California ADU Laws 2026: AB 976 Permanently Eliminates Owner-Occupancy, Transforming Pacific Beach Investment Strategies

January 1, 2026 marks a watershed moment in California housing history. A comprehensive package of six major Accessory Dwelling Unit (ADU) laws took effect, fundamentally transforming how property owners in Pacific Beach, La Jolla, and Mission Beach can leverage their real estate investments. The centerpiece of this legislative revolution—AB 976's permanent elimination of owner-occupancy requirements—removes the single largest barrier to ADU investment properties that has constrained California homeowners for decades.

For Pacific Beach property owners, this isn't just regulatory reform. It's the opening of an entirely new asset class. You can now build an ADU on your rental property, rent out both the primary residence and the ADU, and never live on-site. Combined with AB 434's pre-approved plans, AB 543's 15-day completeness mandate, AB 2533's unpermitted ADU legalization pathway, AB 1154's JADU flexibility, and SB 1211's multifamily expansion to eight units, the 2026 ADU landscape offers unprecedented opportunity for strategic investors.

This comprehensive guide examines every major 2026 ADU law change, with specific focus on how Pacific Beach, La Jolla, Mission Beach, Bird Rock, and Tourmaline Surfing Park area property owners can maximize investment returns under the new regulatory framework.

AB 976: The Game-Changer That Eliminates Owner-Occupancy Forever

The Old Rule That Strangled ADU Investment

Before AB 976, California homeowners faced a crippling restriction: if you wanted to build an ADU, you had to live on the property—either in the primary residence or the ADU itself. This owner-occupancy requirement effectively killed ADU investment strategies. You couldn't purchase a property specifically to build an ADU portfolio. You couldn't add ADUs to existing rental properties. You couldn't build an ADU, rent out your main house, and move elsewhere.

The previous owner-occupancy mandate created an artificial ceiling on ADU development. According to the California Department of Housing and Community Development, this single restriction prevented thousands of potential ADU projects annually, as investors couldn't justify the $200,000-$450,000 construction cost without the flexibility to treat ADUs as true investment properties.

AB 976: What Changed on January 1, 2025

AB 976, which took effect January 1, 2025, permanently eliminated owner-occupancy requirements for all ADUs permitted after that date. The law builds on AB 881 (2020), which temporarily suspended owner-occupancy rules until 2025. AB 976 makes that suspension permanent.

Here's exactly what property owners can now do in Pacific Beach:

Full Rental Flexibility: Build an ADU on a property you own but don't live in. Rent out both the primary residence and the ADU to separate tenants. Live in a completely different property or city.

Portfolio Development Strategy: Purchase multiple properties across Pacific Beach, La Jolla, and Mission Beach specifically to add ADUs and maximize rental income across a portfolio without living in any of them.

Investment Property ADU Construction: Treat ADUs as what they actually are—standalone investment properties with independent cash flow potential, property value appreciation, and exit strategy options.

Long-Term Rental Requirement: Local agencies can still require rental terms of 30 days or longer, preventing short-term vacation rentals but preserving traditional long-term rental investment strategies.

For Pacific Beach property owners, where ADU rental income can reach $2,000-$3,500 per month depending on size and location, AB 976 transforms the ADU economics entirely. A $400,000 ADU investment generating $3,000 monthly rent produces $36,000 annual gross income, a 9% gross yield that would have been impossible under the old owner-occupancy constraints.

Pacific Beach ADU Investment Market Analysis

The elimination of owner-occupancy requirements arrives at an optimal moment in Pacific Beach's real estate cycle. The La Jolla housing market forecast for 2026 indicates pricing will remain firm due to limited land availability and sustained coastal living demand. Properties in Bird Rock are already being marketed with ready-to-implement ADU plans, highlighting their potential for equity growth, rental income, and multi-generational living solutions.

Coastal San Diego's rental market provides exceptional support for ADU investments. The region maintains a 97% rental occupancy rate, and San Diego County faces a shortage of 76,399 homes by 2029. Pacific Beach's proximity to UC San Diego, employment centers, and beach access creates sustained rental demand that supports premium ADU rents.

Exception: Junior ADUs Still Require Owner-Occupancy (But With Modifications)

AB 976's elimination of owner-occupancy requirements does not extend to Junior Accessory Dwelling Units (JADUs)—units of 500 square feet or less built within the existing primary residence. JADUs still require that "a natural person with legal or equitable title to the property" resides on-site, either in the main house or the JADU.

