There’s a lot of talk about how to solve the “affordable housing” crisis, but one solution has been around for centuries. There’s also one thing that has been slowing down the implementation of the solution: regulations.
You probably know them as “mother-in-law apartments,” or “garage apartments,” by whatever name you use, a second small house, typically under 1,000 square feet, built in the backyard of an existing home, or retrofitted into an existing house is legally referred to as an accessory dwelling unit (ADU). They’re about to become the hottest new trend of the next decade if governments allow them.
“If jurisdictions can agree on, come to terms with, and allow the kind of zoning and regulation changes needed to make it [ADUs] happen, we will see a tremendous increase in their construction across the country,” said Kol Peterson, ADU expert, and owner of Accessory Dwelling Strategies. Peterson graduated from the Harvard Graduate School of Design, has a Master’s in Design Studies, and a passion for ADUs. He’s also co-owner of The Tiny House Hotel and a sought-after speaker on ADU issues.
“In 2017 California made a state-wide change to force all cities to improve ADU regulations, but there are still some changes and more flexibility needed there. Housing crises are part of what drives the government to make changes, and there’s a housing crisis in California. We need bold local government leaders willing to make regulatory changes to make this happen across the country,” he said.
ADUs used to be extremely popular around the turn of the century. Think about the old carriage homes in the south and northwest (Virginia, Maryland, and Seattle, Oregon) and the “alley apartments” in DC and other large cities. ADUs fell out of favor for a variety of reasons, but as an option for affordable dwelling and smaller living spaces, and as an income generator for homeowners, they’re becoming more in demand.
Homeowner and Renter Demand
Homeowners, particularly those on fixed or limited incomes, are starting to take a second look at ADUs because it’s a good source of added income for them. Homeowners, whether a single owner, couple or family, have the option of moving into the ADU and renting their larger single-family home, or renting the ADU for less rent.
Renters are always looking for them because ADUs typically rent for a lot less, often a quarter to a half less than the monthly market rent for a one-family dwelling.
There’s definitely a demand for them, but not all ADUs are built or rented legally.
“Of course, that doesn’t stop people from building them, renting them, or living in them,” Peterson said. “We would just like to see more people able to legally build, own and rent them.”
Legal or illegal, unless someone complains, people are continuing to build ADUs.
“There are more than 13 million mostly un-permitted ADUs in America. That’s one-tenth of all residential housing stock in the country,” Peterson said. “That number alone is evidence that there’s a need and demand for ADUs. One to two person households now represent the majority of the country’s households. Nationwide, only 38% of households have more than three or more people in them. Close to two-thirds of the population in the US are living in one-to-two person households.”
What does that mean for the housing crisis? That without more small housing infill options like ADUs, the crisis will compound.
“One-to-two person households are eating up the single-family housing market. There is a scarcity of family housing because there aren’t enough homes for singles and couples to rent. So, they rent more home than they need. ADUs are a niche market. They’re meeting the demand for one-to-two person dwellings.”
Peterson said more ADUs could be built and would be built legally if regulations concerning their construction were more flexible, well-written, and available.
“Many of the reasons regulations aren’t homeowner friendly revolve around economics and highly restrictive regulations such as parking, requiring property owners to own and live on the property,” he said.
Considering what ADUs have to offer, cities need to be taking a second look at what community benefits are. These dwellings can be a good fit for young couples, empty nesters, millennials, college students, those who travel often and seniors. The cost offers an alternative to those who live in pricey, urban areas.
While it’s still largely unknown what role ADUs play in the housing market as a whole, Peterson and others believe they’re becoming a niche form of development that can help cities grow. They also believe they’re about to become a mainstream real estate product with their own financing mechanisms.
“There are so many reasons ADUs make sense,” Peterson said. “They provide flexible dwelling options in central city neighborhoods, they utilize existing governmental infrastructures like roads, sewers and schools. They reduce the demand for expanding infrastructure in far-lying reaches of a developed metropolitan area too.”
If you’re looking for a home with some really cool add-ons check out our listings at homes.com. Before you consider adding an ADU to your property, make sure you follow all codes and compliances set forth by your municipality.