Accessory Dwelling Units | All You Need to Know

Accessory Dwelling Units | All You Need to Know

Accessory dwelling units (ADUs) are the answer to the shortage of affordable housing. Here’s everything you need to know about them.

The housing crisis has been pushing people to find affordable housing or additional living spaces for decades now. That need fueled the growth of the accessory dwelling units trend. 

If you’ve never heard of accessory dwelling units before; don’t worry. You aren’t the only one. 

ADUs aren’t exactly the new kid on the housing market block. People used to call them granny flats or in-laws suits. Still, many people are only learning now that they are more than a place to stash your relatives when they come to visit. They are, in fact, a viable, affordable housing option or a way of earning extra income.

How the Pandemic Increased the ADU Trend

The global pandemic saw many people move from overpopulated cities to suburbs or small towns and shuffle between big cities. But the other side of the coin is that many people also had their living arrangements upended. 

So, they had to scramble to find affordable housing in the middle of a country-wide housing crisis. 

But even before a global disaster shook the entire world and changed the way we work and live, Americans were looking for ways to work around the exhausting, expensive, and convoluted real estate market. 

Buying a single-family home in your late twenties or early thirties was once a given. Today, it’s an unrealistic and sometimes unattainable dream for many young people. 

And that’s where accessory dwelling units come in. Building them is cost-effective (and environmentally friendly). What’s more, they offer a chance for affordable housing. In fact, the McKinsey Global Institute thinks they are the optimal answer to closing the housing gap in California.

What Are Accessory Dwelling Units?

ADUs are secondary, smaller residences that are on the same plot as the primary residence. By definition, they are embedded within residential properties. So, they are the second, small house you often see in the yard next to the big house.

ADUs can be detached from the main house or attached to it. The main features of an ADUs are:

  • Separate entrances
  • Kitchen and bathroom amenities

ADUs are an opportunity for people to stay in the job-rich areas they otherwise couldn’t afford. Given how difficult that is in California, it’s really not surprising that the ADUs are becoming increasingly popular.

An American Tradition With a Modern Twist

But are ADUs really such a modern solution? No, they aren’t.

What we know as ADUs today used to be carriage houses or coach houses. Those were separate buildings on people’s property away from the main residence, mainly used for horse-drawn carriages. But they were usually large enough to have ample living space. So, it was easy to convert them into secondary living quarters decades later.

Today, we have zoning and building laws and regulations. But before the 20th century, landowners could build as many units on their lands as they wished (or could afford). That’s why there are many converted living spaces on the same land now. 

When the housing crisis hit, people were quick to renovate and convert anything they could. They’d either live in those dwellings or rent them out for extra (or primary) income.

Garages have a similar history. After World War II, suburban single-family home building was on the rise. People wanted to have enough space for their families and cars, and — lucky them — they could afford it. But when the housing market changed drastically and providing space for people became more important than having a space for a vehicle, garage conversions became a real hit.

Types of Accessory Dwelling Units

Generally speaking, there are four different types of ADUs:

  • Detached ADU — where the secondary unit is completely separate from the primary residence, has its own entrance and amenities. 
  • Attached — the secondary unit is attached to the original house. 
  • Converted garage, basement, attic, or other existing space — any space at least partially within the primary residence that’s converted into a separate unit that’s independent. 
  • JADU — the secondary unit is completely within the existing primary unit.

A detached ADU is the most popular choice in California. More than 50% of ADUs are entirely separate from the primary residences they share a plot with. 

The majority of all ADUs have one separate bedroom, a living space, and kitchen and bathroom space. Only 21% of ADUs have more than one bedroom, while even fewer are studio-type dwellings.

What Are the Benefits?

The production of ADUs is on the rise in California. Affluent, job-rich, diverse neighborhoods with access to public transport are sprouting them left and right. In fact, the production of ADUs increased by more than 30% in the last two years.

