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feature image of States are making ADUs easier to build. Now it’s up to municipalities to follow suit.
States are making ADUs easier to build. Now it’s up to municipalities to follow suit.
The national housing shortage, the benefits of increased density, an ongoing shift in consumer tastes toward smaller homes closer to where the urban action is, and other factors have pushed state legislators to make it easier to build accessory dwelling units. In 2024 alone, Colorado, Arizona, Massachusetts, and Hawaii passed major ADU legislation, and California added several laws to open the doors wider for ADUs. Ultimately, though, local governments remain the key gatekeepers when it comes to ADU liberalization. While state-level ADU policies take aim at local rules that hamper ADU development, there’s still work to be done.But first, the good news. Colorado’s HB24-1152 and Arizona’s SB 1415 followed the main tenets of what’s become a standard approach to stoking ADU development. They made ADUs legal by right (meaning local governments can’t simply forbid them), did away with or minimized requirements for added parking requirements, banned municipalities from forcing more stringent ADU design requirements than on the primary dwelling, and eased or eliminated owner-occupancy requirements. Hawaii’s SB 3202 follows suit, though it doesn’t address parking requirements. The Massachusetts Affordable Homes Act, passed in August, allows ADUs under 900 square feet by right on single-family lots. State officials expect 8,000 to 10,000 ADUs to be built in the next five years thanks to the law. And in California, which passed its first ADU law back in 1982, five ADU-related laws passed: AB 976 made permanent a sunsetting ban on owner-occupancy requirements.AB 1033 allows the separate sale of an ADU from the main residence. AB 1332 requires all cities and municipalities to develop programs for the preapproval of ADU plans posted to the agency’s website, streamlining the review process. SB 1211 makes it easier to build ADUs on multifamily properties. SB 1210 requires utilities to post estimated fees and completion timeframes for typical service connections, including ADUs (ensuring that owners have an idea upfront about the cost and timing of utility hook-ups).As state legislatures continue to press municipalities to ease or remove ADU-related restrictions (13 and counting have done so), utility and other fees—collectively known as impact fees—move toward the center of pro-ADU policy discussions. That’s because impact fees can add up to more than enough to stifle ADU development.Take a couple of examples from Colorado, where the state and many municipalities are working hard to change the regulatory landscape that favors large single-family homes. The town of Lyons, near Boulder, is looking to boost density. But legacy regulations that favor sizable single-family homes mean the impact fees tacked to each door of a high-density single-unit development make it financially untenable. So, despite a tight community of ADUs aligning with Lyons’s community goals, it looks like the land will instead go to a developer of standard single-family homes.In Nederland, another town near Boulder, the impact fees to build an ADU – or any other home – add up to about $65,000. If you’re building a $2 million mansion, that’s perhaps a rounding error. But if you’re considering a $200,000 ADU, it’s a huge hit. To Nederland’s credit, they’re working on a water study and are intending to reduce those fees. The town is following a clear trend: Scarcely a week goes by when a municipality somewhere in the country isn’t liberalizing their ADU-related ordinances. Based on those and my own experience, a few things municipalities can do to help foster ADUs beyond those typically found in the new state mandates:Prorate impact fees based on building size, not just whether it’s a dwelling unit or not. A 750-square-foot ADU is not, from a utility’s perspective, the same as a 5,000-square-foot house.Consider a program to waive system-development charges, as Portland, Ore., does if the ADU is not intended as a short-term rental. Those charges can include transportation (for possible right-of-way improvements) water, sewer and stormwater, and parks and recreation.If historically single-family home is dominant, evaluate how zoning and permitting works (or doesn’t work) for multi-unit or small-unit developments.As California is doing with AB 1332, fast-track permitting when ADUs are to be built based on pre-engineered plans previously submitted by ADU builders.Finally, a broader consideration: Think about the long-term advantages of higher density, including higher sales-tax revenues and property tax revenues—and without the headaches that can come with multifamily buildings in terms of, for example, public safety.States and municipalities have come a long way in smoothing the paths forward for those who hope to add vital infill housing through ADUs. Ultimately, though, municipalities hold the keys to whether or not ADUs can open many more doors in tackling the persistent U.S. housing shortage.Mike Koenig is the President and founder of Studio Shed.This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.To contact the editor responsible for this piece: zeb@hwmedia.com.
