ADU options set to expand in California

Las Vegas-based housing technology startup BOXABL on Tuesday announced that it has received approval to begin selling a factory-built accessory dwelling unit (ADU) in California, which could provide more options in a state strapped for affordable housing options.

The company’s “Casita” product is a 361-square-foot home with a full kitchen, bathroom, living area and sleeping area. It is shipped from the Boxabl manufacturing facility in Las Vegas and is “designed to unfold into a fully functional dwelling unit in just a few hours,” reducing construction costs and minimizing environmental impacts, according to a company news release.

“Getting approval to offer our BOXABL Casita in California is a pivotal step forward in our commitment to tackling the affordable housing crisis,“ Galiano Tiramani, co-founder of BOXABL, said in a statement.

Roughly one in eight Americans live in California, but the Golden State has a lower homeownership rate (44%) than the U.S. as a whole (50%), according to 2021 data compiled by the Terner Center for Housing Innovation at the University of California at Berkeley. The center also estimated monthly payments of more than $5,500 for the typical home in the state.

State officials reported that 22,800 accessory dwelling units were added in California last year, accounting for nearly one in five new homes created. In February, officials in Marin County, north of San Francisco, approved reduced fees to build more ADUs in unincorporated areas.

A recent survey conducted by Villa, the largest builder of ADUs in California, found that 60% of the tenants living in these units report being able to “live in a neighborhood they would not otherwise be able to afford.” But some experts believe that financing options for ADUs need to be expanded.

While Fannie Mae and Freddie Mac have created guidelines to finance the construction or purchase of ADUs, they have yet to impact market supply in meaningful ways. In October 2023, the Federal Housing Administration (FHA) announced that lenders can include income earned from an ADU rental in mortgage underwriting. This was designed to facilitate construction of more ADUs and make it easier to buy or refinance a home with an existing ADU.