San Diego County AB 1033 ADU Condominium Sales: Planning Commission Approval Creates New Market Opportunity for Pacific Beach Builders

December 5, 2025 Planning Commission Unanimous Vote: San Diego County Takes Historic Step Toward ADU Ownership

The San Diego County Planning Commission delivered a unanimous recommendation on December 5, 2025, to approve implementation of Assembly Bill 1033, clearing a critical hurdle in the county's path to allowing ADU sales as separate condominium units. This vote sends the ordinance to the Board of Supervisors for final approval, scheduled for March 2026.

The Planning Commission meeting drew significant public interest, with testimony from rural community leaders and homeowners who have already invested in ADU construction. Stephen Stonehouse, a Bonita resident, told planning commissioners he finished building an ADU on his property in 2022 specifically with an eye toward eventually splitting his lot and converting the ADU into a condominium once AB 1033 became available at the county level.

County staff initially recommended limiting AB 1033 implementation to detached ADUs only, citing concerns about disrupting typical development patterns in rural areas. However, Planning Commissioner Kevin Sabellico argued that the county needed to take advantage of the full extent of the new state law. The Commission ultimately directed county staff to allow both attached and detached ADUs to qualify for condominium conversion and separate sale.

This decision positions San Diego County to become only the second county in California—after San Francisco—to opt into AB 1033's ADU sales program. The City of San Diego already adopted AB 1033 in June 2025, with implementation beginning August 22, 2025, creating a split regulatory environment where city and county jurisdictions have different rules governing ADU sales.

For builders operating in Pacific Beach, La Jolla, Mission Beach, Bird Rock, and other coastal communities, the Planning Commission's approval signals a coming transformation in how ADUs are marketed, financed, and constructed. Understanding the differences between city and county regulations will be essential for contractors working across jurisdictional boundaries. If you're considering an ADU project, contact our team for expert guidance on AB 1033 compliance.

What is AB 1033 and How Does It Fundamentally Change ADU Economics in San Diego County

Assembly Bill 1033, signed by Governor Gavin Newsom on October 11, 2023, and effective statewide January 1, 2024, provides California cities and counties the legal authority to allow homeowners to sell accessory dwelling units separately from primary residences through condominium conversion. Prior to AB 1033, state law prohibited the separate sale of ADUs except in very limited circumstances, such as development by qualified nonprofits.

The bill removes the state-level restriction on ADU sales while leaving implementation decisions to local jurisdictions. Each city and county must proactively adopt a local ordinance to enable AB 1033 provisions—the law does not automatically grant ADU sale rights statewide.

AB 1033's economic impact on ADU development cannot be overstated. Traditional ADU investment models rely entirely on rental income, requiring property owners to maintain long-term ownership and manage tenant relationships. Federal Housing Finance Agency data from 2023 shows that California homes with ADUs had a median appraised value of $1,064,000 compared to $715,000 for homes without ADUs—a $349,000 difference.

With AB 1033, homeowners gain the ability to immediately monetize ADU construction by selling the unit as a separate condominium. Research from Better Place Design & Build indicates ADUs typically increase property values by 20-35% on average, with some high-demand California markets seeing even greater appreciation. In San Diego specifically, one homeowner added a 500-square-foot ADU at a cost of $200,000 and increased their property value by $307,000—a 53.5% return on investment.

The shift from rental-only to sellable ADUs changes fundamental construction decisions. Builders can now design ADUs with resale appeal rather than purely rental functionality, potentially justifying higher-quality finishes, upgraded appliances, and architectural features that increase market value. For Pacific Beach builders, this means ADU projects can target both investor-owners seeking rental income and homeowners planning to sell the ADU unit separately within months of construction completion. Bird Rock's hillside lots and ocean view properties make AB 1033 particularly valuable for homeowners in this premium coastal neighborhood, where ADU condominiums can command top-tier pricing due to proximity to beaches and local amenities. Explore our ADU construction services to learn more about building for maximum resale value.

One industry rule of thumb suggests newly constructed ADUs add approximately 100 times the monthly rental value to overall property worth. Using Pacific Beach rental rates of $2,500-$3,500 for a one-bedroom ADU, this translates to $250,000-$350,000 in added property value—value that can now be captured through condominium sale rather than waiting years for rental income accumulation.

Timeline: March 2026 Board of Supervisors Vote and Post-Approval Implementation Process

The San Diego County Board of Supervisors will vote on AB 1033 implementation in March 2026, following the Planning Commission's December 5, 2025 recommendation. If approved, the ordinance would take effect shortly thereafter, though the exact timeline depends on the Board's adoption schedule and any required environmental review processes.

