Backyard Boom: Who's building ADUs in San Diego and why

Across San Diego, backyards, side yards, garages, and sheds are being transformed into Accessory Dwelling Units (ADUs). These small, flexible structures are helping homeowners unlock the potential of underused land while addressing one of the region’s most pressing challenges: the housing shortage. Once considered a niche solution, ADUs have become one of San Diego’s most promising and adaptable tools in the effort to increase housing supply.

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But who exactly is driving this boom—and why are they building ADUs in San Diego today?

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San Diego sets the pace

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San Diego’s housing deficit, estimated at more than 100,000 affordable units, demands creative solutions. Geographic constraints, wildfire risk, and climate goals limit the feasibility of outward expansion. Instead, the city is looking inward, encouraging small-scale infill development that adds critical housing stock with minimal strain on existing infrastructure.

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That’s where ADUs come in. Whether it’s a converted garage, a prefab unit craned into a backyard, or a small cottage built from the ground up, these compact dwellings offer a practical, sustainable way to add housing in existing neighborhoods.

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Since launching its ADU Bonus Program in 2020—which incentivizes property owners to build multiple ADUs on a single lot if some are rented at affordable rates—San Diego has emerged as a statewide leader. By 2024, nearly one in five new housing permits issued in the city was for an ADU, signaling a major shift in both attitudes and priorities.

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Who’s building ADUs?

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ADU builders in San Diego represent a cross-section of homeowners and small developers. A few common profiles stand out:

Older Homeowners in Established Neighborhoods
In areas like North Park, Talmadge, and Point Loma, longtime residents are using ADUs to plan for the future. Some are downsizing into backyard units while renting out their main homes. Others are building ADUs to accommodate caregivers or adult children. For retirees and empty nesters, ADUs provide flexibility and independence.

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Families Supporting the Next Generation
In family-oriented neighborhoods like Clairemont, Mira Mesa, and Del Cerro, parents are building ADUs as starter homes or transitional spaces for their adult children. With home prices increasingly out of reach, ADUs provide a middle ground: offering privacy and autonomy while keeping families close.

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Developers and Investment-Minded Homeowners
Some property owners are taking a more strategic approach,using home equity or specialized financing to build multiple ADUs as rental properties. These projects are particularly common in transit-oriented neighborhoods like City Heights, Normal Heights, and Golden Hill, where zoning regulations and lot sizes are more favorable.

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Mission-Driven Homeowners
A growing number of residents are building ADUs with community impact in mind, providing housing for teachers, nonprofit workers, or those displaced by rising rents. These efforts may be informal or supported by partnerships with local housing organizations or city programs.

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What Motivates ADU Builders?

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While every ADU project has a personal story, several consistent motivations emerge:

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Rental Income
Depending on size, location, and amenities, ADUs can generate between $1,500 and $3,000 per month. For many homeowners, this income helps them stay in their homes, pay off mortgages, or supplement retirement savings.

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Multigenerational Living
More households are choosing to live near extended family. ADUs allow adult children and aging relatives to live independently while staying close enough to provide or receive care and maintain family connections.

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Property Value
Adding an ADU can increase property value by 20–30%, especially in neighborhoods with limited rental inventory. Appraisers increasingly factor in both the income potential and added livable space when valuing these properties.

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Future Proofing
ADUs offer long-term flexibility. Today’s home office can become tomorrow’s rental unit or caregiver’s residence. This adaptability is especially valuable in today’s uncertain and unpredictable housing market.

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What’s Next?

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San Diego’s ADU regulations are continuing to evolve. In 2025, the city began scaling back aspects of its Bonus Program in some single-family zones and introduced limits on the number of ADUs allowed per property. Additional changes expected by late summer may include new parking and infrastructure requirements, alongside efforts to streamline the permitting process.

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Despite these shifts, demand remains strong. Prefabricated units are becoming more accessible, permitting is gradually improving, and new financing products are making it easier for property owners to move forward.

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In San Diego, ADUs are more than a trend, they’re a strategic response to a generational housing challenge. While they won’t solve the housing crisis alone, they represent a scalable, community-driven solution. Whether driven by economic necessity, family needs, or a desire to give back, the people building these units are redefining how San Diego grows—not outward, but inward, one backyard at a time.

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Xavier Rodriguez is with ADU Geeks, San Diego’s leading ADU consulting and project management firm. In 2024, the company was ranked No. 1 on the San Diego Business Journal’s Fastest Growing Private Companies list in the Small Business category, achieving 594.3% revenue growth.

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Sources:

• California Department of Housing and Community Development, Accessory Dwelling Unit Handbook (2023)
  

• UC Berkeley Terner Center for Housing Innovation, Who Is Building ADUs? (2022)
  

• City of San Diego Development Services Department, Permit Data and Planning Reports (2023–2025)
  

• Greater San Diego Association of REALTORS®, Market Reports (2024)
  

• AARP, Future of Housing Reports (2022–2024)