feature image of Housing market pauses for election
Housing market pauses for election
Inventory, new listings, sales, and prices all dipped this week. The autumn seasonal decline is upon us. The election took up a lot of peoples’ lives last week, and that obviously delayed some listing and sales activity, plus we’ve had spiking mortgage rates. It’s actually not uncommon for housing activity to dip for the first week of November and rebound a bit in the following week. Given the confluence of trends right now, I do expect inventory and new listings to rebound again before the end of the month. I’m now looking forward to 2025 when the data comes in each week. I have questions on the future of both sales volume and home prices. We’ll release the HousingWire 2025 Forecast paper in the next week or so where we’ll lay out our expectations, scenarios, and data to track for the real estate market in the coming year. Let’s take a look at the data for the first full week of November 2024.Inventory growingRising interest rates create rising inventory. Rising rates slows demand for homes and when demand slows, inventory grows. This has been true all year long, starting in the fourth quarter of 2023. At that time, mortgage rates rose from 6.5% to 8% and inventory spiked. Those high rates and rising inventory trends persisted for most of 2024 with only a small reprieve in September.We’re also at the seasonal decline time for the housing market. It’s really hard for inventory to climb past Thanksgiving. We have two more weeks where I expect more inventory of unsold homes on the market.But this week, unsold, available single-family home inventory around the country declined by nearly 2% to 722,000. Election week delayed a bunch of new listings, a few sales completed, and there are a fairly high number of withdrawn listings — plus, the total homes on the market declined. Any new listings delayed are now listed, and that’s why we’ll see an inventory rebound next week. I’m expecting 728,000 or so next week. People only delayed listing for a few days, and buying conditions are worse than they have been recently. There are 28% more homes on the market than a year ago. Inventory was still growing each week in November of 2023. Remember that 2024 inventory had been as much as 40% above 2023, and now it’s 28%. New listings declinedWe counted 49,000 new listings of single-family homes this week, which was a big decline from recent trends. That’s probably a one-week dip due to the election. I expect a bit of a rebound next week back to maybe 55,000 or so. But for this week, that new listings count was down 20% in a week. There were fewer new sellers this week than last year for the first time in a while. While it’s a notable week, it’s just one week and will bounce back. This is not suddenly a trend of dramatically fewer sellers. We have two full more weeks before Thanksgiving, and it’ll be in December before we see the big dips for the holidays. We’re now looking into 2025, with expectations of continued growth in the seller volume. More sellers and greater inventory is a trend for 2025. New pendings dipThe sales rates dipped along with the new supply rate this week. We’re looking at the newly pending contracts here. We counted 51,000 new sales started this week for single family homes plus another 10,000 condo sales contracts. That pace is down notably from a week earlier. And in fact we counted 2% fewer sales started this week than the same week last year. The recent average is 58,000 single-family home sales started each week. That’s averaging 10% more than recent years in November. One poor showing breaks our 10-week streak of Year-over-year home sales growth, but it doesn’t yet reverse the trend. On the other hand, with mortgage rates shooting up, maybe this autumn is shifting back into low sales mode. We’ve been disappointed with fake recoveries over the last three years. A reversal of our sales growth trend is not off the table. While I still expect a rebound in the new pendings count for this week of November 10, If we don’t get one, that will be a clear signal from homebuyers.Even home prices dippedHome prices dipped with the market activity in the election week also. The median price of single family homes that started contracts this week – those 49,000 newly pending sales – dropped a couple percent this week. Like inventory and sale volume, I expect a rebound in the price next week. By this measure ,even including the big dip this week, home prices are 4% above last year at this time at $380,000. I expect prices to rebound next week with the bigger volume, but if that doesn’t happen, that will also be a signal that the this quarter’s steep jump in mortgage rates are taking their toll on homebuyer demand. Price reductions—you guessed it—ticked downWhile home prices ticked down this week, it’s probably due to the lower activity overall. One way to check that assumption is to look at the price reductions levels. If sellers are accelerating their price cuts, that would be a weakening signal. In fact, price reductions ticked down again this week. We’re down to 38.8% of the homes on the market with price cuts. That’s fewer than last week and fewer than last year. We use price reductions are a leading indicator of future sales prices. While 38.8% is still more than normal which tells us what we already know and that is that demand for homes is still weak, the trend nationally is for fewer price reductions this fall. Recently as homes have sold or been withdrawn from the market the percent of listings that have taken price cuts from the original list price is ticking lower. This tells us that the current expectations of buyers are sellers are lining up for continued price resiliency in 2025. There aren’t any signals in the data that show home prices falling dramatically. As we look into 2025, it seems we’re lined up for another year where affordability is difficult.  When you focus on affordability specifically, it’s hard to imagine how home prices can stay elevated. Homebuyers are stretched and as long as prices stay high, demand will be limited. There are some forecasters who use affordability as a guide for assuming home prices will fall in 2025 and 2026. At HousingWire, we’re about to publish our 2025 housing market forecast paper which covers all these perspectives. Mike Simonsen is the founder of Altos Research.