County planning staff had been soliciting public feedback on the draft ordinance through the end of 2025, incorporating community input into the proposal reviewed by the Planning Commission. The draft ordinance published December 4, 2025 outlined specific requirements for ADU condominium conversion, including mandatory detached-unit status, compliance with the Davis-Stirling Common Interest Development Act, and adherence to Subdivision Map Act provisions.

Based on other California jurisdictions that have adopted AB 1033, San Diego County property owners could potentially begin filing condominium conversion applications as early as late spring or summer 2026, assuming Board approval in March with minimal implementation delays.

The City of San Diego's AB 1033 timeline provides a useful comparison. The City Council approved ADU reforms on June 18, 2025, with the ordinance taking effect August 22, 2025—approximately 65 days from approval to implementation. If San Diego County follows a similar timeline after a March 2026 Board vote, countywide AB 1033 implementation could begin in May or June 2026.

For Pacific Beach builders planning ADU projects in early 2026, this timeline creates strategic opportunities. ADUs under construction during the Board vote could be designed with condominium conversion in mind, incorporating separate utility metering, detached configurations, and architectural features that facilitate Davis-Stirling compliance. Builders who understand the conversion process before the ordinance takes effect will have a competitive advantage when homeowners begin requesting AB 1033-ready ADU designs.

One critical consideration: the Planning Commission directed the ordinance to allow both attached and detached ADUs, overriding county staff's recommendation for detached-only eligibility. However, the Board of Supervisors could modify this provision during their March vote. Builders should monitor Board deliberations closely, as the final ordinance language will determine which ADU types qualify for condominium conversion in unincorporated county areas.

City of San Diego vs. County of San Diego: Understanding Dual AB 1033 Regulatory Frameworks

Pacific Beach builders must navigate two separate AB 1033 regulatory frameworks depending on project location. The City of San Diego adopted AB 1033 with implementation beginning August 22, 2025, while San Diego County's ordinance awaits Board of Supervisors approval in March 2026. These parallel systems create important distinctions that affect project planning, client advising, and construction timelines.

The City of San Diego allows both attached and detached ADUs to be sold separately through condominium conversion, effective immediately for projects in city jurisdiction. Property owners in Pacific Beach, La Jolla, Mission Beach, Bird Rock, and areas near Tourmaline Surfing Park—all within city limits—can already pursue AB 1033 conversions under the city's ordinance. Coastal locations near Tourmaline Surfing Park command premium ADU rental rates due to beach proximity, making these properties excellent candidates for AB 1033 condominium conversion.

San Diego County's draft ordinance initially proposed limiting conversions to detached ADUs only, reflecting county staff concerns about rural area development patterns and infrastructure capacity. However, the Planning Commission overrode this recommendation on December 5, 2025, directing that both attached and detached units be eligible. The final Board of Supervisors decision in March 2026 will determine whether this expanded eligibility survives into the adopted ordinance.

Additional regulatory differences exist in the approval processes. The City of San Diego requires that ADU condominiums being sold must first be offered to owner-occupant buyers for at least 30 days on two public real estate websites. This owner-occupancy preference aims to prioritize housing opportunities for residents over investors. It's unclear whether San Diego County will adopt a similar requirement—the draft ordinance does not explicitly address owner-occupancy marketing periods.

For projects in coastal zones like Pacific Beach, Mission Beach, and Bird Rock, additional California Coastal Commission jurisdiction creates another regulatory layer. Properties within the Coastal Overlay Zone may require Coastal Development Permits regardless of city or county AB 1033 status. Mission Beach ADUs face additional coastal zone restrictions but achieve similar rental rates to Pacific Beach due to their premium beachfront location and high tourism demand. Builders should verify Coastal Commission requirements early in project planning to avoid permitting delays that could extend ADU construction timelines.

The City of San Diego permitted 2,285 ADUs in 2024, representing 26% of the city's 8,782 total permitted homes that year. By comparison, San Diego County permitted 489 ADUs in 2024 in unincorporated areas, up from 159 in 2020—a 207% increase over four years. From 2021-2024, the county permitted 1,552 ADUs total. These statistics demonstrate robust ADU growth in both jurisdictions, suggesting strong market demand that AB 1033 implementation will likely accelerate.

Contractors working across city and county boundaries should develop clear client communication protocols explaining which AB 1033 framework applies to specific properties. A homeowner in unincorporated Fallbrook faces different rules than a homeowner in city-jurisdiction La Jolla, even though both are commonly considered "San Diego" locations. Precise jurisdiction identification prevents costly project redesigns when clients discover mid-construction that their ADU doesn't meet applicable condominium conversion requirements.

