By Sara Beth Williams–
As adding an accessory dwelling unit, or ADU, to properties has surged in popularity, a new law allows ADUs to become more than just backyard additions.
Sacramento real estate appraiser and housing analyst Ryan Lundquist shared in a recent blog post that, with the passage of Assembly Bill 1033 in 2024, owners are now allowed to sell an ADU separately from the main house.
“This would not normally be allowed without some sort of a parcel split, but under AB 1033, the entire parcel can be converted to a condo, and that allows the rear ADU condo to be sold separately,” Lundquist explains, adding that the parcel essentially becomes a two-unit condo.
“On one hand, this is innovative thinking to help with affordability, but on the other hand, this type of law is sadly only needed because of a lack of affordability,” Lundquist said.
In Citrus Heights, there appears to be at least six active listings in Citrus Heights right now with an ADU listed, Lundquist said, adding a caveat that it’s not always easy to perfectly find ADUs during a Multiple Listing Service (MLS) search of current real estate on the market. To qualify as an ADU, a property technically needs a bathroom, kitchen, and bedroom, but sometimes other types of units are included in this MLS field.
“So, we have to sift through data, and maybe we’ll find a pool house or “she-shed” instead of a technical ADU,” Lundquist said. Using the available ADU category in MLS, Lundquist found five recent sales in Citrus Heights in 2026 that listed accessory dwellings.
Currently, the City of Citrus Heights has established a dedicated web page for those interested in constructing ADUs in the city and has also established pre-approved, permit-ready ADU plans. The dedicated page also includes planning guides, tutorials and webinars, along with an FAQ section on ADU construction.
The first reported sale of an ADU condo conversion through AB 1033 recently happened in June in San Jose, Lundquist said. However, the law is not mandatory and jurisdictions need to adopt AB 1033 for it to take effect. Currently, West Sacramento has adopted the law, while Sacramento is discussing it. Lundquist shared that several other cities have also adopted the law, including San Jose, San Diego, Berkeley, Oakland, San Francisco, Santa Monica, and others. He confirmed via email he had not heard of the City of Citrus Heights adopting AB 1033, but suspects more cities will begin adopting the law “eventually.”
Selling an ADU as a condo conversion has its advantages and disadvantages. On the one hand, selling an ADU with small square footage is less expensive for new homebuyers. However, the main residence also will thereafter be considered a condo, Lundquist points out, which means that its price point will also drop. Whether that’s something the seller appreciates or not, it could help potential buyers, especially in expensive markets like San Jose.
As for whether AB 1033 and ADU condo conversions would benefit Citrus Heights specifically, Lundquist said he thinks the law will benefit some parcels throughout the region, but that it wouldn’t benefit Citrus Heights specifically any more or any less than other areas.
“I do think consumers having more options is generally a positive in real estate, but it’s also important to think through this law,” Lundquist said. “Owners need to be aware there are some challenges that come with adopting AB 1033. Having a condo form of ownership can make finding comps more challenging as well as financing possibly being more challenging.”
Other factors for homeowners considering this option include taking a close look at how an ADU condo conversion impacts home insurance costs.
Lundquist also warned that buyers need to consider what happens to the value of their main house. Buyers might be turned off from buying a main house where an ADU is occupied by a different owner because now the new buyer doesn’t have access to the entire parcel. The main house will also have a little less privacy potentially.
He suspects the new law may only apply to “a handful of situations.”
California leads the nation in ADU construction, with 72 percent of the share of national ADU permits in 2025, issuing 41,000 ADU permits or 52 per every 100 conventional resident permits, according to data from the real estate data and analytics firm Cotality. The second highest state was Washington State, which issued 2,200 ADU permits.