feature image of Despite everything, NAR hasn’t lost many members (and its budget reflects that)
Despite everything, NAR hasn’t lost many members (and its budget reflects that)
The headlines might suggest that National Association of Realtors (NAR) members are struggling to find common ground on many issues. But any hint of division was nowhere to be seen during Monday morning’s NAR Board of Directors meeting.According to NAR president Kevin Sears, 886 directors attended the meeting at the NAR NXT annual conference in person, with another 100 directors attending virtually.Although Sears has already acknowledged that 2025 may be a financially challenging year for NAR, the trade organization should be in good financial shape in the long term if the commission lawsuit settlement is approved later this month, said NAR treasurer Greg Hrabcak.He said the 2025 budget will maintain NAR’s current reserve level, and there are no dues increases scheduled for the year.“Through the budget reductions that were incorporated in the other proposal, there is minimal impact on our products, services and advocacy support,” Hrabcak said. “Nearly all areas of NAR contributed to the reductions, without any on area feel a disproportionate impact. The 2025 budget moves NAR forward on the path to settlement fulfillment in a very disciplined and responsible fashion.”The positive news about NAR’s budget comes from the fact that the trade association’s anticipated big drop in membership has not materialized — it had 1.526 million members at the end of October, the fourth-highest all-time. NAR is forecasting 1.4 million members in 2025, an 8% decline but not nearly as stark has many outside observers have anticipated.All three budget related proposals presented by Hrabcak easily passed with no discussion.NAR’s board also heard and voted on proposals presented by the trade group’s recently established Culture Transformation Commission (CTC), which was led by Ryan Davis and Christina Pappas.The CTC presented one item for vote to the Board, which was a new requirement for NAR volunteer members and staff to complete annual training on all the policies and procedures related to accountability. The requirement would go into place in 2026, and it would ensure NAR leaders and staff “understand” how to properly handle and process sexual harassment complaints, among other things. The Board approved the rule 858 to 47.Other votes:The board voted to amend the application for NAR elected and appointed office to include a question on whether the candidate has had a professional audit of their social media within the last three years. Additionally, candidates will have to agree to the NAR Leader’s social media guidelines and all elected and appointed officials will be subject to at least an annual audit of their social media. Candidates running for President-Elect, First Vice President and Treasurer will be subject to a “media audit.”In addition to this recommendation, the Board also approved a measure to extend the application submission period for NAR elected officials to run for four months from January 1 to April 1, beginning in 2026. Committee chair Leslie Rouda-Smith said this change would allow the trade group to properly vet potential candidates.The final measure brought before the board was an item presented by the Leadership Team to allow the Canadian Real Estate Association (CREA) a non-voting member on NAR’s leadership team. According to NAR leadership, CREA has offered NAR a similar seat on its leadership team. While the Board was not voting on the item, as it was being sent for further discussion and voting with the delegate body, the measure was contentious. Despite the objections, the Board voted 754 to 131 to send the motion back to the leadership team for further discussion.
Eric Young

Broker | License ID: 201219799

+1(360) 901-4782 | eric.young@callitclosed.com

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