Second Units vs. Accessory Dwelling Units

Last September Governor Jerry Brown signed Senate Bill 1069 and Assembly Bill 2406 that promotes secondary dwelling units aka accessory dwelling units (ADU) which as of January 1, 2017 has gone into effect.  Accessory Dwelling Units are defined as housing structures that provide complete independent living facilities and include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as another dwelling. The idea is this will hopefully help defeat the affordable housing crisis in California by creating more affordable housing. So, what’s the difference between an Accessory Dwelling Unit and a Second Unit?

Accessory Dwelling:

  • Not recognized by city or county as a second unit (sometimes it is though)
  • The market does NOT consider it a second unit
  • Probably does not contribute as much to value
  • Inferior to the main unit in size and location (maybe quality too)
  • Has kitchen, bathroom and sleeping area
  • May or may not be separately metered
  • May or may not have a separate address
  • May or may not be attached to the main house

Second Unit:

  • Recognized by city or county as a second unit
  • The market recognizes it as a second unit
  • Likely contributes more substantially to value
  • Zoning allows two units
  • It is probably separately metered
  • Most likely has a separate address
  • May or may not be inferior in size and location to the other unit
  • May or may not be attached to the main unit

On a local level,  Accessory Dwelling Units supersedes local jurisdiction (until or unless a City adopts a new ordinance) for Secondary Dwelling Units. It’s important to note that projects within the Coastal Zone still fall under the permitting requirements of the Coastal Act.

Live Near a Surf Break?

Researchers at the Middlebury Institute of International Studies at Monterey found that being located within a mile of a surf break adds about $106,000 to a home’s value.  Living near a desirable public park or outdoor recreation space boosts it significantly higher — as much as 8 percent to 20 percent.

There are dozens, if not hundreds, of neighborhood attributes that can affect a home’s value. Some are obvious and some are not. Analysts at Houselogic, a website operated by the National Association of Realtors, did some digging recently and uncovered surprising facts.  As for the parkland bonus, a recent study examined 16,400 home sales within 1,500 feet of 193 public parks (in Portland, Oregon) and found that nearby natural areas added $10,648 to a home’s value. Golf courses add $8,849, specialty parks add $5,657, and urban parks add $1,214. On the downside, a park that is overcrowded and not well-maintained can drag down nearby home values.

Meanwhile, California homes with photovoltaic (solar) systems sell for an extra $17,000 over homes without solar systems, according to experts at Lawrence Berkeley National Laboratory. Add walkability to the home-value bonus list, too. Being able to stroll to schools, parks, stores, and restaurants will raise a property value anywhere from $4,000 to $34,000, according to a 2009 study from the nonprofit group CEOs for Cities.

Accessory dwelling units are another big attraction. Whether it’s a granny flat, an in-law apartment, or a carriage house, having a separate unit can increase a home’s value by 25 percent to 34 percent, according to a study of 14 properties with accessory dwelling units in Portland. Bonus: A second unit can also provide a steady stream of rental income. Elsewhere in this blog you can find a post:  “The Difference between Second Units and Accessory Dwelling Units” that you may find helpful.

Supreme Court Rules on Dual Agency

For the first time in history, homebuyers are deliberately creating dual agency situations as many refuse to work with anyone but the listing salesperson. The thinking being that they may get a better deal working with the listing salesperson when actually they may be creating a possible conflict of interest. How can the listing salesperson negotiate the best deal for you when their fiduciary obligations are to the seller?

In 2016, a surprising trend emerged almost everywhere in the country. When buyers call about a listing that is unavailable or unsuitable for their needs, they have no interest in hearing about other properties – instead agents are constantly hearing the refrain: “We’ll just contact the listing agent directly.” This shift is just another sign that clients have not been educated about the benefits of having a fiduciary relationship with their buyer’s agent.

In Horiike v. Coldwell Banker, the California State Supreme Court ruled that for in-house deals, that the agency (Coldwell Banker and its respective salespersons in the transaction) had a fiduciary duty to both the seller and the buyer. This ruling could limit the ability of large firms to do in-house deals, raise transaction costs due to increased litigation and force agents to disclose “sensitive information about the client’s motivations or the salesperson’s personal beliefs to the other side of the transaction. Sadly, agents divulge this type of information all the time.

Couple this with pocket listings, lax agent attitudes toward dual agency issues, and a recent California Supreme Court decision changing dual agency requirements in that state, and you have a perfect storm that could fundamentally transform how Realtors conduct their businesses. Realtors refer to themselves as agents, but when it comes to the agency law, the brokerage is the “agent,” not the individual salesperson.

The best way to avoid agency issues is to ask, “Whom are you advocating for and what are your legal obligations in terms of what you can and cannot disclose?” Most real estate attorneys believe the solution to the dual agency issue is to work with a buyer’s agent exclusively.

Santa Barbara Film Festival 2017

2SBFilmFestivalPoster2017 The 32nd annual Santa Barbara International Film Festival  poster celebrates architecture and it’s link to cinema. This year’s poster was created by Barbara Boros and Bob Blackwell.

