In a time where housing prices are unattainable and residents are looking to downsize their homes more than ever, enter the concept of Accessory Dwelling Units (ADUs). These small and highly customizable homes are taking backyards across the United States by storm, enabling homeowners to build homes on their land, and rent them out to tenants.
An accessory dwelling unit is an additional housing unit that is built on a lot that already has one home. As the name suggests, an ADU is smaller than the existing home, ranging anywhere from 500 to 1,000 SF. Similar to a standard home, an ADU has all of the spaces and amenities needed for a tenant to live comfortably, including a kitchen, bathroom, living/sleeping spaces, and a completely separate entrance from the main unit, allowing for privacy. While ADUs come in all shapes and sizes, the most common form is a detached structure. Sometimes these units are former garages converted into living spaces, and sometimes they’re built from the ground up. Other ADUs are attached structures, which are like micro-apartments built onto the back of a home, sharing a wall with the main unit.
ADUs offer a sort of flexibility for the younger generation of homeowners, especially Millenials, who are in the stage of their lives buying their first or second home. Over the pandemic, many millennials moved back home to save money, and ADUs offered a private space to work from home and socialize with friends away from their families. In a report by Freddie Mac, the number of homes with ADUs in the United States rose to 7%, up from 1% almost two decades earlier, signaling that the interest and demand for these units are on the rapid rise. On a larger scale, there's a significant need for housing across the US right now, making right now a great time to take a closer look at the potential that ADUs can unlock. The single-family housing market is being strained, with the demand significantly outpacing the supply. Especially given the unknown economic outlook, more and more potential homeowners are turning to rental units and owning smaller homes.
Los Angeles has recently been looking toward ADUs as a means to solve its long-term housing shortage crisis. Recently, they launched the Accessory Dwelling Unit Standard Plan Program, which allows homeowners to choose from twenty different pre-approved designs for their own ADUs. Coordinated through the Los Angeles Department of Building and Safety (LADBS), the designs come from some of the most creative and high-profile firms, including SO-IL, who designed a starburst shape home measuring about 700 SF. The LADBS program was developed to fast-track the permitting process, while also breaking down some of the financial barriers that might deter homeowners from building ADUs on their properties. Ever since the state of California approved legislation to streamline the way that ADUs could be approved and constructed five years ago, 22% of new housing permits are for ADUs. Their popularity has even sparked the founding of several startups, including Cottage, a company that specializes in the custom design, permitting, and construction of ADUs across California. Their total price for the design, engineering, site preparation, utility hookups, foundation pouring, and total construction helps to simplify the process for homeowners who wish to build on their property.
While there are many different ways to tackle the housing crisis, the development of ADUs has benefits for property owners and renters alike. For owners, it gives them the chance to have a source of revenue by investing in real estate on their own, unused land, and for those who live in ADUs, it offers a small-scale and affordable housing solution. The next time you look out into your backyard, maybe consider looking into what it takes to build an ADU on your land.
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