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A big shout out to Max Bergstrom and his podcast Elite Zone! Max has been instrumental in helping me develop my first 2 podcasts, and is an excellent coach!

WHO LET THESE ALLIGATORS LOOSE AND HOW DID THEY DO IT?

San Diego, California, 2025

Alligators and the New Class of LIMBYs

In one fell swoop, the State of California took away the most important of all single family homeowners’ property rights. What right did they take away? The right to remain single-family neighborhoods, along with the right to the quiet enjoyment of their property.

Single family neighborhoods, and the homeowners within them, it was argued, needed to sacrifice their right for the greater good of the larger community. Drastic action was necessary to solve a crisis that had spun out of control.

It is the people who are making the sacrifice for the rest of us that keeps me awake at night. It is these folks who’ve had to “take one for the team” for the rest of us. They are the new LIMBY (Look In My Backyard) class.

That fell swoop was SB 9. Homeowners can now split their single-family lot, sell off the split lot, or retain it to build up to 4 units.

The only caveat? If units are built on the second parcel, one of them must be owner-occupied for a period of three years. This requirement was put into the new law to prevent non-occupant developers (LLCs, etc) and investors from profiteering off a law intended to allow bona-fide homeowners to increase the housing supply.

It was adopted by the City of San Diego in April 2022. It was ruled unconstitutional by a Los Angeles Superior Court judge in April of 2024 and now under appeal. But by 2022, some alligators got loose.

When the Mayor and City Council adopted SB 9, they coupled it with their aggressive ADU (accessory dwelling units) Bonus Density Incentive policy to spur growth. Their goal was to help solve the lack of housing in San Diego. ADU construction proliferated under the new ADU rules.

Unfortunately, one provision of the new rules favor a certain type of investor. Unlike the State’s bill SB9, the owners of single family properties are not required to occupy any of the added units.

Many homeowners in single family neighborhoods add a few units to their homes, some for their children, and some for new renters. They are considerate of their neighbors by making the units conform to the neighborhoods surrounding them with careful design and provide parking spaces for their new tenants.

Alligator project investors are different.

They have no intention of living at the properties they are building. They can build up to 17 units on a single family lot and don’t plan to live in the units they build, thererby avoiding the consequences of looking their neighbors in the eye to see the distruption they cause by poor design, dangerous overcrowding of the units and providing no parking spaces. They have no concern for the load their projects put on the older infrastructure of these neighborhoods. Water, sewage, and the electrical grid.

Instead of aquiring raw land to build new units, institutional investors take advantage of the new ADU laws to build apartments in our older single-family neighborhoods. These apartment complexes are not “granny flats” in any stretch of the word. To my knowledge, I’ve never met anyone with 17 grannies.

This practice of building mini-apartement complexes in single family neighborhoods is spiraling the cost of home-ownership as new buyers are being shut out of the market and current homeowners are “locked in place.”

Our older neighborhoods, Bay Park, La Mesa, College Area, Encanto,etc., were traditionally the entry point for first time homebuyers because of lower prices and available homes.

Under the provision of AB 976, an new State law, local planning authorities are prohibited from imposing an owner-occupancy requirement under a city’s ADU program.

It seems ironic that they included the caveat in SB 9, but not in their rules for ADUs.

This is the door that Alligator projects use to infiltrate our neighborhoods. And our city lawmakers are prohited from closing it!

Because the builders of these projects aren’t required to occupy the units they build, coupled with Bonus Density incentives in San Diego’s Commplete Communities program, these investors are outbidding first time homebuyers as they seek to convert single-family homes into massive multiple unit mini-apartment properties.

By offering all cash incentives they are making bids on our available housing inventory that are higher than first-time homebuyers because of the returns available for the conversion into multi-units.

First-time homebuyers can’t compete and the result is an artificial inflation of home prices.

As investors out-bid, waive home inspections, and close escrows sooner than first-time homebuyers, these neccesary first time homebuyers are frustrated from losing enough bidding wars, their inability to close quick escrows due to the time it takes to process a new home loan, and being forced to waive home inspections, so they soon disappear from the market.

Current homeowners in these older neighborhoods are faced with the same bidding wars when they want to move up, and as a result, they are locked-in to their homes with no adequate movement in the market. When they do move up to the few homes that are available due to job transfers, divorces, or death, they end up in bidding wars amongst themselves and the endless loop of rising prices continues.

Other homeowners who would like to move up can’t because of high interest rates and prefer to remain in their current property because of historic low refinance rates that they took advantage of in the past five to ten years. No one wants to trade their current 3% interest rate for a new 6.63% rate. It ends in a dreadful stalemate.

Without the normal market flow of the entry of first-time homebuyers and the willingness of current homeowners to move up, the normal real estate market slows to a halt.

Maybe local lawmakers didn’t understand the unintended consequences that implementation of the new housing law could do to prices. We know now.

Resident Californians, those of us who live and work here, are losing the chance at homeownership and aquiring equity through purchases of the property that the Alligator gobbles up and retains in their portfolios as rentals.

After public outcry from neighborhoods, like Encanto, on March 4, 2025, the City Council decided to review it’s ADU incentive program and ruled to remove it from some token zones (RS 1-1, RS 1-2, RS 1-3, RS 1-4, RS 1-8, RS 1-9, RS 1-10 and RS 1-11) but they refused to remove in from R 1-7 which the majority of our neighborhoods are zoned. At the meeting, the City Council decided to re-evaluate the ADU rules during the next 90 days.

On March 25th, in a Press Release, the Mayor announced his proposal to reform his ADU Density Bonus Program. The impetus to do so came from the community outcry at the March 4th City Council Meeting.

It was those who were “taking one for the team” that forced the Mayor’s proposal to reform his own Complete Communities program and ADU rules.

The Federal Government is now talking about releasing public land for affordable housing development. These lands are the natural habitat for the Alligators who’ve been eating our existing housing stock.

As this process begins to take shape, our LIMBY neighbors need help from the larger community to resolve the destruction to their neighborhoods from, no matter the good intention, the State and San Diego ADU housing policy that set the Alligators loose upon them.

Public undeveloped land is where the Alligators belong, not in our existing neighborhoods. As those lands are released, some in areas previously protected, we need to transition to low Carbon Architecture.

I invite you to join me on March 29, 2025 for my Alligator Tour. Come view one of the many Alligator projects under construction. Walk the lot. Come with no agenda in mind. Come with an open mind and meet those of our community (LIMBYs) that now have to navigate solutions to live next to these mini-apartments. Come and make up your minds for yourselves.

For me, I would like to help these neighbors find The Way Home.

Jim LaMattery

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