Davis-Stirling Common Interest Development Act: Legal Requirements for ADU Condominium Conversion

Every AB 1033 condominium conversion must comply with California's Davis-Stirling Common Interest Development Act (Civil Code Section 4000 et seq.), which governs creation and operation of condominiums and other common interest developments. For Pacific Beach builders, understanding Davis-Stirling requirements is essential to advising clients on conversion feasibility and costs.

The Davis-Stirling Act requires establishment of a homeowners association (HOA) to manage common areas, shared utilities, and property maintenance. Even a two-unit property—one primary residence and one ADU condominium—must form an HOA structure with bylaws, financial management systems, and ongoing administrative protocols. This represents a significant legal complexity that many homeowners underestimate when considering AB 1033 conversions.

Key Davis-Stirling compliance requirements include:

Condominium Plan Preparation: A licensed surveyor must prepare a detailed condominium plan showing separate ownership boundaries, common areas, exclusive-use areas, and compliance with Subdivision Map Act requirements. This document legally establishes which portions of the property each unit owner exclusively controls versus which areas are jointly owned.

CC&Rs (Covenants, Conditions & Restrictions): The property must have recorded CC&Rs governing the condominium development. These documents establish rules for property use, maintenance responsibilities, architectural standards, and dispute resolution procedures. Professional legal drafting is essential—poorly written CC&Rs create ongoing conflicts between primary residence and ADU owners.

HOA Bylaws and Operating Agreement: The homeowners association requires formal bylaws establishing governance structure, voting procedures, meeting requirements, and financial management protocols. For a two-unit property, these documents address how the primary residence owner and ADU owner jointly make decisions about shared property elements like roof repairs, landscaping, and utility infrastructure.

Financial Reserve Study: Davis-Stirling mandates HOAs maintain adequate financial reserves for major maintenance and repairs. Even small two-unit developments must conduct reserve studies and collect appropriate HOA fees to fund future capital improvements to shared building components.

Disclosure Requirements: Sellers of ADU condominiums must provide extensive disclosures to buyers, including CC&Rs, HOA bylaws, financial statements, reserve study results, and recent HOA meeting minutes. These disclosure obligations exceed typical single-family home sale requirements.

Separate Utility Metering: AB 1033 conversions require separate utility meters for water, sewer, gas, and electricity. Homeowners must coordinate with local utilities to establish independent service connections before condominium plan recordation. In Pacific Beach, Mission Beach, Bird Rock, and other coastal areas, utility separation may require trenching through landscaped areas or coordinating with San Diego Gas & Electric and the City of San Diego Public Utilities Department. Learn more about our comprehensive ADU development expertise spanning coastal zone compliance and utility coordination.

Converting an ADU to a condominium typically costs $15,000-$50,000 including surveying, legal fees, inspection costs, utility separation, and recording fees. These expenses vary by project complexity, lot configuration, and existing infrastructure. Builders should help clients budget for these conversion costs separate from ADU construction expenses.

Recent legislative changes affect HOA fee structures. Under statutes amended for 2025, HOAs established beginning in 2025 must limit regular monthly or annual fee increases to no more than 5% plus cost of living adjustments for owners of deed-restricted affordable housing units. While most AB 1033 conversions won't involve affordable housing restrictions, builders should be aware of evolving HOA regulations that may affect long-term ownership costs.

Financial Analysis: Sell vs. Rent Profit Modeling for Pacific Beach ADU Investments

AB 1033 fundamentally changes ADU investment analysis by introducing a sell option alongside traditional rental models. For Pacific Beach builders advising clients on ADU projects, understanding comparative returns between selling and renting is essential to project planning.

Rental Income Model: Pacific Beach ADUs generate premium rental income due to coastal location and proximity to beaches, restaurants, and employment centers. A 600-square-foot one-bedroom ADU in Pacific Beach typically rents for $2,200-$2,800 monthly, while a 900-square-foot two-bedroom unit commands $3,200-$4,000 monthly. La Jolla ADUs achieve even higher rates—$2,500-$3,500 for one-bedroom units and $4,000+ for two-bedroom configurations—driven by the neighborhood's luxury market positioning and tourism appeal. Mission Beach properties near the boardwalk and Tourmaline Surfing Park also command premium rents, particularly for short-term vacation rentals during summer months when beach access is highly valued.

Using a $250,000 ADU construction cost financed through a home equity line of credit at 7.5% interest over 15 years, monthly loan payments total approximately $2,315. A Pacific Beach ADU renting for $2,800 monthly generates $485 monthly positive cash flow after debt service, or $5,820 annually. This represents a 2.3% annual return on the $250,000 investment—modest compared to other real estate investments.