However, AB 1154 (discussed below) significantly relaxed even those JADU owner-occupancy requirements, limiting them only to JADUs with shared bathrooms.

AB 434: Pre-Approved Plans Slash Design Costs by $10,000-$15,000

The Pre-Approved Plan Mandate

AB 434, which required compliance by January 1, 2025, mandates that all California cities offer a selection of pre-approved ADU plans posted online for public use. The law requires local agencies to accept ADU plan submissions for pre-approval from any party and approve or deny applications according to standards in Government Code sections 66314-66332.

For Pacific Beach builders and property owners, this represents a dramatic reduction in upfront ADU development costs. Learn more about AB 434 pre-approved plan requirements.

Cost Savings: Custom Design vs Pre-Approved Plans

Custom Architectural Design Costs: Traditional custom ADU design typically costs $12,000-$18,000 for architectural services, site-specific engineering, and multiple revision rounds to achieve city approval.

Pre-Approved Plan Costs: Pre-approved plans are provided at minimal or no cost by cities, though agencies can still charge standard "plan check" fees. The plans are typically 85% complete, requiring only project-specific information like lot dimensions, setbacks, and utility connections.

Time Savings: AB 434 also mandates a 30-day approval timeline for projects using pre-approved plans. This represents a 60-75% reduction compared to traditional custom design approval timelines of 3-5 months in San Diego.

For Pacific Beach projects, where the average detached ADU costs $300,000-$450,000, eliminating $12,000-$18,000 in design fees and accelerating approval by 2-4 months provides both immediate cost savings and faster path to rental income.

San Diego Pre-Approved ADU Plans: Where to Find Them

The City of San Diego Development Services Department currently accepts pre-approved ADU plans from multiple jurisdictions, including Chula Vista, San Diego County, and Encinitas. Once a plan is pre-approved, it's posted on the DSD website with applicant contact information.

San Diego County offers pre-approved plans that can be used as ADUs or single-family dwellings in unincorporated areas. The plans are approximately 85% complete and are available through the county's official website.

For Pacific Beach, La Jolla, and Mission Beach properties within City of San Diego jurisdiction, the official resource is sandiego.gov/development-services, where the latest pre-approved plan options are maintained.

Limitations and Customization Requirements

Pre-approved plans don't eliminate all project-specific work. Property owners still need:

• Site-Specific Engineering: Foundation design, grading plans, and drainage solutions based on actual lot conditions
• Utility Connection Plans: Coordination with San Diego Gas & Electric, water, and sewer services
• Coastal Zone Compliance: For Pacific Beach properties west of I-5, additional Coastal Development Permit requirements apply
• Setback Verification: Confirmation that pre-approved design fits within lot-specific setback requirements

Despite these remaining requirements, the pre-approved plan framework eliminates the majority of architectural design costs and provides a predictable approval pathway.

AB 543 (SB 543): 15-Day Completeness Rule Prevents Application Delays

The Application Limbo Problem

Before AB 543, Pacific Beach ADU applicants faced a frustrating uncertainty: cities could review ADU applications for weeks or months without declaring them "complete" or providing clear guidance on deficiencies. Applications languished in bureaucratic limbo, with vague requests for "additional information" and no firm timeline for resolution.

This indefinite review process added unpredictable delays and costs to ADU projects, discouraging many property owners from moving forward.

SB 543: The 15 Business Day Completeness Mandate

SB 543, effective January 1, 2026, requires local agencies to determine whether an ADU application is complete within 15 business days of receipt. If the application is incomplete, the agency must provide a written list of specific deficiencies and required fixes.

This seemingly simple requirement delivers three critical benefits:

Prevents Indefinite Delays: The 15-day clock starts ticking immediately upon submission. Cities can't sit on applications indefinitely.

Written Deficiency Lists Required: Vague verbal requests for "more information" are eliminated. The city must provide a specific written list of exactly what's missing or needs correction.

Deemed Complete Provisions: If the city misses the 15-day deadline without providing written deficiencies, the application may be deemed complete, moving directly to the approval phase.

Additional SB 543 Provisions for Pacific Beach Property Owners

Beyond the completeness timeline, SB 543 includes several other important changes:

Square Footage Clarification: The law clarifies that statutory references to "square footage" relate to an ADU's "interior livable space," resolving ambiguity about how to measure ADU size for regulatory purposes.

