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Whether they’re places for parents to age in place or temporary nests for recent college grads, accessory dwelling units are addressing today’s changing needs.

By Julie Saetre

You might know it as a granny flat or a mother-in-law suite. Or maybe you enjoyed a cozy stay in a carriage house or guest cottage rental. Whatever the term, you’ve likely been introduced to one of the most intriguing housing concepts in today’s real estate market: the accessory dwelling unit, or ADU.

What is an ADU, exactly? As described by the American Planning Association — a nonprofit that helps communities and their residents plan for and adapt to a changing world — it’s a smaller, independent residential dwelling unit located on the same lot as a stand-alone (i.e., detached) single-family home. ADUs can be a separate building, an attachment to the main residence, inside the main residence or attached to or within a garage.

In the United States alone, 1.4 million ADUs were identified in a 2020 study by mortgage-loan giant Freddie Mac. 

The most well-known ADUs are those that help people age in place — allowing parents or grandparents a level of independence and privacy while they live in a separate unit inside a family home or on the property.

Photo courtesy Ileana Schinder

“It brings the idea of family and architecture together,” says Ileana Schinder, a Washington, D.C.-based architect and author of “Housing for Humans: A Book to Imagine, Create and Design a New Housing Model in America.”

ADUs also have been a common investment strategy for people looking to benefit from what Kol Peterson terms “passive rental income potential.” 

The author of “Backdoor Revolution: The Definitive Guide to ADU Development,” Peterson has built and lived in two ADUs himself. As an ADU advocate, educator, consultant and policy expert, he has even seen the merger of the desires for independence and investment.

“People might say something like, ‘Oh, I want to build it for my mom, who’s getting older and wants to move in near us. But if and when she passes, we’ll have it be a rental unit.’”

Schinder calls that combo concept “investing in place.” And it can apply to more than aging relatives. 

An ADU also can house an adult dependent who needs a place to stay while looking for a job after college or a family member who has special needs but is self-reliant with nearby support. 

“(If) you want to make a real estate investment, you can make it in the house you have and it can have a concrete benefit to you (individually) or as a family,” Schinder explains. “That’s what I see a lot.”

But the potential of today’s ADUs goes further. In many communities, they fulfill a need for nontraditional housing in a suburban market that hasn’t fundamentally changed in more than half a century. 

“The model that we have (is from) the 1950s,” Schinder says, “where you have Mom, Dad, two kids and a pet. Those times went away. Everyone’s family structure is more complex. 

Photo courtesy Ileana Schinder

“We have multigenerational housing. We have different people from different cultures with different expectations of what a house should be. We have more single people. People that have kids and are single parents. So we’re starting to see more people asking for supportive housing to match their needs. That is what these dwellings do. They give flexibility to what the new family is becoming.”

ADUs also offer environmental benefits. That’s one reason the AARP is an advocate. A nonprofit that serves people in the United States who are 50 and older, the organization points out that ADUs require fewer resources to build and maintain than full-sized homes do. 

For one, they’re much smaller. In 2020, for example, the median size of a new single-family house was 2,261 square feet, according to the U.S. Census Bureau. ADUs usually average in size from 600 to 1,000 square feet, according to AARP. 

ADUs also require significantly less energy for heating and cooling. And since they’re built on property that already has a house, they preserve green space. Rather than necessitating the removal of more trees on previously unoccupied land, for example, these properties fit neatly inside an established space.

While many people are just now becoming familiar with the term “accessory dwelling unit,” this type of housing has been around for much longer.

“ADUs have been in existence across the country and other places in the world for hundreds of years,” says David Morley, a senior research associate with the American Planning Association. “It was a very common practice to have a dwelling that was smaller than the principal dwelling on a lot.”

AARP points out that prior to the 20th century, landowners often built multiple homes on a single property to house family or workers. Few if any zoning laws existed, and infrastructure needs were far less complex, negating the need for regulation. 

In many countries, Schinder adds, laws have historically allowed landowners to be flexible, adapting each property to the circumstances surrounding it. A city dictates general parameters (front and side setbacks, building height), and the landowner decides how best to incorporate them.

“The U.S. is one of the few countries that tie together building shape and building use,” Schinder says. “In so many countries, if there’s enough demand, you can have a small shop. If there’s not demand, you do a house. If you’re next to a school, you can have a daycare center. The idea of occupying the building to satisfy the local needs, that happens very naturally (almost) everywhere in the world.”

U.S. zoning laws, by contrast, tightened considerably after World War II, when families started moving to suburbia and living in neighborhoods consisting solely of single-family homes.

“It became quite common to dramatically simplify the sort of activities and uses that were permissible on land in communities,” Morley explains. “So a lot of communities came up with land-use rules where they just sort of ignored the concept of an accessory dwelling unit. And they all became illegal all at once in a lot of places. A lot of communities that developed after World War II inherited a post-World War II mindset for land-use and development patterns. And so (ADUs) were something that they didn’t consider.”

It’s not surprising, then, that zoning laws are a major impediment to the construction of ADUs. 

Conditional-use clauses are one example. These laws require the property owner to first meet certain requirements, such as participating in a public hearing process, rather than being allowed to build “by right.”

Another common deterrent involves owner-occupancy regulations, which require the property owner to live either in the main residence or in the ADU — to assuage concerns that an absentee landlord will let the property and both dwellings fall into disrepair. These regulations are also intended to discourage what Schinder calls “Airbnb highways” — areas catering to tourists where short-term rental units far outpace long-term units and permanent residents. 