However, long-term rental models benefit from mortgage paydown, tax deductions, and property appreciation. Over 10 years, the owner pays down approximately $90,000 in loan principal while collecting $58,200 in net rental income (assuming stable rents and 100% occupancy), for total returns of $148,200 before accounting for property value appreciation. If the ADU increases the property's overall value by $300,000 (using the 100x monthly rent rule of thumb), total 10-year returns reach $448,200 on a $250,000 investment—a 79% return or 7.9% annualized.

Condominium Sale Model: AB 1033 allows immediate monetization through ADU sale as a separate condominium. Using the same $250,000 construction cost plus $25,000 for condominium conversion expenses (surveying, legal fees, utility separation, HOA formation), total investment reaches $275,000.

If the ADU sells as a condominium for $450,000—a conservative estimate for a well-designed 600-square-foot unit in Pacific Beach with coastal proximity—the homeowner realizes $175,000 profit after expenses. This represents a 64% return on investment captured within months rather than years.

The sale model offers several advantages:

• Immediate Liquidity: Cash proceeds available for other investments, debt payoff, or personal use
• No Landlord Responsibilities: Eliminates tenant management, maintenance costs, vacancy risk, and property management fees
• Tax Benefits: Primary residence sales enjoy up to $250,000 capital gains exclusion ($500,000 for married couples filing jointly) if the property was the owner's principal residence for two of the previous five years
• Market Timing: Ability to capture current market valuations without waiting for long-term appreciation

The rental model provides:

• Ongoing Cash Flow: Monthly income stream that increases with rent growth over time
• Appreciation Capture: Full benefit of long-term property value appreciation on both primary residence and ADU
• Tax Deductions: Mortgage interest, property taxes, depreciation, maintenance, and other landlord expenses reduce taxable income
• Inflation Hedge: Real estate typically appreciates with or above inflation, protecting purchasing power

For Pacific Beach clients, the optimal strategy often depends on individual circumstances. Retirees seeking immediate equity access may prefer AB 1033 sale, while younger homeowners building long-term wealth might choose rental income. Builders should help clients model both scenarios using realistic local market data, including Pacific Beach's premium rental rates and strong buyer demand for coastal condominiums. Properties in La Jolla, Bird Rock, and Mission Beach also benefit from these premium market dynamics, with each coastal submarket offering unique advantages for ADU investment strategies. Contact us for a customized financial analysis comparing rental versus sale options for your specific property.

One important consideration: lenders currently have limited experience with ADU condominium mortgages. Fannie Mae and Freddie Mac have introduced loan guidelines allowing lenders to factor potential ADU rental income into borrower qualification, but AB 1033 condominium sales remain relatively new. Buyers may face higher down payment requirements (20-25% versus 10-15% for traditional condominiums) or slightly elevated interest rates until the ADU condo market matures. Builders should prepare sellers for potentially smaller buyer pools in the early AB 1033 implementation period.

Lender Requirements and Financing Challenges for ADU Condominium Sales in 2025-2026

AB 1033 implementation creates new financing complexities for both ADU construction and condominium sales. Pacific Beach builders must understand current lending landscape to advise clients on realistic financing expectations.

ADU Construction Financing: Building an ADU in San Diego typically requires $150,000-$350,000 depending on size, type, and finish quality. Most homeowners finance construction through home equity lines of credit (HELOCs), home equity loans, cash-out refinances, or construction loans.

HELOCs offer revolving credit with variable interest rates, allowing homeowners to draw funds as needed during construction and pay interest only on amounts used. Lenders typically provide HELOCs up to 80-90% of appraised home value minus existing mortgage balance. A Pacific Beach homeowner with a $900,000 property value and $400,000 mortgage balance could access up to $310,000 through a HELOC (80% LTV: $720,000 minus $400,000 existing loan).

Current HELOC rates in California range from 7.25% to 8.75% as of late 2025, with rate variations based on borrower credit scores, loan-to-value ratios, and lender competition. These rates remain elevated compared to historical averages but have stabilized after the Federal Reserve's 2022-2023 rate increase cycle.

Home equity loans provide lump-sum financing with fixed interest rates, typically 6.75% to 8.25% for 10-30 year terms. Fixed-rate products offer payment certainty that many homeowners prefer over HELOC variable rates, particularly if interest rates are expected to rise further.

