ADUs in San Jose: A Comprehensive Guide to Accessory Dwelling Units

Discover how to build an ADU in San Jose with this comprehensive guide. Learn about regulations, costs, design options, benefits, and potential challenges. Block Change Real Estate breaks down what homeowners need to know before starting their accessory dwelling unit project.

Why ADUs Matter in San Jose

Accessory Dwelling Units (ADUs) are rapidly reshaping housing across San Jose and the greater Bay Area. With rising home prices and limited inventory, homeowners are turning to ADUs as a practical solution for creating additional living space or generating rental income. Whether you're housing aging parents, building a backyard studio, or planning for passive income, understanding how ADUs work is critical before you break ground.

At Block Change Real Estate, we help homeowners see the bigger picture — and that includes the value of long-term, flexible housing solutions like ADUs. This guide will walk you through what an ADU is, why they're increasingly popular in San Jose, and what it takes to build one successfully.

What Is an ADU?

An Accessory Dwelling Unit (ADU) is a secondary residential unit built on the same lot as a primary home. It can be detached (like a small house in the backyard), attached (like a converted garage), or internal (like a basement conversion). In San Jose, ADUs are commonly known as in-law units, granny flats, or backyard cottages.

California state law has relaxed many previous restrictions, and San Jose has followed suit, encouraging more homeowners to explore building one. ADUs must have their own entrance, kitchen, bathroom, and living space. They're considered permanent housing and can be used for family, guests, or tenants.

ADUs are not the same as short-term rentals or sheds. They must meet all building codes and require permits. Once built, they can offer incredible versatility and add long-term value to your property.

Benefits of Building an ADU in San Jose

Adding an ADU comes with many practical and financial benefits:

• Rental Income: Rent out the unit for consistent passive income, especially valuable in San Jose’s competitive rental market. Depending on location and size, ADUs can bring in $1,500–$3,000 per month.

• Multi-Generational Living: Keep family close without sacrificing privacy. ADUs are ideal for aging parents, adult children, or visiting guests.

• Increased Property Value: ADUs typically increase your home’s resale value and make it more attractive to future buyers looking for flexibility.

• Flexible Use: Use the space as a home office, gym, creative studio, or even a long-term Airbnb (if permitted by city regulations).

• Aging in Place: Some homeowners build an ADU to live in while renting out the main house, allowing them to downsize without moving.

It’s a smart move in a market where housing affordability is a major issue, and land is a premium resource.

Common Drawbacks and Challenges

While ADUs offer many advantages, they’re not without drawbacks. Here’s what to watch out for:

• Upfront Costs: Building an ADU isn’t cheap. Costs in San Jose typically range from $150,000 to $300,000 depending on size, materials, permits, and design.

• Permitting Process: Though the city has streamlined approvals, navigating permits, inspections, and zoning rules still takes time and expertise.

• Space Constraints: Not every lot can accommodate an ADU. Lot size, setbacks, and utility access may limit your options.

• Ongoing Maintenance: ADUs are homes — they require the same care, insurance, and utilities as your main residence.

• Property Taxes: While Prop 13 protects the primary home, ADUs may trigger reassessments that increase your overall tax burden.

It’s important to work with an experienced real estate advisor, architect, and contractor to avoid pitfalls.

Current ADU Regulations in San Jose (As of 2025)

San Jose has adopted ADU-friendly policies aligned with California state law to address the housing crisis. Here are the current key regulations (subject to updates):

• Size Limits: Detached ADUs can be up to 1,000 square feet (or 1,200 sq. ft. in some cases). Junior ADUs (JADUs) are capped at 500 sq. ft.

• Setbacks: At least 4 feet from side and rear lot lines for detached units.

• Parking: No parking is required for ADUs located within half a mile of public transit, which includes most of San Jose.

• Lot Size: No minimum lot size required to build an ADU.

• Occupancy: Homeowners are not required to live on the property, making it easier to rent both units if desired.

• Streamlined Permits: The city offers an online application portal and has reduced approval timelines to 60 days or less.

Regulations may change, especially as housing legislation evolves. Always check the City of San Jose’s Planning Department site or work with professionals who stay updated.

How Much Does It Cost to Build an ADU?

Building an ADU in San Jose involves several expenses:

• Design and Architecture: $10,000–$25,000 depending on complexity

• City Permits and Fees: $5,000–$15,000

• Construction Costs: $200–$400 per square foot

• Utilities & Hookups: $10,000–$30,000

• Landscaping & Finish Work: $5,000–$20,000

Altogether, most homeowners can expect to invest $150,000 to $300,000+ on a quality ADU project. Financing options may include cash-out refinancing, HELOCs, renovation loans, or builder-backed lending programs.

It's important to request detailed estimates and timelines. Costs can quickly escalate without careful planning and project management.

Step-by-Step: How to Build an ADU in San Jose

1. Assess Your Property

   • Check zoning, lot size, and access. Make sure your site meets city guidelines and can physically support an ADU.

2. Hire a Professional Team

   • Work with an experienced architect, builder, or ADU specialist. They'll help navigate design and permitting.

3. Submit Your Plans

   • Use San Jose’s ADU-specific application portal for faster processing. Plans must comply with zoning, structural, and energy codes.

4. Get Permits Approved

   • The city aims to issue permits within 60 days. Any corrections or revisions can add time, so be precise with documentation.

5. Start Construction

   • Once approved, your contractor will begin building. Construction typically takes 4–9 months depending on complexity.

6. Final Inspection and Occupancy

   • After passing inspections, your ADU can be legally occupied or rented. Celebrate — you’ve just added serious value to your property.

Is an ADU Right for You?

ADUs aren’t just a housing trend—they’re part of San Jose’s long-term strategy for sustainable, flexible living. Whether you're a homeowner looking for added income, a parent planning for future care, or a buyer interested in multi-functional properties, an ADU could be the smartest move you make.

At Block Change Real Estate, we specialize in helping San Jose homeowners unlock the potential of their property. If you're curious about what it would take to build an ADU—or want to find a property with ADU potential—we’re ready to help.

Let’s turn your backyard into a future-forward asset.