School Impact Fee Exemption: ADUs or JADUs with less than 500 square feet of livable space are exempt from school impact fees, reducing permitting costs for smaller units.

60-Day Ministerial Approval Deadline: SB 543 establishes a 60-day ministerial approval deadline for ADUs. If the deadline passes without city action, the project is automatically approved.

Fee Prohibitions Under 750 Square Feet: The law prohibits most fees for ADUs under 750 square feet, further reducing costs for smaller projects.

For Pacific Beach property owners navigating San Diego's Development Services Department, SB 543's 15-day completeness requirement creates a predictable timeline. Current San Diego ADU processing times run 3-5 months, down from 8-10 months during 2022-2023 staffing shortages. SB 543 should further compress these timelines by eliminating the indeterminate initial review phase.

Pacific Beach Permit Timeline Expectations Under SB 543

Assuming compliance with SB 543's mandates, Pacific Beach ADU applicants can expect:

• Days 1-15: Completeness determination with written deficiency list if incomplete
• Days 16-30: Correction period for any deficiencies identified
• Days 31-90: Substantive plan review and approval (60-day ministerial deadline from completeness determination)
• Total Timeline: 90-120 days from initial submission to approved permits for straightforward projects using pre-approved plans

Coastal properties west of I-5 in Pacific Beach may face additional time for Coastal Development Permit coordination, though AB 462 (effective October 2025) imposed a strict 60-day approval deadline for coastal ADU permits, dramatically improving coastal permitting timelines.

AB 2533: Legalize Unpermitted ADUs Built Before January 1, 2020

The Unpermitted ADU Problem

Thousands of California properties contain unpermitted ADUs—converted garages, basement apartments, or detached structures built without proper permits. Before AB 2533, property owners faced a painful choice: continue operating illegally with risk of fines and forced demolition, or attempt legalization through a process that often resulted in outright denial and expensive retroactive penalties.

Many Pacific Beach properties contain unpermitted living spaces created during previous eras when ADU regulations were more restrictive or permitting processes prohibitively expensive.

AB 2533: The No-Denial Legalization Pathway

AB 2533, effective January 1, 2025, creates a clear path to legalize unpermitted ADUs and JADUs built before January 1, 2020. The law's key innovation: local agencies cannot deny permits based solely on prior lack of authorization. Learn more about AB 2533's legalization pathway.

Instead of denial, cities must provide a Substandard Housing Inspection Checklist identifying health and safety deficiencies that need correction. Once those deficiencies are remediated, the ADU must be permitted and legalized.

AB 2533 Eligibility Requirements

To qualify for AB 2533's legalization pathway, the ADU must:

Pre-January 1, 2020 Construction: The ADU must have been built before January 1, 2020. This extends the previous amnesty date from January 1, 2018, allowing more homeowners to participate.

Life Safety Compliance: The ADU must pass a Substandard Housing Inspection addressing issues like electrical safety, structural integrity, egress windows, smoke detectors, and carbon monoxide alarms.

Current ADU Standards: Once health and safety issues are resolved, the ADU must comply with current ADU regulations regarding size, setbacks, and parking (though current regulations are generally more permissive than historical requirements).

Pacific Beach Coastal Zone Complications

AB 2533's legalization pathway faces special complications in Pacific Beach's Coastal Zone (roughly west of I-5). Coastal properties require Coastal Development Permits, and the California Coastal Commission has historically taken a stricter approach to after-the-fact permitting.

Property owners with unpermitted ADUs in Pacific Beach's Coastal Zone should expect:

Enhanced Scrutiny: Coastal Commission review of the legalization application, particularly for properties with beach access, view impacts, or public access implications

Possible Mitigation Requirements: The Commission may require mitigation measures such as deed restrictions, landscaping, or public access improvements as conditions of after-the-fact approval

Extended Timeline: Coastal legalization projects may take 6-12 months rather than the 3-4 months typical for inland properties

Despite these complications, AB 2533 provides the first viable pathway for many Pacific Beach property owners to bring existing unpermitted units into compliance and capture their full rental income potential legally.

Business Opportunity: Unpermitted ADU Renovation Pipeline

For Pacific Beach builders and contractors, AB 2533 creates a substantial business opportunity. Thousands of San Diego properties contain unpermitted units needing health and safety upgrades, electrical work, plumbing improvements, and structural reinforcement to pass the Substandard Housing Inspection.