Construction loans finance ADU building in phases, disbursing funds as work progresses through inspections. These short-term loans (typically 12-18 months) often convert to standard mortgages upon completion. Construction loan rates currently range from 7.5% to 9.0%, reflecting the higher risk lenders perceive in financing incomplete construction projects.

ADU Condominium Purchase Financing: Buyers seeking to purchase AB 1033 ADU condominiums face different lending requirements than traditional condominium purchases. Most lenders have limited experience with two-unit properties created through single-lot subdivision, creating uncertainty about approval criteria.

Conventional mortgage lenders typically require:

• Credit Score: Minimum 620 for most programs, though 680+ receives better rates. The California Housing Finance Agency (CalHFA) requires 680 for borrowers above 80% area median income, 660 for borrowers at or below 80% AMI. Credit scores above 720 qualify for optimal interest rates and terms.
• Down Payment: Expect 15-25% down payment requirements for ADU condominiums versus 10-15% for traditional condo purchases. Lenders view two-unit properties with shared infrastructure as higher risk until market precedent establishes default and appreciation patterns.
• Debt-to-Income Ratio: Maximum 43-47% DTI for most conventional loans. Monthly housing payment (principal, interest, taxes, insurance, HOA fees) cannot exceed 28-31% of gross monthly income. CalHFA programs typically cap at 47% DTI.
• Loan-to-Value Ratio: Most lenders prefer 75-80% LTV maximum for ADU condo purchases. Higher LTV loans may require private mortgage insurance (PMI), increasing monthly costs by $100-$200 for a $400,000 loan amount.
• Appraisal: Lenders require professional appraisal establishing fair market value. With limited ADU condominium comparables, appraisers may struggle to determine appropriate valuations, potentially resulting in lower-than-expected appraisals that require buyers to increase down payments.

Lienholder Consent for Condominium Conversion: AB 1033 requires written consent from all lienholders before recording a condominium plan. If the property has an existing mortgage, the lender must approve the subdivision and ADU sale. This requirement creates significant uncertainty—lenders can refuse consent, impose additional terms, or charge fees for evaluation and approval.

Mortgage servicers have limited incentive to approve condominium conversions that reduce their collateral value. When a property with a $600,000 mortgage subdivides into a $750,000 primary residence and a $450,000 ADU condominium, the lender's collateral decreases from $1,200,000 to $750,000 (assuming the ADU sells and the mortgage remains only on the primary residence). Some lenders may require partial mortgage payoff equal to the ADU sale proceeds to maintain adequate loan-to-value ratios.

Pacific Beach builders should advise clients to contact mortgage servicers early in the AB 1033 planning process to understand specific consent requirements and potential restrictions. Properties with low loan-to-value ratios (under 50% LTV) typically receive easier lender approval than highly leveraged properties.

CalHFA ADU Grant Program: The California Housing Finance Agency offers up to $40,000 in grants for ADU pre-development and non-recurring closing costs, including site preparation, architectural design, permits, soil tests, impact fees, surveys, and energy reports. These funds require no repayment and are available through CalHFA-approved lenders. The 2024 program funds exhausted quickly, but new 2025 allocations were expected in early 2025. Builders should help clients monitor CalHFA announcements for future funding rounds.

New 2025 Tax Incentives: Senate Bill 1164, enacted in 2025, provides property tax exemptions for up to 15 years on new ADUs, making them more cost-effective to operate as rentals. While this benefit doesn't directly affect AB 1033 sales, it improves rental model economics for clients comparing sell versus rent strategies.

Rural Community Concerns: Infrastructure and Fire Safety Opposition to AB 1033 in San Diego County

The San Diego County Planning Commission's December 5, 2025 vote wasn't unanimous in public support—rural community representatives raised substantial concerns about AB 1033's potential impacts on infrastructure capacity and wildfire response in unincorporated areas.

Dori Rattray, chair of the Valley Center Community Planning Group, testified that her town already has a strained sewer system that additional housing density could worsen. Valley Center, located approximately 35 miles northeast of Pacific Beach in San Diego County's rural backcountry, relies on septic systems and limited sewer infrastructure that was never designed for the density increases AB 1033 could enable.

Rattray and other rural residents worry about how new housing development affects fire response capabilities. Valley Center and similar unincorporated communities face elevated wildfire risk, particularly during Santa Ana wind events. The October 2003 Cedar Fire burned through Valley Center, destroying homes and demonstrating the area's vulnerability to fast-moving wildfires.

Rural fire protection in San Diego County relies on a network of volunteer departments and the San Diego County Fire Authority, which provides services to over 40 communities through 35 fire stations covering 1.5 million acres. Adding housing density through ADU construction could strain emergency response times, water supply for firefighting, and evacuation route capacity during wildfire events.

