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The Rising Popularity of Accessory Dwelling Units: Part 1

By Karen Strong I December 10, 2019

One of the most aggressively used phrases in the senior housing and remodeling worlds has been the term “aging in place.” Industry professionals can even acquire certifications as “Aging-in-Place Professionals.” In the broadest sense, the term relates to the mature homeowner who doesn’t want to move into an assisted living facility and instead wants to stay “home.” Many older adults want to be close to their children, but still maintain their sense of independence. However, the cost of buying a single-family home close to a support network is often cost prohibitive.

One possible solution: Accessory Dwelling Units (ADUs)

Many homeowners are finding this alternative housing option to be the perfect solution for this challenge. The ADU goes by many names including an in-law suite, granny flat, or secondary dwelling unit. Basically, an ADU is a self-contained living unit that typically has its own kitchen, bedroom(s), and bathroom space while maintaining independence and privacy from the primary home.  

ADUs can take many forms: a small backyard cottage on the same grounds as (or attached to) a single-family house, an apartment over the garage, or a basement apartment.  

 

3 different type of ADU construction

 

What Does it Cost to Build an ADU?

While ADUs may offer a more cost-effective means to live in a specific neighborhood, cost effective doesn’t necessarily mean inexpensive. By any measure, an ADU is still a major investment. The median cost to build a detached ADU in Portland, Oregon, a leader in the development of ADUs, is approximately $90,000. The median cost to build an attached ADU is cheaper—between $40,000 and $50,000.

According to a recent NAHB survey, in the past 12 months, one-fifth of remodelers created an ADU by converting an existing space; a similar number also created an ADU by building a new addition. More than 75% of remodelers indicated such projects cost upward of $50,000 to construct, with only 6% completing projects valued at $25,000 or less (or what is often considered a minor improvement).

Remodelers are leading the call for ADUs according to the NAHB Remodeler Market Index. Homeowners may not be specifically making the modifications with the ADU name but are organically creating/recreating spaces that serve the same purpose. The chart below outlines the survey results.

 

The Impact of ADUs

While many communities worry about the impact of allowing the construction of ADUs, they do provide a way to create affordable housing without altering the character of an established neighborhood. In addition to providing additional space for family members, an ADU may also serve as a rental unit that provides an additional income for the homeowner. ADUs also have the added appeal of generally not needing new infrastructure or public investment, and not contributing to a concentrated increase in density. It’s important to note that most municipalities do not allow the sale of detached ADUs separately from the primary home.    

Ken Semler of Express Modular notes one of the biggest challenges in selling ADUs is that “there isn’t a common term or name by which people refer to these types of products so getting organic or even paid search traffic is difficult. ADU, Accessory Dwelling Unit, Med Cottage, and Granny Pod are all terms people use to refer to this type of structure.”

Additionally, he notes that It’s important and interesting to understand the ADU process. “These products are modular in that they are pre-built within a factory and shipped to the site. Once there, the owner still needs to hire a general contractor to create the foundation, put all the utilities in place, and to set the module, hook up the utilities, and complete the finishing touches. It’s a real challenge finding builders who know how to install modular construction properly.”

As the population continues to age and longer life spans become increasingly common, the need for this type of housing stock will be in higher demand around the country. However, even though many communities imply they want to allow the expansion of accessory housing as a viable means to address affordable housing concerns, many of these municipalities impose many restrictions. Localities and states have sought to find ways to overcome barriers and make ADUs a more widely available option. Look for Part 2 of this blog to learn what cities and states are doing to make ADUs more accessible.

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