This renovation pipeline represents a multi-million dollar market opportunity for contractors with expertise in bringing substandard housing up to code while preserving existing structures.

AB 1154: JADU Owner-Occupancy Limited to Shared-Bathroom Units Only

Junior ADUs Explained

Junior Accessory Dwelling Units (JADUs) are small units—500 square feet or less—built within the existing footprint of a single-family home. Unlike traditional ADUs, JADUs are created by converting interior space: a bedroom, den, or portion of the main house partitioned into a separate living unit.

Before AB 1154, all JADUs required owner-occupancy: the property owner had to live either in the main house or the JADU. This requirement severely limited JADU investment potential.

AB 1154: The Shared-Bathroom Exception

AB 1154, effective January 1, 2026, fundamentally changes JADU owner-occupancy rules. Local agencies can now only impose owner-occupancy requirements on JADUs that share sanitation facilities (bathrooms) with the primary dwelling.

If a JADU has its own separate bathroom, the property owner no longer needs to reside on-site.

This creates two distinct JADU categories:

Shared-Bathroom JADUs: Require owner-occupancy (someone with legal title must live in either the main house or the JADU). These units share a bathroom with the primary residence, functioning more like roommate situations.

Separate-Bathroom JADUs: No owner-occupancy requirement. If the JADU has a fully private bathroom, it can be rented out while the owner lives elsewhere, similar to standard ADUs under AB 976.

Strategic Implications for Pacific Beach JADU Development

AB 1154's separate-bathroom provision opens new investment strategies for Pacific Beach property owners:

Minimal Construction Costs: JADUs require no new building foundation, external structures, or site work. Construction costs typically range from $50,000-$100,000, significantly less than detached ADUs at $300,000-$450,000.

Rental Income with Minimal Investment: A separate-bathroom JADU in Pacific Beach can generate $1,200-$1,800 monthly rent—providing a 14-21% annual gross yield on a $100,000 investment.

Existing Home Conversion Strategy: Property owners can convert existing bedrooms or den spaces into JADUs without expanding the building envelope, preserving yard space for potential future detached ADUs.

Setback and Height Advantages: Because JADUs are built within existing structures, they face no setback requirements or height limits—eliminating common obstacles that complicate detached ADU projects.

AB 1154 Short-Term Rental Prohibition

AB 1154 includes one significant restriction: JADUs cannot be used as short-term rentals (less than 30 days). This prohibition applies to all JADUs, regardless of whether they have shared or separate bathrooms.

For Pacific Beach, where short-term vacation rental demand is high due to beach proximity, this limitation reduces JADU income potential compared to standard ADUs (which can be short-term rentals in jurisdictions that allow it). However, long-term rental demand in Pacific Beach remains strong enough to support JADU investment strategies even without short-term rental options.

SB 1211: Up to 8 ADUs on Multifamily Lots

Multifamily ADU Expansion

Before SB 1211, California law allowed only two detached ADUs on multifamily properties—regardless of the size of the apartment building or the available land. This artificial cap prevented larger apartment complexes with substantial land from adding meaningful numbers of ADUs.

SB 1211, effective January 1, 2025, expanded the number of detached ADUs for multifamily properties to eight units, with the stipulation that ADUs cannot outnumber the existing units in the main building.

How the 8-ADU Rule Works

SB 1211's provisions operate on a sliding scale:

Properties with 8+ Existing Units: Can build up to 8 detached ADUs, provided the ADUs don't exceed the number of existing multifamily units.

Example—10-Unit Apartment Building: Can add 8 detached ADUs (the maximum allowed), because 8 is less than the 10 existing units.

Example—6-Unit Apartment Building: Can add only 6 detached ADUs, because that matches the number of existing units.

Properties with 2-7 Existing Units: Can add detached ADUs equal to the number of existing units, up to the previous maximum or new maximum as applicable.

Parking Conversion Allowed: SB 1211 specifically prohibits local agencies from requiring replacement of off-street parking spaces when converting carports, covered parking structures, or uncovered parking lots into ADUs. This provision enables apartment buildings with large surface parking lots to convert that parking into ADUs.

Pacific Beach Multifamily ADU Opportunities

Pacific Beach contains numerous older apartment buildings with substantial lots and surface parking—ideal candidates for SB 1211 ADU expansion. Properties along Garnet Avenue, Mission Boulevard, and other commercial corridors often feature small apartment buildings (4-12 units) on oversized lots with surface parking that could be converted to ADUs.

