San Jose Records First ADU Condo Sale in California

A 749-square-foot, two-bedroom accessory dwelling unit on Josefina Street in San Jose sold last month for $530,000 to Daniel Aflakian, marking the first time an ADU has been sold as a separately owned condominium in California. The transaction was made possible by Assembly Bill 1033, a 2023 state law that allows homeowners to convert ADUs into condos with independent property tax bills and shared HOA agreements for common elements.

San Jose became the first city to opt into the law in July 2024. To support the initiative, the city assigned building department staff to assist homeowners with permitting. City officials have approved two such condo conversions to date and have two more under review.

Mayor Matt Mahan described the strategy as a way to unlock homeownership opportunities at lower price points in one of the nation's least affordable housing markets. However, the two-year gap between the law's passage and this first sale has raised concerns about scalability. Experts, including David Garcia of the UC Berkeley Terner Center for Housing Innovation, noted significant hurdles such as the costs of obtaining easements and subdivisions, as well as difficulties in securing construction loans.