They've been a way to raise money or help out a relative. Now, they can help people get into affordable homes.
A new law passed in January, allows ADUs to be sold separately from the main house.
"People surprised how small a footprint you need for ADU," said Dan Kearnan.
He built his 500-square-foot ADU behind his five-bedroom home back in 2021.
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Kearnan says everyone who has rented his place loves it for the space.
"High ceilings. They are 15 feet. There's a contained kitchen, bedroom, bathroom," said Kearnan. "They've all found it wonderful especially considering they could walk to the front door, and they have all the patio to themselves."
Now, instead of renting out the ADU, he can actually sell it like a condo.
"It opens the door for home ownership," said Kearnan.
"We are in a huge housing shortage all over California. We are desperately trying to catch up and build more housing," said Assemblyman Phil Ting.
Right now, many cities right now allow for ADUs, which are a lot like back yard cottages or in-law units or casitas.
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San Jose has received twice as many ADU applications as Oakland and four times as many as San Francisco.
In January, Assemblyman Phil Ting's bill AB1033 became law allowing property owners to sell their ADUs like condominiums separate from their home.
Cities have to go one step further and adopt an ordinance to allow for that law to take effect. Other cities like Berkeley are trying to adopt the ordinance. But San Jose stepped up first.
"This week, San Jose became the first city in California to implement AB1033," said Mayor Matt Mahan.
Mahan says this is a big win for his city.
"It creates accessible home ownership, particularly young people reaching out for ownership on a fixed income. And it becomes a source of revenue," said Mahan.
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Mahan says this couldn't have come at a better time.
"Silicon Valley has added six jobs for every one new home. The homes we are building are slow to build and they are expensive. This creates a much more accessible form of home ownership," said Mahan.
Kearnan says there's already a buyer in mind for his ADU. His in-laws in Sacramento have been wanting to move over to the Bay Area for a while now but couldn't afford it.
He says, now they can buy a home in San Jose and be super close to family.
"This opens the door considerably. It allows home ownership at a much more reduced cost," said Kearnan.