising real estate costs and a solution to the city's housing challenges.

Why Are ADUs Gaining Popularity in San Diego?

In 2023, nearly 20% of all new housing permits in San Diego were for ADUs, a substantial increase from just 4% in 2015 . This surge can be attributed to policy changes that have made it easier and more cost-effective for homeowners to add ADUs to their properties. These changes include reduced permit fees, streamlined approval processes, and relaxed zoning regulations.

Benefits of Building an ADU

1. Additional Income: Homeowners can rent out ADUs to generate extra income, helping to offset mortgage payments or fund other expenses.

2. Increased Property Value: Adding an ADU can enhance the overall value of a property, making it more attractive to potential buyers.

3. Flexible Living Arrangements: ADUs provide space for extended family members, such as aging parents or adult children, allowing for multigenerational living while maintaining privacy.

4. Addressing Housing Shortages: By increasing the housing supply within existing neighborhoods, ADUs contribute to alleviating the city's housing crisis.

Supportive Programs and Incentives

The City of San Diego offers several programs to encourage the development of ADUs:

• ADU Finance Program: Provides construction-to-permanent loans up to $250,000 at a fixed interest rate of 1% during the construction period, along with free technical assistance to help homeowners navigate the building process.

• ADU Bonus Program: Allows homeowners to build additional ADUs beyond the standard limit if they agree to rent them at affordable rates for a specified period.

Recent Developments

In March 2025, the San Diego City Council voted to roll back parts of the ADU Bonus Program in response to community concerns about neighborhood density and infrastructure strain . Despite these changes, the city continues to support ADU development through various initiatives aimed at increasing affordable housing options.

Conclusion

Accessory Dwelling Units offer a practical solution for homeowners looking to maximize their property's potential while contributing to the broader goal of addressing San Diego's housing needs. With supportive programs and a growing awareness of their benefits, ADUs are poised to remain a key component of the city's housing strategy.