Homebuilders from across the country gathered in San Diego this week for the "Build the Middle" conference on "missing middle housing."
Missing middle housing refers to any type of housing that's not a single-family home or a large apartment building, said Rafael Perez, vice president of the Casita Coalition, which hosted the conference. That can include duplexes, triplexes, townhomes and accessory dwelling units, or ADUs.
California legalized ADUs across the state in 2016, leading to a building boom. Perez said they're often cheaper to build because they're relatively small and easy to connect with water, sewer and electrical lines.
"There's a lot of innovation in prefab homes, modular homes that could be assembled quickly or are partially built in a factory," Perez said. "All of these innovations have cut down costs and have increased the speed of delivery."
ADUs are also getting easier for homeowners to finance. The Federal Housing Administration last month announced a new policy that allows lenders to count future rental income from an ADU in a homeowner's loan application. This was previously only allowed for duplexes.
And California lawmakers this year passed AB 1033, which allows homeowners to sell their ADUs separately as condominiums — as long as there's a local ordinance that allows it.
A handful of states have already passed similar laws, which Perez said could create new more affordable options for first-time homebuyers.
"Some of those units sell for 40-60% of what a single-family home sells for in that neighborhood," Perez said. "For people who are dreaming of homeownership and think it's out of reach, that may create some new, exciting inventory options down the road that are an alternative to just an apartment-style condo."
