Earlier this year, the State of California passed first-of-its-kind legislation in an attempt to increase housing supply. The law requires cities and towns to allow homeowners to build in-law apartments as of right, without having to go through a cumbersome permitting process.

Some cities and towns have been slow to respond. Hayward isn’t one of them.

Hayward Planning Commission Votes

Last month, the Hayward Planning Commission voted 4-0 to endorse new building and zoning codes that would give homeowners more flexibility in building these in-law apartments, otherwise known as “granny units” or more formally, as “accessory dwelling units” (ADUs).

ADUs are defined as independent dwelling units with permanent provisions for living, sleeping, eating, cooking and sanitation located on the same property as a single-family home. ADUs come in many forms: they can be internal (within the existing residence, such as a basement apartment), attached (such as above a garage) or detached in a standalone structure.

The Commission’s decision comes in response to the state law, which invalidated the City of Hayward’s longtime restrictions on ADUs.

According to the proposal, the Planning Commission voted unanimously to support, ADUs will be allowed in all three forms. They can be no larger than 1,200 square feet in size or half of the living space of the main house, whichever is smaller, and homeowners must have at least one parking space per bedroom within the ADU in addition to whatever parking is already required under local regulations. Two bedrooms is the maximum that would be allowed at any ADU.

ADUs will only be allowed at owner-occupied single family homes, though the homeowner would be allowed to live in the ADU instead of the main home, allowing the main home to be rented. In either case, the ADU cannot be rented for short-term rentals such as those advertised on websites like Airbnb.

Before the proposal can become law, it must go before the Hayward City Council for final approval—which will be no easy task.

Several City Councilors have already expressed concern over relaxing ADU regulations.

“I think we’re all committed to more housing options and building more affordable housing,” said Councilor Mark Salinas earlier this year, “but I think this is going to change the way our neighborhoods look. Councilor Marvin Peixoto also expressed his reservations. “Essentially what we’re doing is converting single-family developments into multi-family developments [without consideration for neighbors].”

The City Council is expected to vote on the ordinance in October.

Demand for granny units highlights Hayward’s limited housing supply and excess demand. In the past year alone, the city’s median sales price has climbed a whopping 13% and median rent now eclipses $2,750 per month. Allowing ADUs would increase the housing stock—particularly in terms of smaller units, which are inherently more affordable than larger, more traditional single family homes.

Before real estate investors get spooked: there’s little reason to believe Hayward will be flooded with ADUs. As one resident pointed out at a Planning Commission hearing, local construction costs and the City’s exorbitantly high permitting fees will be cost prohibitive for most homeowners, particularly for those who lack construction experience.

“The whole basis of this is that it’s a housing issue, but no one’s going to get these things permitted because of the fees,” said Eduardo Padilla.

If he’s right, the number of new ADUs that come online will likely be limited, even though homeowners have the ability to construct ADUs if they so choose. As a result, we suspect Hayward housing stock to remain constrained. Given existing supply and demand, that’s a positive sign for Hayward real estate investors looking for rent growth over the foreseeable future.

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