What Accessory Dwelling Units (ADUs) Mean for Housing
Just what is an Accessory Dwelling Unit (ADU)? Typically less than 1,000 square feet, an ADU is a separate, functional, and complete living space that typically looks like one of three options:
The ADU is inside a primary residence, like in a renovated basement or attic.
The ADU is attached to a home, in a renovated garage space, or in a room addition.
The ADU is separate from the home but still on the property grounds. Perhaps in an updated carriage house or standalone garage.
The ADU is often synonymous with "mother-in-law" suites or a "granny flat" based on the design and build. However, the trend of building ADUs has caused these units to distinguish themselves from other architectural designs.
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Where Are Accessory Dwelling Units Seeing Growth?
ADUs have seen a surge of interest and growth in California, Florida, Texas, and Georgia, according to data recorded by Freddie Mac. These states have some of the largest U.S. cities where the population is growing the fastest.
From 2009 to 2019, Freddie Mac reported that ADU listings increased at an average annual rate of 8.6%. During these 10 years, the number of ADU listings relative to total listings rose from 3.5% to 6.6%.
Freddie Mac cites the lack of affordable housing as a likely cause of the increase in purchasing ADUs. In April 2020, the average U.S. home cost estimate was $246,334. A year later, the new average U.S. house cost estimate is $287,148 – up a staggering 13.2%.
It’s no wonder states like California are taking drastic measures to loosen regulations on building ADUs. In 2020, the state of California alone issued 12,392 ADU building permits.
What Makes Accessory Dwelling Units Popular?
ADUs are popular with homeowners for several reasons:
Affordability
As the cost of housing continues to rise, homeownership may not be possible for all families. However, ADUs shift this reality. Building an ADU is much cheaper compared to a new dwelling because it requires far fewer resources to construct.
Accessory dwelling units also have market implications for affordability. In heavily urbanized cities, activists and urban planners are looking for any way to address the supply shortage and ease the upward pressure on property prices. By adding more homes on existing lots, policymakers hope to contribute to more affordable housing options in their cities.
Multigenerational Living
ADUs provide the option of multigenerational living with ease. This is becoming more critical for many families as expanded families and caretaking become more of a norm.
Many homeowners with aging parents, for example, like the idea of setting their loved ones up in their own ADU space and providing for all their needs at home.
Rental Revenue
Homeowners don't always keep ADUs in the family. Sometimes they rent their properties out to properly vetted tenants. If homeowners decide to rent their ADU, they will take in a great deal more revenue – a decided perk.
Increased Property Value
Homeowners like the idea of ADUs for the opportunity to increase their property value. There isn't a standard one-size-fits-all in terms of how much ADUs increase the value of a home.
Research shows that, generally, the property value increases by 7.2%-9.8%, but that depends on how the ADU space looks. Also, the homeowner must ensure the space is legally rentable.
Multi-Purpose Space
Homeowners who run their businesses or work from home can utilize their ADU as their home office. ADUs present the perfect opportunity for homeowners to invite clients to their professional office space, home salon, or other business site.
Accessory Dwelling Unit Considerations
The following factors are vital influencers in style and should be taken into consideration when designing ADUs:
1. Flexibility
When drawing up design plans to creatively utilize ways to engage space, think "flexible." A homeowner might initially want an ADU as a home office but might need to rent to tenants in a year. Stay flexible in your initial architectural design, and this will save everyone a headache later.
2. Multi-functionality
ADUs have less than 1,000 feet of space, so maximize each inch to utilize the area. Prioritize functionality in the placement of doors and windows. There is a variety of furniture that can be used for multiple purposes or even folded down when not needed.
3. Timeless Over Trendy
Because the use of ADUs changes so regularly, it's best to design with a timeless look in mind, using a neutral color palette. Encourage a stylish flair, however, with interior and exterior decorations.
A Note About Code Restrictions
While several large cities have recently lifted restrictions, local codes often present challenging roadblocks to designing ADUs. Receiving the proper permits and still building an ADU in the manner the homeowner wishes can, unfortunately, require quite a bit of time and money. However, this hasn't seemed to diminish the popularity of the ADU.
Accessory Dwelling Units in the Future
Homeowners love the ADU for its affordability, multigenerational living options, and rentability. If current trends continue, the ADU will likely remain a staple in real estate markets for a considerable time to come.
Author Bio: Evelyn Long is a writer and editor-in-chief for Renovated, a web magazine for the home industry. Her work focuses on design and construction tactics for industry professionals.
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