Can You Sell Your Pacific Beach ADU as a Condo in 2026?

The Historic Vote That Could Transform Pacific Beach Real Estate

On December 5, 2025, the San Diego County Planning Commission unanimously approved groundbreaking rules that could revolutionize how Pacific Beach homeowners think about accessory dwelling units. The commission's decision paves the way for ADUs to be sold separately as condominiums—a move that would make San Diego County only the second in California, after San Francisco, to adopt such a program under Assembly Bill 1033.

The Board of Supervisors is scheduled to vote on this measure in March 2026. If approved, Pacific Beach homeowners who build ADUs could eventually sell them as standalone condominiums rather than being limited to renting them out or selling them only with the primary residence.

This isn't just a regulatory tweak—it's a fundamental shift in how coastal San Diego homeowners can leverage their property. With Pacific Beach median home prices at $1.65 million and strong demand for walkable, beach-adjacent housing, the ability to sell an ADU separately opens entirely new investment strategies.

What Is AB 1033 and Why Does It Matter?

Assembly Bill 1033, signed into law by Governor Gavin Newsom in October 2023, gave California cities and counties the authority to allow ADUs to be sold separately from the primary dwelling through condominium conversion. However, the law is opt-in, meaning each jurisdiction must proactively choose to implement it.

As of late 2025, only a handful of California jurisdictions have adopted AB 1033 programs. The City of San Diego implemented it in August 2025, San Jose opted in during June 2024, and San Francisco approved its program in July 2025. Santa Monica and Santa Cruz have also joined this progressive group.

What makes San Diego County's potential adoption significant is that it would affect all unincorporated areas of the county, opening opportunities for thousands of homeowners beyond city limits. For Pacific Beach residents specifically, since Pacific Beach is within San Diego city limits, they would already fall under the city's August 2025 adoption—but the county vote matters for neighboring areas like La Jolla Shores (partially unincorporated) and helps establish regional momentum for ADU investment.

Key Differences: County vs. City Programs

In a notable departure from county staff recommendations, the Planning Commission voted to allow both attached and detached ADUs to be eligible for condominium conversion. County staff had originally recommended limiting the program to detached ADUs only, citing concerns about complexity and infrastructure impacts in rural areas.

Commission Chair Ronald Ashman advocated for the broader approach, noting that areas like Spring Valley and Bostonia—closer to urban cores and public transit—could benefit from the flexibility of selling attached ADUs. This decision means homeowners won't be limited to building standalone structures in their backyards; they could also convert garage space or build an attached addition and eventually sell it separately.

The ADU Boom in Coastal San Diego: By the Numbers

San Diego County has experienced explosive ADU growth in recent years, particularly in desirable coastal communities like Pacific Beach, Mission Beach, La Jolla, and Bird Rock. The statistics are striking:

• 2020: Just 159 ADU permits issued in unincorporated county areas
• 2024: 489 ADU permits issued—a 207% increase in four years
• 2021-2024 total: 1,552 ADU residential building permits in unincorporated areas

During this same period, traditional single-family home permits in the county dropped from 960 in 2021 to just 336 in 2024. ADUs have become the dominant form of new residential construction, accounting for a significant portion of the county's state-mandated housing goals.

Between 2021 and 2029, San Diego County must permit 6,700 housing units in unincorporated areas. By the end of 2024, 5,647 permits had been issued—84% of the goal—with ADUs playing a crucial role in reaching these numbers.

Pacific Beach ADU Market Dynamics

Pacific Beach presents particularly compelling economics for ADU construction and potential condo conversion. The neighborhood's unique characteristics make it ideal for this investment strategy:

• High rental demand: ADUs in Pacific Beach rent for $2,100 to $3,000+ per month, driven by young professionals, students at UC San Diego, and those seeking a coastal lifestyle
• Property value premiums: Oceanfront properties sell for $2.5 million to $5 million, while inland single-family homes average $1.65 million
• Strong appreciation: Pacific Beach home prices increased 4.5% year-over-year in 2025
• Investor interest: Rental yields in Pacific Beach reach 5-7%, among the highest in San Diego County

Financial Analysis: Renting vs. Selling Your Pacific Beach ADU

For Pacific Beach homeowners considering an ADU, the potential to eventually sell it as a condo fundamentally changes the financial calculus. Let's examine both scenarios with real market data.

