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Book a callIn the evolving landscape of California real estate, Senate Bill 9 (SB 9) stands as a beacon of potential transformation for homeowners and neighborhoods alike. It's a significant stride toward addressing the state's pressing housing shortage by unlocking new possibilities in single-family neighborhoods. Yet, the road to fully leveraging SB 9 is paved with both opportunities and challenges.
SB 9, enacted to alleviate California's housing crisis, enables homeowners to split their residential lots or convert single-family homes into duplexes, thereby increasing the housing supply in existing neighborhoods. This law represents a pivotal change, especially in cities with larger lot sizes and higher home prices, where its impact could be most beneficial.
At its core, SB 9 aims to streamline the process of creating more housing units within single-family zones. It allows for the division of residential lots into two separate parcels and the development of up to four dwelling units on what was previously designated for a single-family residence.
Signed into law on September 16, 2021, Senate Bill 9 – the "California Housing Opportunity and More Efficiency" (HOME) Act – aims to tackle the state's housing crisis. This groundbreaking legislation, often referred to as the "duplex bill," provides homeowners with a streamlined legal process to subdivide their urban single-family residential lots and/or construct additional residential units on their properties.
The cornerstone of SB 9 lies in its transformation of the municipal review process for two-unit housing developments on single-family lots and property subdivisions. Whereas the review process was previously discretionary (subjective and case-by-case), it is now subject to ministerial approval (objective and consistently applied). This pivotal change is designed to simplify and expedite the permitting process, making it easier and more accessible for homeowners to contribute to the state's housing stock by building additional units on their properties.
Senate Bill 9 took effect statewide on January 1, 2022, and all California cities are required to comply. However, local governments retain the ability to impose their own objective design standards and limitations, provided they do not directly conflict with the state law. A few cities have already faced formal reprimands from the State Attorney General for adopting ordinances that violate the requirements and intentions of SB 9.
The implications of SB 9 for homeowners are profound, particularly in cities like Saratoga and Danville, where larger lot sizes and higher property values make lot splitting under SB 9 financially attractive. However, the uptake has been uneven across the state, with high ADU (Accessory Dwelling Unit) development cities seeing limited SB 9 activity, suggesting a preference among homeowners for ADUs over SB 9 projects due to more favorable legislation and local incentives for ADUs.
For homeowners interested in exploring the possibilities SB 9 offers, a step-by-step approach involves understanding local regulations, considering the economic feasibility, and navigating the application process. Despite low initial applications, high inquiry levels indicate a strong interest that may translate into more projects as homeowners weigh the benefits of SB 9 against those of pursuing an ADU.
The over performance of Saratoga and Danville relative to other cities may be partly explained by their larger single-family lot sizes. Planners noted that SB 9 works best on larger lots, which provide more room to build one or two new homes. Most homes are centered on their lots, making additions geometrically difficult on smaller parcels. Saratoga and Danville also have significantly higher home sale prices, increasing the financial incentive for homeowners to split lots.
Despite high levels of ADU construction in cities like San Diego (871 ADUs permitted in 2021) and Santa Maria (401 ADUs in 2021), these cities have seen almost no SB 9 activity. Planners hypothesize that more prescriptive state ADU laws, allowing larger units and removing some fees, are likely driving homeowners interested in new units towards ADUs rather than SB 9 projects currently.
Planning staff in San Diego and San Jose noted that their local ADU policies, offering larger sizes, bonus units, and incentives for affordability, may preclude interest in SB 9. While adopting permissive SB 9 ordinances, these cities still do not match the ADU incentives like limiting fees or pre-approved plans.
- Establish more flexible standards for SB 9 home design (sizes, heights)
- Limit extra costs like impact fees, especially for single-family to duplex conversions
- Reconsider owner-occupancy requirement while preventing displacement
- Allow more aggressive SB 9 growth assumptions for cities meeting RHNA goals
- Limit SB 9 fees and provide clear guidance for homeowners
- Increase "missing middle" housing options beyond SB 9 duplexes
- Facilitate small-scale infill with flexible design standards
- Reassess policies increasing costs for small homeownership projects
- Create exemptions for construction defect liability and Subdivision Map Act requirements
To assess the early utilization of SB 9 – California's law allowing homeowners to build duplexes and subdivide single-family lots – we collected data from 13 jurisdictions across the state. These cities were selected based on our previous analysis identifying areas where SB 9 projects would likely be most financially feasible, as well as cities with relatively high accessory dwelling unit (ADU) production, since ADUs and SB 9 units share similar characteristics in terms of size, scale, and location.
Additionally, we interviewed eight planning professionals from four of these jurisdictions to gain insights into the on-the-ground implementation of SB 9. Our findings reveal.
The data shows that SB 9 activity has been limited or non-existent in the 13 cities analyzed (Table 1). Los Angeles reported the highest number of applications for new units under SB 9 in 2022, with 211 applications received. However, other major cities like San Diego reported just seven applications for new SB 9 units in 2022.
To put these numbers into perspective, San Diego permitted over 5,000 new homes in 2021, while Los Angeles permitted just under 20,000 new homes during the same year. The stark contrast between SB 9 applications and overall housing production highlights the law's modest impact thus far.
Despite the slow start, there are success stories of homeowners leveraging SB 9 to enhance their property value and contribute to solving the housing crisis. These examples shed light on the practical application of the law and its potential to serve as a model for future development.
Amidst the limited SB 9 activity observed across the sample, the smaller cities of Saratoga and Danville stood out as relative outliers, with comparatively higher numbers of SB 9 applications received.
In Saratoga, a total of 15 applications for new SB 9 units and 21 applications for lot splits were reported in 2022 alone. To put this into context, the entire housing production for Saratoga in 2021 was just 71 units.
Similarly, the city of Danville reported receiving 20 applications for lot splits under SB 9, although no applications had been submitted for new units as of the time of data collection.
The relatively elevated SB 9 activity in these two smaller jurisdictions contrasts with the sparse application numbers seen in larger cities, suggesting potential factors at play that may be enabling or encouraging greater utilization of the law in certain locales.
The full impact of SB 9 on California's housing landscape remains to be seen. It holds promise for increasing housing availability and offering new opportunities for homeownership. However, realizing this potential depends on overcoming current barriers and enhancing the law's attractiveness compared to alternative options like ADUs.
SB 9 represents a critical step forward in California's quest to address its housing shortage. For homeowners, it opens up new avenues for property development and investment. Yet, the effectiveness of SB 9 in spurring widespread housing development hinges on addressing the challenges that currently deter its broader adoption. By refining the law and aligning it more closely with successful models like ADU development, California can unlock the full potential of SB 9 to create more homes and opportunities for residents across the state.
If you're a homeowner curious about how SB 9 could impact you, or if you're simply interested in the future of housing in California, staying informed and engaged is key. Remember, the evolution of homeownership and neighborhood development under SB 9 is an ongoing process, with each project contributing to the larger goal of creating a more inclusive and accessible housing market in California.
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