“Instinctually you might say, ‘Oh yeah, we want these properties to be well kept, and therefore we’re going to require owner occupancy,’” Peterson says. “But you don’t see owner occupancy requirements on any other form of housing in the country — for single-building homes, for duplexes, for triplexes, for fourplexes, for apartment buildings. 

Photo courtesy Ileana Schinder

“And unfortunately, that provision makes it an unattractive form of development from the homeowner’s point of view and from the lender’s point of view. It significantly undermines the ability to finance or get a mortgage on the property because banks are hesitant to loan against properties where (the bank) would have to become owner-occupants if the owner of the property defaults on the mortgage.”

Another common regulation requires onsite parking availability. It’s meant to ensure that all landowners in a community have sufficient parking for their own vehicles. The concern is warranted in neighborhoods where property owners rely on limited on-street parking. But since many ADUs are built on larger suburban properties, Schinder says, a one-size-fits-all onsite parking rule responds to fear rather than reality.

“I’m talking about neighborhoods where each house has a frontage of more than 100 feet. You can park four or five cars comfortably (on the street). And this is coming from neighborhoods where everyone has onsite parking (via garages or driveways).”

Sometimes these impediments are remnants from those 1950s zoning regulations. Other times, property owners and homeowner associations rely on them as a kneejerk reaction to more renters in their area. And those concerns might be more deeply based in fear of change, not who parks where.

“(It’s) the fear that these different type of families will change the shape of the community — different cultures, different family formats, different economic backgrounds,” Schinder says. “The fear that new people, different people, will change your neighborhood, will change your school, will make it more dangerous, will make it worse. It’s a fear that is very common.”

Education about the reality of ADUs can help assuage these concerns, experts say. Since the reemergence of ADUs, studies have started to look at their impact. And so far, what they’ve found is encouraging.

“Do ADUs on average seem to cause a shortage of on-street parking?” says Morley. “From the little evidence so far, the answer is no. They don’t seem to be a major contributor to that. 

“And similarly with overcrowding of schools: There’s very little evidence that the average ADU occupant is a family with school-age children.”

In addition to the relatives of the property owner, for example, ADUs often house empty-nesters. Sometimes these occupants own the land, move into the ADU and rent the main house — so they can downsize, gain supplemental retirement income, travel freely and no longer have the responsibility of house and lawn maintenance.

AARP reports that other typical ADU residents are nannies or au pairs who care for the children of the property owners, a caregiver employed by the property owner or somebody in need of temporary housing after an emergency or during a home renovation. 

Other ADUs, Schinder says, are rented by employees at nearby businesses who want to live among the customers and clients they serve.

“What if your accountant, your physical therapist or your yoga teacher were to be in the (ADU)?” she says. “The idea of using the home differently by different people changes the dynamic and the economy of neighborhoods in a very positive way.”

Since ADUs are small, the typical one houses only one or two people. And an ADU represents a significant financial investment  — anywhere from US$50,000 for a small unit inside the existing house to more than $150,000 for a newly constructed detached version. 

“In San Francisco, (California), the least expensive detached ADU that you could do would be more like $400,000,” says Peterson. “We’re not talking about doing a kitchen remodel.” 

Therefore, not every property owner will want to build one.
So the influx of ADU renters in any neighborhood will be modest.

“More and more people are realizing that more housing doesn’t bring in a lot of negative ideas of density that we had in the 1960s, where you had this gigantic tower shadowing the house,” Schinder says. “This housing actually brings in the density and the type of people that neighborhoods need. And detached ADUs usually are tucked behind the main residence, so they don’t change the visual impact of a community.”

For Peterson, what ADUs do change makes him particularly enthusiastic about their potential.

“I think ADUs are kind of this magical housing type that solves all these social, economic and environmental problems,” he says.

Morley is more cautious, but he sees reason for optimism.

“Is it the solution to the housing crisis in the U.S.?” he says. “I don’t think it is. I think it’s a component and a really logical starting point for perhaps the widest number of communities — to have this be maybe the first conversation they have about, ‘How are we going to broaden housing choice and affordability in our community?’”

Interested in an ADU? Consider these tips:

If the idea of adding an accessory dwelling unit to your property intrigues you, you should first meet with an architect or consultant specializing in this form of housing.

“Whenever they’re planning to do this type of project, I always tell them to look for three things: scope, timeline and budget,” says Ileana Schinder, a Washington, D.C.-based architect. “This is the first conversation I have with people when they call me.”

Scope: “What do you want the building to do for you?” asks Schinder. “Will it work in the base-ment? Is it for somebody with mobility issues? Do you want parking? It’s very important that the architect, the designer, the contractor narrow this down so that the scope is perfect.”

Timeline: When do you need the ADU to be completed? If you’re building it for aging parents or to house your grown child after graduation, for example, you’ll want to plan well in advance. A basement renovation can take at least six to nine months. For a detached building, the construction process could take nine months, a year, even longer — especially with the current supply-chain issues.

Budget: ADUs don’t come cheap. Expect to spend at least US$50,000 for a small ADU inside your home to more than $150,000 for a detached structure. Costs vary greatly depending on the country and region you call home. It could end up being more financially feasible to rent a nearby apartment or existing home for your desired purpose.

Financing: If you decide to take the plunge, know that many traditional lenders haven’t caught up with financing packages for ADUs. AARP reports that many homeowners use some combination of savings, home equity lines of credit, second mortgages and funding from family members. Aging parents, for example, might be willing to contribute to the cost since they’re the intended ADU residents. Also check to see if your city, a housing organization or other type of nonprofit offers any specialized funding packages.

This story originally appeared in the March 2022 issue of Kiwanis magazine.

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