Scenario 1: Long-Term Rental Strategy

Construction Investment:

• 750 sq ft detached ADU: $280,000-$367,500 (at $375-$490/sq ft)
• Permit fees: $6,500-$15,000
• Separate utilities/meter: $15,000-$30,000
• Total investment: $300,000-$410,000

Rental Income:

• Conservative estimate: $2,400/month ($28,800/year)
• Aggressive estimate: $3,000/month ($36,000/year)
• 10-year income: $288,000-$360,000 (before expenses)

Property Value Increase: Industry rule of thumb suggests an ADU adds approximately 100 times monthly rental value to your home. A $2,500/month ADU would add roughly $250,000 to your property value. Research shows homes with ADUs in the Pacific region see an average 35% increase in resale value.

Scenario 2: Build-to-Sell Condo Strategy (Post-March 2026)

If the Board of Supervisors approves AB 1033 in March 2026, a different strategy becomes possible—though with important caveats.

Same Construction Investment: $300,000-$410,000

Additional Condo Conversion Costs:

• Condominium map preparation: $5,000-$15,000
• Survey and legal descriptions: $3,000-$8,000
• Attorney fees for CC&Rs and condo documents: $5,000-$15,000
• HOA establishment costs: $2,000-$5,000
• Additional utility separation (if not done initially): $10,000-$25,000
• Total conversion costs: $25,000-$68,000

Potential Sale Price:

Based on Pacific Beach condo market data, a 750 sq ft ADU-condo near the beach could sell for $650,000-$875,000, depending on location, finishes, and proximity to the ocean. However, this assumes:

• You can secure lienholder consent (all mortgage holders must approve)
• The ADU qualifies under program requirements
• Market conditions remain favorable
• Conversion timeline of 2-3 years from approval

Net Proceeds Analysis:

• Sale price: $700,000 (mid-range estimate)
• Less construction: -$355,000
• Less conversion costs: -$46,500
• Less real estate commission (5%): -$35,000
• Net profit: $263,500

The Critical Time Factor

Real estate experts caution that ADU ROI is heavily time-dependent. Sherry Chen, an ADU specialist and Realtor at Compass, advises: "An ADU is a good idea if they are looking for valuable cashflow now, plus long-term appreciation in at least a three to five year timeframe. If they plan to sell in a shorter time frame, then they might risk not seeing their ROI pan out."

County officials note that converting an ADU to a condo "could take up to two to three years" after program approval due to state requirements for private access, parking, and utilities. In San Jose, which became the first city authorizing such sales in July 2024, only one ADU had sold as a condo by late 2025—demonstrating the program's slow initial uptake.

How to Build an ADU Today That Qualifies for Future Condo Conversion

If you're planning to build an ADU in Pacific Beach now with the intention of potentially selling it as a condo once the county program is approved, strategic design decisions today will save significant expense and hassle later.

1. Separate Utilities From Day One

AB 1033 requires that ADUs sold as condos have separate utility connections for independent billing. This includes:

• Electricity: Install a separate electric meter during construction
• Water: Coordinate with the city water department for separate metering capability
• Gas: If applicable, ensure separate gas service
• Sewer/Trash: Plan for separate billing arrangements

Retrofitting utilities after construction can cost $10,000-$25,000 or more. Building with separation from the start typically adds $15,000-$30,000 to initial costs but is more cost-effective long-term.