These concerns led county staff to initially recommend limiting AB 1033 implementation to detached ADUs only, reasoning that attached units would increase density more significantly than detached structures on larger lots. However, Planning Commissioner Kevin Sabellico argued that the county should take full advantage of state law provisions, leading the Commission to override staff recommendations and direct the ordinance to allow both attached and detached ADU conversions.

Infrastructure concerns extend beyond fire safety to include:

Sewer and Septic Capacity: Many rural San Diego County properties rely on individual septic systems. Adding an ADU requires septic system expansion or connection to existing sewer infrastructure where available. In areas with aging sewer systems operating near capacity, additional ADU connections could exceed treatment plant capabilities or require expensive infrastructure upgrades funded through property assessments.

Water Supply: Rural areas often depend on well water or small water districts with limited supply. California's ongoing drought conditions make water availability a critical constraint on new housing development. Some water districts have imposed connection moratoriums preventing new service hookups until supply reliability improves.

Road Capacity: Rural roads in unincorporated San Diego County were often built to minimal standards serving low-density development. Increased housing density through ADU construction generates additional vehicle trips that narrow roads may not safely accommodate. School bus routes, emergency vehicle access, and agricultural equipment movement could all be affected by higher traffic volumes.

Electric Grid Reliability: Rural San Diego County experiences periodic Public Safety Power Shutoffs (PSPS) during high fire risk conditions. San Diego Gas & Electric de-energizes circuits in backcountry communities like Alpine, Julian, Fallbrook, and Valley Center when high winds and dry conditions elevate wildfire risk from fallen power lines. These shutoffs leave residents without heat, water (for electric well pumps), refrigeration, and communication for extended periods. Additional ADU housing in PSPS-affected areas increases the number of residents impacted by safety shutoffs.

For Pacific Beach builders, these rural concerns seem distant from coastal construction markets. However, understanding the policy debates shaping San Diego County's AB 1033 ordinance helps contractors anticipate potential implementation restrictions that could affect all county properties, not just rural areas.

The Board of Supervisors could modify the Planning Commission's recommendation when they vote in March 2026, potentially:

• Limiting AB 1033 to detached ADUs only (reverting to county staff's original proposal)
• Excluding certain Community Planning Areas with identified infrastructure constraints
• Requiring additional environmental review for AB 1033 conversions in fire hazard severity zones
• Imposing minimum lot sizes for condominium conversion eligibility
• Mandating water district or fire authority approval before conversion permits are issued

Builders should monitor Board deliberations closely to understand the final ordinance requirements that will govern countywide AB 1033 implementation.

San Diego County ADU Market Growth Data: 489 Permits in 2024 Signal Strong Demand

San Diego County's ADU market has experienced dramatic growth over the past five years, with permit activity increasing 207% from 2020 to 2024. Understanding these market trends helps Pacific Beach builders recognize the expanding opportunity that AB 1033 implementation will accelerate.

Countywide (all jurisdictions within San Diego County boundaries):

• 2020: 1,150 ADU permits issued
• 2024: 3,991 ADU permits issued
• Five-Year Growth: 247% increase from 2020 to 2024

ADU construction completions (certificates of occupancy issued) increased even more dramatically:

• 2020: 342 ADU completions
• 2024: 1,984 ADU completions
• Five-Year Growth: 480% increase from 2020 to 2024

The gap between permits and completions narrowed substantially, indicating that permitting backlogs and construction delays that plagued earlier years have largely resolved. In 2020, only 29.7% of permitted ADUs received completion certificates within the calendar year. By 2024, that ratio improved to 49.7%, suggesting faster project timelines from permit to occupancy.

San Diego County (unincorporated areas only):

• 2020: 159 ADU permits
• 2024: 489 ADU permits
• 2021-2024 Total: 1,552 ADU permits in unincorporated county areas

Unincorporated county areas account for approximately 12-13% of all ADU permits issued countywide, with the City of San Diego representing the largest single jurisdiction for ADU development.

City of San Diego specific data:

• 2024: 2,285 ADU permits (26% of the city's 8,782 total housing permits)
• 2024 Multi-Unit ADU Projects: 28% of permitted ADU projects contained more than one unit (444 of 1,605 projects)

The City of San Diego permitted more multiple-unit ADU projects than the rest of the region in 2024, with most involving 2-unit configurations. Only 4% of city ADU projects (58 of 1,605) contained three or more units, indicating that single and dual-unit ADUs dominate the market.

