“Informal” Housing – It’s Not Just a Formality

California’s statewide accessory dwelling unit (ADU) reforms are an unambiguous housing policy win, enabling the permitting and construction of tens of thousands of new homes all across the state. However, legal ADU development is not the whole story: even with zoning reforms, permit streamlining, and fee reduction, many homeowners are still choosing to build ADUs without permits –  or “informal” housing.

In Not (Officially) in My Backyard, Nathanael Jo, Andrea Vallebueno, Derek Ouyang, and Daniel E. Ho use satellite imagery and computer vision to identify detached ADUs that were built in San Jose between 2016 and 2020, then referenced city permit data to determine how many were unpermitted.

Key Findings:

• Approximately 80% of all detached ADUs built in San Jose between 2016 and 2020 were unpermitted.
• Homeowners who built unpermitted units were more likely to be poorer and living in less-white neighborhoods, with higher density and more household overcrowding.

The researchers used a computer vision model trained to segment building footprints to compare satellite imagery from 2016 and 2020 and note where construction appeared to have happened. The results were then checked by third-party humane reviewers, who looked for evidence that the structures appeared habitable. Using a Neyman allocation sample, they examined a representative 15,000 parcels, then compared their results to city permit data to estimate how many new dwellings were permitted.

This approach has limitations. Notably, satellite imagery cannot capture informal ADUs carved out of existing structures, like garages; and their sample may have miscategorized some non-ADU buildings.

They found that 1,045 of the 1,336 new detached ADUs they identified were unpermitted. While this number seems surprisingly high—San José’s city government is regarded as a very pro-ADU, having spearheaded innovative programs like same-day permitting—it is backed up by Census data, which shows faster housing growth than city permit data.

Further, unpermitted ADUs were concentrated in poorer, denser neighborhoods with lower white populations and more household overcrowding. About one in five of the ADUs identified were built on properties that did not meet the initial minimum lot size for ADUs.

The policy implications of this research are clear: state and local governments need to make it easier for marginalized communities to build ADUs and legalize existing unpermitted ADUs by doing away with regulations that do not protect residents’ health and safety.