2. Design for Independent Access

Condo conversion requires that the ADU have independent access that doesn't require crossing the primary dwelling's private space. For Pacific Beach lots, this means:

• Dedicated pathway from street to ADU entrance
• Separate address and entrance
• No shared interior spaces with primary residence
• Adequate parking (typically one space per unit)

3. Ensure Legal Lot Compliance

Work with your contractor and surveyor to verify:

• Your property can legally be subdivided under current zoning
• Setback requirements are met for both structures as separate parcels
• Fire separation requirements between buildings
• Compliance with Coastal Zone regulations (Pacific Beach is in the Coastal Overlay Zone)

4. Plan for Lienholder Consent

One of AB 1033's most significant hurdles is the lienholder consent requirement. Every mortgage, deed of trust, or lien on your property requires written approval before you can record a condominium map and sell the ADU separately.

Contact your lender early to:

• Understand their policy on ADU condo conversions
• Determine if they'll require refinancing or additional terms
• Get preliminary approval in writing
• Consider paying down or refinancing loans before conversion

Lenders can refuse consent or impose conditions such as higher interest rates, reserve requirements, or revised collateral language. Some homeowners may find it easier to pay off their mortgage entirely before attempting condo conversion.

5. Document Everything

Maintain detailed records of:

• All permits and approvals
• Construction plans and as-built drawings
• Utility separation documentation
• Inspection reports and certificates of occupancy
• Property surveys and legal descriptions

These documents will be essential when preparing the condominium map and CC&Rs required for conversion.

What Pacific Beach Can Learn From San Francisco's AB 1033 Program

San Francisco's program, approved unanimously by the Board of Supervisors in July 2025, offers valuable insights for San Diego County homeowners. The San Francisco ordinance established several key eligibility criteria:

San Francisco Eligibility Requirements

• Property contains four or fewer existing dwelling units
• ADU application submitted on or after May 1, 2025
• ADU must be either:
  • A newly constructed, detached unit on a lot with an existing single-family home, OR
  • An attached or detached unit that is part of a new single-family home or new condominium project
• Cannot be a Junior ADU (JADU)
• Must be approved under the city's ministerial approval programs

Success Metrics From Other Markets

While San Francisco's program is too new to show results, other cities that removed regulatory barriers have seen dramatic ADU construction increases. Seattle removed barriers in 2019 and issued nearly 1,000 ADU permits—more than four times the 2018 number.

Oregon, Texas, and Seattle have all had success with sellable ADUs, demonstrating that the concept works when properly implemented.

Key Lessons for Pacific Beach Homeowners

1. Start with compliant design: Build to condo standards from day one rather than trying to retrofit
2. Understand the timeline: Don't expect immediate conversion; plan for 2-3 years minimum
3. Rental income first: Generate rental income while waiting for conversion approval and market timing
4. Monitor program evolution: San Diego County's program will likely evolve based on early results

Coastal Zone Considerations for Pacific Beach ADUs

Pacific Beach homeowners face an additional layer of complexity because the neighborhood falls within the California Coastal Zone, which triggers special permitting requirements.

Coastal Development Permits

Properties in the Coastal Overlay Zone typically require either a Coastal Development Permit or an exemption before ADU construction can begin. This process:

• Adds 5-8 months to the approval timeline (versus 3-4 months for non-coastal areas)
• Requires additional environmental review
• May impose restrictions on height, size, and placement
• Often includes public access and view corridor considerations

The City of San Diego's implementation of AB 1033 within the Coastal Zone is subject to certification by the California Coastal Commission, expected in 2026. This means Pacific Beach homeowners should monitor both the county's March 2026 vote and the Coastal Commission's certification process.

Design Strategies for Coastal Properties

To maximize approval chances and future condo conversion potential:

• Keep ADU height conservative (single story when possible)
• Position ADUs to minimize view impacts to neighbors
• Use drought-tolerant, coastal-appropriate landscaping
• Consider beach-compatible architecture and materials
• Maximize parking to exceed minimum requirements

The March 2026 Vote: What to Watch For

The San Diego County Board of Supervisors' vote in March 2026 will be critical for determining how the program takes shape. Based on the Planning Commission's December 2025 recommendation, homeowners should pay attention to:

Key Decision Points

1. Attached vs. Detached: Will supervisors uphold the commission's recommendation to allow both, or limit to detached only?
2. Rural Area Restrictions: Will special provisions apply to rural communities with infrastructure concerns?
3. Implementation Timeline: How quickly will the program become operational after approval?
4. Fee Structure: What will conversion fees and charges look like?
5. Coastal Zone Coordination: How will the county program integrate with Coastal Commission requirements?