If you’re still wondering why that is, let’s go over some benefits of ADUs. As we already mentioned in one of our previous posts, the main benefits of ADUs are extra space and extra income. But what does that mean precisely?

Generally speaking, it means you can get some extra space for yourself (as an office or additional living space for relatives), or you can rent the space out and get some extra money. 

The significant benefits of ADUs are:

  • Cost-Effective
  • Square Footage Increase
  • Increases Property Value
  • Multigenerational Living
  • Office Space
  • Extra Income 

Cost-Effective Extra Space

Building an ADU is cheaper than building an actual house. First of all, you don’t have to buy land, since you already own it. Second, building ADUs usually involves using cost-effective wood frames. And, if you aren’t building an ADU yourself but getting a finished product, the overall construction price is even cheaper (and you don’t have to deal with the hassle of construction).

But is that all? Of course not! As mentioned, accessory dwelling units increase property value, especially if they look like a natural extension of the original home. They also provide extra living or working space for you. 

The pandemic altered every aspect of our lives. Still, merging living and working spaces was probably one of the hardest hits we took.

We all saw what a nightmare working from home can be. Having a separate office space can make WFH more bearable. 

A separate office makes it easier to maintain a work-life balance. Furthermore, we also wanted to keep our family close during these trying times. ADUs came in handy there as well. After all, they are known as in-law suits for a reason.

So Who Can Benefit From Accessory Dwelling Units?

In short, pretty much everyone:

  • People looking to downsize (and/or earn additional income)
  • Boomerang kids
  • People seeking affordable housing
  • People opting for multigenerational living

ADUs used to be temporary housing. Today, it’s more of a long-term solution for some. For example, older people who are looking to downsize find ADUs the perfect solution. 

Retired people can build an ADU and rent out their original homes. That cuts on their costs or living but gives them the option to keep their original homes.

Converted spaces or separate ADUs are also an excellent choice for boomerang kids. Moving back in with your parents used to be taboo. But with everyone’s housing options being upended due to global events, more and more boomerang kids are flying back into the nests they once left. 

2.9 million people moved back home during the pandemic. Those who had an ADU in their backyards probably also had an easier time adjusting to living in a multigenerational household again.

But what if you don’t have an adult child looking to come back and live with you? And what if you aren’t looking to downsize? Do you still need an ADU? 

Well, you might not need it, but you can still benefit from it. An extra house on your lot increases your income because you can rent it out. So, you can become a landlord. But you can also provide affordable housing. 

Californian Laws and Regulations Regarding ADUs

As of January 2021, the California Department of Housing and Community Development published new funding laws that would act as incentives for building ADUs. 

The Californian government has long been working on solving the lack of affordable housing issue. Accessory dwelling units are one of the viable ways to do that.

So, to that effect, the state expanded homeowner’s rights to building ADUs. What’s more, they also shortened the wait time for permits (from 120 to 60 days).

Other major changes in the law that will make building ADUs easier are:

  • New bills prohibit the municipalities from blocking the ADU construction based on minimum lot size.
  • They also block the HOAs from prohibiting the building of ADUs.
  • The impact fees are lower.
  • You no longer have to occupy the primary residence or the additional dwelling to get a permit to build an ADU.

Furthermore, the California Department of Housing and Community Development issued a requirement for cities to promote the building of ADUs as an affordable housing option with low or mid-high rent by offering various grants such as the CalHome Program and the LEAP Grants

Got More Questions? Cedar Has All the Answers 

Building an ADU can be the right move for many people. It can:

  • add value to your home
  • provide extra income
  • provide extra space
  • make multigenerational living a lesser ordeal than it is

But the building process, which starts with a financing plan and permits, can be challenging. That’s why here at Cedar, we’re ready and eager to answer any question you might have. 

Building a backyard cottage that meets all zoning requirements and doesn’t cost an arm and a leg is possible. You just have to ask the right people. So don’t hesitate — book your consultation today! Cedar will be here for you every step of the way.