The long-awaited Friend Compound laws in California

As someone that’s dealt with families trying to sell real estate owned jointly by several different families, owning real estate that requires all your friends and/or family to approve your sale sounds like a recipe for disaster.

> Otherwise what starts as a family compound will eventually just become a “normal” neighborhood of strangers.

That's explicitly noted as an advantage of the arrangement in the article.

It's called preemption, and it's a thing where I live.

A compound's members can have preemption to acquire a property when an outside buyer puts their money in an escrow for a contract that's already been signed. The preemptees have 30d-1y to come up with the same amount to purchase the property themselves or accept the new owner.

This way, property law isn't violated, because the seller still gets to sell their property for the agreed price no matter what others decide.

The real benefit here is the increased density of the neighbourhood. That's conducive to community even if it's strangers that move in. Combine this with mixed zoning that allows for commercial property (things like cafes and grocery stores) and suddenly you have a pathway for gradually turning faceless modern suburbs into walkable neighbourhoods with amenities.

That’s fine. My home will be for my children to grow up in, but the world is big. I would never constrain them to this place. Once we pass it’s okay if other families make this their home. What sin is it that’s others enjoy it after I am gone.

> In a friends/family compound that is subdivided, you need a covenant on the original deeds that controls what happens when a member wants to sell their lot, e.g. the existing members collectively have to approve the buyer, or have right of first refusal to buy back the property, etc

This sounds like reinventing the the often extremely long, complicated and onerous process of getting approved to buy into a coop in NYC.

I would hope that any real estate is subject to such covenants will be appropriately valued much less than traditional freehold / fee simple land.

Sounds like more fun than selling a co-op, even!

They're talking about buying one lot and splitting it into 6 micro lots. That sounds ridiculously small to me.

I think the idea is that you buy a house that has a lot that could easily support more houses. You live in the house that's there, and then you subdivide the lot and sell those smaller parcels for some amount to friends/family, who then finance the build of their own home.

So as the initial buyer, you're certainly spending some extra to get a house on a lot that's large enough (vs. a lot only large enough for your own house), but you're going to recoup some (all?) of that extra outlay from your friends/family. You're not financing the build of more homes yourself.

Also we need to be on the same page when it comes to lot size. Here in California it's common to have a house on a quarter of an acre of land or (much) less. You could easily build 6 -- maybe even 8 -- homes (1500 sqft or so each) on a 1-acre plot here, and no one would think that's unusual.

And sure, an acre of land in CA is not going to be cheap, but that certainly depends on where you buy it. But if you can get an acre for, say, $1M, and then sell sub-parcels to 5 of your friends for $200k each, that's... fine? Honestly that seems pretty standard here. But sure, in some places in CA you could get acre for $600k, or maybe less.

Yeah, I think the article captures that pretty well. The infographic shows 4 lots for 100k each.

In most cities it is close to impossible to find several lots for sale side by side.

Except that this is California, where real estate prices are crazy. And not just recently, prices have continually been getting less and less affordable for 40 years.

There could be macroeconomic forces that affect that estimate, but in Berkeley in the historical context of home prices it makes perfect sense.

Isn't homes becoming more affordable an intended side effect of this legislation?

Not sure I agree. The extent of the increase is certainly up for debate, but in a place like California where we have a housing affordability crisis, packing more housing units onto the same lot absolutely increases the value of the lot as a whole.

Now, certainly each individual house will be worth less than a single house on the lot would be. But the value of the lot+improvements will likely go up quite a lot.

Also consider that the value of the lot, unimproved, doesn't just magically go up once you get approval to build your friend compound. To get that $1M -> $2.5M increase in value, you probably have to invest a cool million into building the rest of the homes.

Do you have a source for this?

From what I've seen with infill in my area (Reston, VA, outside DC)... infill might slow the appreciation of adjacent property, but rarely/never hurts it. Surrounding property (>1 parcel away, give or take) generally increases in value, because along with the infill housing comes more amenities (commercial/retail redevelopment).

And for the property that was "infilled", the per unit price might be slightly lower, but the value of the entire property has gone up. Say the land cost $1 million, got split into 4 parcels, and each is now worth $275,000 (fabricated numbers).

EDIT - this isn't quite apples to apples, since we don't have the same rules as CA - we just have a massive amount of infill development happening along approved "density" corridors.

That’s absolutely not true. Higher population density almost always increases land values and it certainly would increase the total value of the land that was subdivided.

The goal of housing is not to grow or even maintain the wealth of the people who live there it is to to house people. If it should come about that A given neighborhood triple's in population and everyone's house is worth half as much I should count it as a success.

How many of these would it take to drive down property values in a neighborhood?

Yes, that's the whole subtext. These kinds of developments with multiple freestanding units on a single lot are generally disallowed by the previous generation of zoning and planning rules. Note how these changes are allowing "friend complexes" on lots zoned multifamily already.

Are you a churchgoer? Because they usually have a lot of families they know that want these situations.

This is for suburbia. There isn't massive demand for AirBnB in suburbia. There's such a massive shortage of housing that the small AirBnB demand is large relative to the supply of empty houses, but that's because a small number divided by a number very close to zero results in a large number. More supply will help a lot more than limiting AirBnB.

Instead of high density housing this will do slightly higher density in low density zones. You cannot really increase density by that much with it, but you for sure can cut the yards... And parking space.

I'm pretty sure this won't make housing more affordable by much. Or will even have an opposite effect. To build these houses a pretty serious investment or Amish-sized group is required. Who has that?

You are correct - in fact the OG “bestie row” compound in Texas is already a glorified Airbnb.

What all of this will do is fuel vacation villages for rich people to use a little and rent out a lot.

>In rural Colorado there is a law that makes subdividing lots under 35 acres very difficult.

Those sorts of laws are often to protect farms and ranches from being turned into subdivisions are generally a good thing if you want a stable food supply.

Same. I am living on about 40 acres in the 4 corners area and I'd really like to put in more infrastructure. Currently I have a bunch of non-permitted (built in the 90s) cabins together in one corner, running off of solar. I'm planning on building a septic and a cistern for this set of buildings and a larger, more permitted house on another part of the property this year.

I could have 6-10 tiny houses on this property and not have folks seeing each other, and I have the cash to just put in everything necessary. As written, the codes are not friendly towards that idea. I am still going to put in some RV hookups, at least- those are much less regulated than dwellings. My neighbors certainly aren't in a position to do the kind of complainaing that would lead to more attention from the county, and I'm at the end of a long series of oil field roads.

While I am an anarchist, I do understand the county's need to prevent folks from creating dangers to themselves and other folks. I just wish that everything didn't need to be massively profitable for some investors before variations on codes and planning could be grante.

Can condo or co-op (legal) structures solve this problem?

Where are those ten houses going to get water?

That's what a Bungalow Court is all about. They're kind of a dying breed, but have previously been very popular here in LA County.