Strategic Timing: When to Build Your Pacific Beach ADU

Given the evolving regulatory landscape, Pacific Beach homeowners face a strategic timing question: Should you build now or wait until after the March 2026 vote?

Case for Building Now

• Start earning rental income immediately: $2,400-$3,000/month in Pacific Beach
• Lock in current construction costs: California Construction Cost Index has increased 44% from January 2021 to September 2025
• Qualify for current incentives: CalHFA ADU Grant (up to $40,000) and San Diego Housing Commission programs
• Build to future condo standards: Incorporate separate utilities and access now
• Hedge your bets: If condo conversion doesn't work out, you still have a valuable rental asset

The Hybrid Approach

Many Pacific Beach homeowners are pursuing a hybrid strategy:

1. Design now: Work with architects and contractors to create plans that meet both current and anticipated condo conversion requirements
2. Secure permits: Get ADU permits approved under current rules
3. Begin construction in early 2026: Start building after the March vote clarifies final rules
4. Rent initially: Generate income for 2-3 years while completing condo conversion process
5. Convert when optimal: Choose the right market timing for condo sale

Working With Pacific Beach Builder for Your ADU Project

As a general contractor serving Pacific Beach, La Jolla, Mission Beach, Bird Rock, and Tourmaline Surfing Park, Pacific Beach Builder has extensive experience navigating the complex requirements for coastal ADU construction.

Our AB 1033-Ready Approach

We help homeowners prepare for future condo conversion from day one by:

• Separate utility design: Installing independent water, electric, gas, and sewer connections
• Coastal Zone expertise: Managing Coastal Development Permits and California Coastal Commission requirements
• Condo-compliant construction: Building to condominium standards for fire separation, soundproofing, and building codes
• Legal access planning: Designing dedicated entrances and pathways that support future subdivision
• Survey coordination: Working with surveyors to prepare accurate legal descriptions and site plans

Understanding the Full Timeline

For Pacific Beach ADU projects with future condo conversion potential, expect:

• Design phase: 2-3 months
• Coastal Zone permitting: 5-8 months
• Construction: 6-12 months (depending on size and complexity)
• Rental period: 2-3 years minimum (building equity and cash flow)
• Condo conversion process: 2-3 years (after March 2026 approval)
• Total timeline to sellable condo: 5-7 years from initial planning

This extended timeline reinforces why ADUs should be viewed as long-term investments rather than quick flips.

Conclusion: Preparing for the AB 1033 Opportunity

San Diego County's potential adoption of AB 1033 in March 2026 opens unprecedented opportunities for Pacific Beach homeowners to transform their properties into multi-unit investments with flexible exit strategies. Rather than choosing between building an ADU for rental income or for property value appreciation, homeowners can now pursue both objectives sequentially.

The key to maximizing this opportunity lies in strategic planning today:

1. Design for tomorrow: Build ADUs with separate utilities and independent access from the start
2. Understand the timeline: Plan for 5-7 years from initial design to condo sale
3. Secure lienholder cooperation: Address mortgage consent issues early in the process
4. Generate income while waiting: Rent the ADU for $2,400-$3,000/month during the conversion period
5. Work with experienced contractors: Choose builders familiar with both Coastal Zone requirements and condo conversion standards

The March 2026 Board of Supervisors vote will provide crucial clarity on program details, but Pacific Beach homeowners can begin preparing now. Whether you ultimately choose to sell your ADU as a condo or continue renting it, building to conversion standards ensures maximum flexibility for the future.