Investment Strategy—Parking Lot Conversion: An 8-unit apartment building in Pacific Beach with a large surface parking lot could add 8 detached ADUs (approximately 600-800 square feet each), converting underutilized parking into income-generating housing.

Revenue Impact Analysis:

• 8 ADUs × $2,200 average monthly rent = $17,600 monthly gross revenue
• $211,200 annual gross rental income from ADU additions
• Construction cost: 8 ADUs × $350,000 average = $2,800,000 total investment
• Gross yield: 7.5% before expenses
• Property value increase: typically 25-35% appreciation when adding substantial rentable square footage

Commercial Property ADU Conversion: SB 1211's parking conversion provisions also apply to commercial properties with residential components, creating opportunities for mixed-use development in Pacific Beach's commercial corridors.

Setback and Design Requirements Still Apply

SB 1211 doesn't eliminate standard ADU regulations. The eight detached ADUs must still comply with:

• 4-Foot Side and Rear Setbacks: Standard ADU setback requirements
• 16-Foot Height Limit: For ADUs within setbacks (up to 25 feet when outside setback zones)
• Minimum 150 Square Feet / Maximum 1,200 Square Feet: Standard ADU size limits
• Fire Safety and Building Code Compliance: All current building codes and fire safety requirements

These requirements remain manageable on multifamily lots with substantial land area, but may constrain ADU numbers on smaller multifamily parcels.

Pacific Beach Investment Strategy: Building ADU Portfolios Under 2026 Laws

Maximum ADU Potential on Single-Family Lots

Under 2026 California law, a single-family residential lot in Pacific Beach can contain up to three dwelling units:

1. One Primary Single-Family Residence: The existing house
2. One ADU: Either detached or attached to the main house, up to 1,200 square feet
3. One JADU: Up to 500 square feet, created within the existing primary residence

With AB 976's elimination of owner-occupancy requirements, all three units can be rented simultaneously while the owner lives elsewhere.

Pacific Beach ADU Investment ROI Analysis

Let's analyze a realistic Pacific Beach ADU investment scenario:

Property Acquisition:

• Purchase price: $1,400,000 (single-family home in Pacific Beach)
• Down payment (25%): $350,000
• Mortgage: $1,050,000 at 7% = $6,986 monthly

ADU Development:

• Detached 800 sq ft ADU construction: $400,000
• JADU conversion (separate bathroom): $80,000
• Total development investment: $480,000

Rental Income (all three units rented):

• Primary residence (3BR/2BA): $4,500/month
• Detached ADU (2BR/1BA): $3,000/month
• JADU (studio): $1,500/month
• Total monthly rental income: $9,000

Cash Flow Analysis:

• Monthly rent: $9,000
• Mortgage payment: $6,986
• Property taxes ($17,500/year): $1,458
• Insurance: $250
• Maintenance reserve (8%): $720
• Net monthly cash flow: -$414

While this scenario shows slight negative cash flow, it demonstrates:

Tenant-Paid Mortgage: Tenants cover 97% of carrying costs

Property Appreciation: Pacific Beach properties historically appreciate 4-6% annually. On a $1,400,000 property, that's $56,000-$84,000 annual appreciation.

ADU Value Addition: Properties with ADUs typically see 25-35% value appreciation beyond standard market appreciation due to increased income potential.

Tax Benefits: Mortgage interest, depreciation, and operating expenses provide substantial tax deductions.

Exit Strategy: The property can be sold with three income-generating units, commanding premium pricing from investors seeking cash-flowing assets.

Portfolio Approach: Multiple Properties with ADUs

AB 976's elimination of owner-occupancy enables true ADU portfolio development. An investor could:

Strategy—Acquire 5 Pacific Beach Properties Over 3 Years:

• Purchase one property per year with 3.5% down (FHA/low down payment)
• Add one ADU to each property ($400,000 each)
• Total portfolio: 5 primary residences + 5 ADUs = 10 rental units
• Combined rental income: $9,000 × 5 properties = $45,000 monthly
• Portfolio value after 5 years with appreciation: $8-10 million

This portfolio approach was impossible under previous owner-occupancy requirements, as the investor would have had to reside in each property. AB 976 enables professional ADU investment management at scale.