By 2024, nearly 20% of all new homes built in San Diego were accessory dwelling units, demonstrating ADUs' central role in meeting regional housing production goals. A county staff report prepared for an April 2025 Board of Supervisors meeting noted that 45% of permitted housing units in 2024 were ADUs—a remarkably high percentage that reflects both robust ADU construction and relatively weak multifamily apartment development.

ADU production growth has been essential to San Diego County meeting state-mandated Regional Housing Needs Assessment (RHNA) targets. The county's goal for unincorporated areas requires permitting 6,700 homes by 2029. Through 2024, the county reported 5,244 permitted homes to the state, with 1,552 (29.6%) being ADUs. Without ADU production, the county would fall far short of RHNA compliance.

Affordability data reveals that ADUs play a critical role in expanding middle-income and lower-income housing options:

• 84% of middle-income housing units permitted in 2024 were ADUs
• Over 50% of lower-income housing units permitted in 2024 were ADUs

However, most ADU units are not affordably priced by state standards. They do appear more affordable to moderate-income households than other housing types, largely because ADU rental rates (even at market rates) tend to be lower than comparable apartment rents due to smaller square footage and often more basic finishes.

Geographic distribution shows ADU concentration in high-value coastal and urban areas:

• Leading Jurisdictions: City of San Diego, Unincorporated San Diego County, Oceanside, Chula Vista, Encinitas
• Premium Markets: La Jolla, North Park, Hillcrest (within City of San Diego)

Pacific Beach and surrounding coastal communities represent particularly strong ADU markets due to high property values, strong rental demand from both long-term residents and short-term vacation renters, and lot configurations that often accommodate detached ADU construction. Mission Beach, Bird Rock, and areas surrounding Tourmaline Surfing Park see especially high ADU demand driven by beach access and tourism appeal. La Jolla's luxury market positioning creates unique opportunities for high-end ADU conversions that maximize AB 1033 sale proceeds, with some premium properties commanding 40-50% value increases from well-designed ADU additions.

Project size data indicates single-unit ADUs dominate:

• 85% of permitted ADU projects countywide contain one unit (2,796 of 3,274 projects)
• Only 2% of permitted ADU projects contain more than two units (60 of 3,274 projects)

This concentration in single-unit projects aligns with typical homeowner use cases: creating rental income from one additional unit, providing housing for family members, or (with AB 1033 implementation) building an ADU specifically for sale as a condominium.

For Pacific Beach builders, these growth statistics demonstrate sustained market demand that AB 1033 will likely amplify. As ADU sales become legally possible countywide in 2026, expect increased homeowner interest in ADU construction—particularly from clients who want to build and quickly sell rather than manage rental properties long-term.

Action Plan for Pacific Beach Builders: Preparing for AB 1033 Implementation in 2026

San Diego County's expected AB 1033 adoption in March 2026 creates immediate preparation opportunities for Pacific Beach builders. Contractors who understand condominium conversion requirements before the ordinance takes effect will gain competitive advantages in advising clients and designing AB 1033-ready projects.

1. Master Davis-Stirling Act Requirements: Study California's Common Interest Development Act provisions governing condominium creation. Understanding HOA formation, CC&R requirements, and shared property management helps builders advise clients on post-construction obligations. Consider partnering with real estate attorneys who specialize in condominium law to provide client referrals for legal document preparation.

2. Develop Relationships with Licensed Surveyors: Every AB 1033 conversion requires professional survey work creating condominium plans that show ownership boundaries, common areas, and exclusive-use spaces. Establish referral relationships with surveyors experienced in condominium subdivision work. Discuss typical costs, timeline, and information requirements so you can provide accurate client estimates during project planning.

3. Design for Detached Configuration: While the Planning Commission recommended allowing both attached and detached ADU conversions, county staff initially proposed detached-only eligibility. The Board of Supervisors could revert to this more restrictive approach in March 2026. Design ADU projects as detached structures whenever site conditions permit to ensure AB 1033 conversion eligibility regardless of final ordinance language.

4. Incorporate Separate Utility Metering from Initial Design: AB 1033 requires independent utility connections for water, sewer, gas, and electricity. Design ADU projects with separate meter locations from the start rather than retrofitting later. Coordinate with San Diego Gas & Electric, City of San Diego Public Utilities Department, and other providers to understand connection requirements, costs, and timelines. Budget $3,000-$8,000 for utility separation work depending on distance from existing service connections and required trenching through landscaped areas.

5. Understand Coastal Zone Additional Requirements: Pacific Beach, La Jolla, Mission Beach, Bird Rock, and areas near Tourmaline Surfing Park fall within California Coastal Commission jurisdiction. Verify whether specific properties require Coastal Development Permits beyond standard city building permits. Coastal overlay zones often impose additional design standards for setbacks, height limits, view protection, and architectural compatibility that affect ADU feasibility.