This year’s celebrity attendees include Denzel Washington, Emma Stone, Ryan Gosling, Jeff Bridges, Casey Affleck, Isabelle Huppert, and Michelle Williams. For a complete list of special events, galas, films, free screenings, panels, and educational programs click here: Santa Barbara Film Festival 2017 Program

Santa Barbara Real Estate Market Trends

Santa Barbara Real Estate Market Trends through December for 2016. This graph was prepared by Fidelity Title Company in Santa Barbara. This year is reflected by the thicker purple line with diamonds. The green line reflects 2015, where in May of 2015, it appears the southern Santa Barbara real estate market most peaked based on the number of homes sold for that month. The light purple line reflects 2013 which shows the highest number of sales per month going back to 2010. The graph reflects the number of sales for that month for southern Santa Barbara. (Carpinteria to Goleta) Click on image to enlarge.

2017 Housing Market Predictions

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Recently Zillow jumped in with six predictions for next year’s housing market, touching on some of the more nuanced factors that influence who will be buying and selling homes next year, where they’ll be focused and what challenges they stand to face.  Speculation also brought up the potential effect of Trump’s hard-line immigration plans on construction industry labor — and its expectations for America’s historically low homeownership rate.  The 2017 predictions:

1.      “Cities will focus on denser development of smaller homes close to public transit and urban centers.”

2.      “More millennials will become homeowners, driving up the homeownership rate. Millennials are also more racially diverse, so more homeowners will be people of color, reflecting the changing demographics of the United States.”

3.      “Rental affordability will improve as incomes rise and growth in rents slows.”

4.      “Buyers of new homes will have to spend more as builders cover the cost of rising construction wages, driven even higher in 2017 by continued labor shortages, which could be worsened by tougher immigration policies under President-elect Trump.”

5.      “The percentage of people who drive to work will rise for the first time in a decade as homeowners move further into the suburbs seeking affordable housing — putting them further from adequate public transit options.”

6.      “Home values will grow 3.6 percent in 2017, according to more than 100 economic and housing experts surveyed in the latest Zillow Home Price Expectations Survey. National home values have risen 4.8 percent so far in 2016.”

Fiesta! “Old Spanish Days” in Santa Barbara

“Old Spanish Days” is Santa Barbara’s largest celebration and one of the top regional festivals in the United States. It is expected to attract more than 100,000 people this year, making it one of the biggest to date.

This year “Fiesta!” will take place in various locations around the city August 3rd through the 7th.

This celebration of community fondly looks back to a period when Santa Barbara was a remote rural area under the influences of Spanish, Mexican, and local Native American cultures. Fiesta celebrates a period of romance and hospitality through pageantry, dance, music, custom, and cusine. (photo below is of the brochure for the Santa Barbara Fiesta 2016)

Santa Barbara Fiesta 2016 2FiestaBrochure2016

Good Fences Make Good Neighbors

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“Somewhere in Santa Barbara?”

Forbes magazine reported that in 2010 Oracle’s Larry Ellison sued his neighbors, whose trees were blocking his view of San Francisco Bay. The neighbors tried to obtain landmark status for the trees. Ellison hired a Tree Attorney and reportedly offered to buy their house. They settled out of court.

David Geffen is under fire from his neighbors for renovations to his 5th Avenue penthouse. 18 neighbors have filed complaints against Geffen some of which he’s settled.

Hedge funder Larry Robbins turned three lots behinds his New Jersey mansion into a 10,000 square foot hockey rink adding a small apartment thinking that would make it a legal residence. The neighbors challenges were dismissed and the arena still stands.

Investor Ira Rennert built a 29 bedroom 100,000 square foot house in the Hamptons and continues to stoke tensions with the neighbors by landing his helicopter on the property.

George Lucas neighbors have been battling him for decades over any expansions to his film studio. As a result he now plans to build 224 low income housing units in one of the more expensive areas of the country. Neighbors say he’s vindictive, he claims altruism. Forbes magazine suggests that un-neighborly behavior is surprisingly common among the ten figure set.

The most notable use of the quote in English Literature belongs to Robert Frost who used the line in his poem “Mending Wall.”This quote seems to be contradictory in nature. How can neighbors come together if they are divided by fences? Benjamin Franklin is known to have said, “Love thy neighbor, yet don’t pull down your hedge.” Given how many different cultures have versions of this proverb, it represents a very common sentiment among neighbors everywhere.

1214 High Ridge Lane in Santa Barbara

1214 High Ridge Lane in Santa Barbara is listed with Sotheby’s International Realty.  Listing agent Wilson Quarre. 3,700 square feet. Mediterranean Style. 3 car garage. Gated entry. 4 bedrooms with master, one guest and office on main floor. 3.5 bathrooms. Two bedrooms downstairs with workout area, wine closet, and more. Remodeled in 1999/2000. $3,398,000