California is facing two rental emergencies.
The first is the increase in rental costs. According to Multi-Housing News article dated September 7th, "_rent costs are up 1.5% year-to-year" and "single-family rents rose 0.5 percent year-over-year to $2,104._" We in the Riverside county area are seeing one-bedroom apartments is over $2000 a month.
California has attempted to relieve the rise in rental cost as well as the supply needs by approving Accessory Dwelling Units for typical residential properties but these are being rented for even more. More on these later.
The second emergency is the inflation that could cause layoffs causing even more financial woes for renters. The FED still looks to raise interest rates to slow down the present inflation so rental rates could continue to rise.
What about a recession. Many analysts, like Danielle DiMartino of Quill Intelligence, are warning of a major recession coming over the horizon resulting in job loss. If renters lose their jobs how will this affect them to maintain their rental units? Many who benefited from the moratorium allowing renters to not have to pay rent and not be evicted has ended in August so now back rent is due. According to USA Today article on August 1st, "_roughly 3.6 million people in the U.S. as of July 5 said they face eviction in the next two months, according to the U.S. Census Bureau's Household Pulse Survey_."
Is there an answer? We are finding many clients seeking to build an Accessory Dwelling Unit on their single family resident lot for their family. A low cost rental for mom and dad, for the son and his new wife, for the brother or uncle. Families are consolidating their resources and living conditions. The cost of building a 500 to 1200 square foot ADU is a potential saving response to the emergency but it is not without its challenges. Since covid shortages and increased construction costs in California have risen from $150 per/sf to over $200 per/sf. While construction has continued to grow it is behind the need, but it is also short of experienced contractors and sub-contractors. Contractors are finding it hard to find experienced workers so are unable to start projects. This then adds to the rise in construction costs.
The ADU is still a valid option if started today. We have standard plans that fit well with most residential properties. City permit process can take 2 to 6 weeks on average. This is because most departments are still experiencing post covid blues and are short handed. Low employee return under the high volume of submittals has extended the process. But if you find an available builder who can start once plans are approved, so you could move in within 9 months from when you start.
What re the other options? Selling your home to buy a larger home for the family? You could add on. This is less cost in construction and does add value and space to your home. We have seen an increase in addition projects adding a new bedroom and bath. There are some challenges in these projects but often can be worked out.
This is advisory, rental costs are going up, housing costs have been up and little chance of reducing, but the ADU or room addition is a responsible answer to the coming housing challenges for your family.