6. Monitor City vs. County Jurisdiction Boundaries: Pacific Beach sits within City of San Diego jurisdiction where AB 1033 has been effective since August 22, 2025. However, nearby communities may fall under county jurisdiction with different implementation timelines and requirements. Confirm jurisdiction for each project during initial client consultations to provide accurate regulatory guidance.

7. Create AB 1033 Cost Estimates for Client Consultations: Develop standardized cost estimates showing construction expenses separate from condominium conversion costs. Typical conversion budgets include:

• Licensed surveyor condominium plan preparation: $5,000-$12,000
• Real estate attorney CC&R and HOA document drafting: $3,000-$8,000
• Utility separation and meter installation: $3,000-$8,000
• HOA formation and initial setup: $1,000-$3,000
• Safety inspection and certificate of occupancy: $500-$1,500
• Recording fees and title work: $500-$2,000
• Total Conversion Costs: $15,000-$50,000 depending on project complexity

Providing these estimates helps clients understand total investment requirements when evaluating build-to-sell ADU strategies.

8. Establish Lender Referral Networks: Connect with mortgage brokers and lenders who understand AB 1033 financing. As the ADU condominium market develops, some lenders will become more experienced with these transactions than others. Creating referral relationships helps clients secure financing and demonstrates your comprehensive project knowledge.

9. Study Comparable ADU Condominium Sales Data: As AB 1033 sales begin in the City of San Diego (effective August 2025), track transaction data through MLS listings and public records. Understanding actual sale prices for ADU condominiums in Pacific Beach, La Jolla, and similar coastal communities provides critical data for advising clients on realistic sale expectations and return-on-investment calculations.

10. Prepare Marketing Materials Explaining AB 1033 Benefits: Most homeowners don't yet understand AB 1033 or its implications for ADU investment strategy. Develop educational materials explaining:

• How AB 1033 allows ADU sales as separate condominiums
• Financial comparison of rental income versus immediate sale proceeds
• Condominium conversion process and timeline
• Total costs including construction and conversion expenses
• Estimated sale values for Pacific Beach ADU condominiums
• Lender requirements for both construction financing and buyer mortgages

Position yourself as the local AB 1033 expert before most competitors understand the opportunity.

11. Attend Board of Supervisors Hearing in March 2026: Monitor San Diego County Board of Supervisors agenda for the AB 1033 ordinance vote. Attend the hearing (in person or virtually) to understand final adopted language, implementation timeline, and any modifications from the Planning Commission recommendation. Board discussion may reveal enforcement priorities, staff interpretation of ambiguous provisions, or future ordinance amendments that affect project planning.

12. Design ADUs with Resale Appeal, Not Just Rental Function: Traditional ADU design prioritizes durability and low maintenance since homeowners typically retain ownership as landlords. AB 1033 sales justify higher-quality finishes, upgraded appliances, architectural details, and premium materials that increase resale value. Shift design philosophy toward creating condominiums buyers will want to purchase, not just rental units tenants will accept.

13. Understand HOA Fee Structures for Client Advising: Buyers of ADU condominiums will pay monthly HOA fees covering shared expenses like property insurance, landscaping, roof maintenance, and reserve fund contributions. These fees typically range from $150-$400 monthly for two-unit properties depending on included services. Help sellers understand how HOA fee levels affect buyer qualification and market appeal—excessively high fees can make properties difficult to sell.

14. Create Two-Track Project Workflows: Some clients will want to build ADUs for rental income while others plan immediate sale under AB 1033. Develop parallel project workflows addressing different design priorities, construction timelines, and budget considerations. Rental-focused ADUs might use more durable but basic finishes, while sale-focused ADUs justify premium materials that command higher condominium prices.

15. Network with Real Estate Agents Specializing in ADU Sales: As AB 1033 creates a new condominium subcategory, some real estate agents will develop expertise in ADU listings, buyer representation, and transaction management. Building referral relationships with these agents creates mutual business opportunities—they send construction clients to you while you send completed ADUs ready for sale to them.

Pacific Beach builders who implement these preparation strategies before March 2026 Board of Supervisors approval will be positioned to capture market share as AB 1033 awareness grows and homeowners begin requesting condominium-ready ADU designs. The transition from rental-only to sellable ADUs represents the most significant change in California accessory dwelling unit economics since the state began promoting ADU development in 2017. Contractors who understand and leverage this change will benefit from first-mover advantages in a rapidly evolving market.