La Jolla and Bird Rock Premium Markets

La Jolla and Bird Rock command substantially higher rents than average Pacific Beach properties:

La Jolla ADU Rental Rates: $3,500-$4,500 monthly for well-appointed detached ADUs near the Village

Bird Rock Investment Opportunities: Properties are already being marketed with ready-to-implement ADU plans, highlighting equity growth and rental income potential

Market Stability: The La Jolla luxury market forecast for 2026 indicates pricing will remain firm due to limited land availability and sustained coastal living demand

For investors targeting premium returns, La Jolla and Bird Rock ADU investments offer higher rents with similar construction costs compared to Pacific Beach, generating superior cash yields.

Coastal Construction Premium Considerations

Pacific Beach, La Jolla, and Mission Beach properties face elevated construction costs compared to inland San Diego:

Coastal Development Permit Requirements: Properties in the Coastal Zone (generally west of I-5) require additional permitting, though AB 462's 60-day CDP mandate significantly improved approval timelines.

Salt Air Corrosion Protection: Coastal construction requires enhanced corrosion protection for hardware, fasteners, and mechanical systems—adding 5-10% to construction costs.

Foundation Engineering: Coastal soils often require enhanced foundation engineering, particularly in areas with high water tables or sandy soils.

Premium Materials: Many coastal property owners choose premium finishes to match the neighborhood aesthetic and command higher rents, driving per-square-foot costs from $375-$600 rather than inland averages of $300-$450.

Despite these premiums, coastal rental rates typically exceed inland rates by 30-50%, justifying the additional investment.

Financing ADU Investment Properties

AB 976's elimination of owner-occupancy requirements also impacts ADU financing:

Investment Property Mortgages: Properties purchased specifically for ADU investment require investment property loans (typically 20-25% down, higher interest rates than owner-occupied mortgages).

ADU Construction Financing Options:

• Home Equity Line of Credit (HELOC): Borrow against existing property equity at 8-10% interest
• Cash-Out Refinance: Refinance existing mortgage to pull out cash for ADU construction
• ADU-Specific Construction Loans: Several lenders now offer ADU construction loans with 10-15% down and streamlined approval
• Personal Loans: Unsecured personal loans up to $100,000 for smaller JADU conversions

Investment Property Loan Challenges: Properties with existing ADUs may face appraisal complications, as some lenders struggle to appraise multi-unit properties on single-family lots. Working with lenders experienced in ADU valuations is essential.

Conclusion: 2026 Marks ADU Investment Revolution in Pacific Beach

The comprehensive package of ADU legislation taking effect in 2026 represents the most significant regulatory transformation in California housing policy in decades. AB 976's permanent elimination of owner-occupancy requirements removes the fundamental barrier that prevented ADUs from functioning as true investment properties. Combined with AB 434's pre-approved plans, AB 543's 15-day completeness mandate, AB 2533's unpermitted legalization pathway, AB 1154's JADU flexibility, and SB 1211's multifamily expansion, the 2026 regulatory framework creates unprecedented opportunity for strategic real estate investors.

For Pacific Beach, La Jolla, Mission Beach, Bird Rock, and Tourmaline Surfing Park area property owners, this isn't just regulatory reform—it's the opening of an entirely new investment strategy. The ability to build ADU portfolios across multiple properties, generate rental income without living on-site, and develop multifamily properties with up to 8 additional units fundamentally changes the economics of coastal San Diego real estate.

The California Construction Cost Index shows costs have risen 44% from 2021-2025, with detached ADUs now costing $300,000-$450,000 in San Diego's coastal markets. Despite these substantial upfront investments, the combination of rental income ($2,000-$3,500 monthly), property value appreciation (25-35% for properties with ADUs), mortgage paydown by tenants, and tax benefits creates compelling investment returns—particularly in Pacific Beach's supply-constrained coastal market where the 2026 forecast indicates sustained demand and limited inventory.

The 2026 ADU legislative package positions accessory dwelling units as legitimate investment vehicles. For the first time in California history, property owners can approach ADUs the same way they approach any other income-producing real estate: as professional investments evaluated on cash flow, appreciation, and portfolio diversification—without the artificial constraint of having to live on-site.

Pacific Beach property owners who move quickly to capitalize on the 2026 regulatory framework will establish first-mover advantage in what is likely to become the dominant small-scale residential development strategy in coastal California for the next decade.