What Are ADUs?

by Lauren Rosales-Shepard, Content Writer

Technically, the “Accessory Dwelling Unit” (ADU) has been around since the 1980s, though the concept itself is much older. If the phrase doesn’t ring a bell, you might know it better as “granny house” or “backyard cottage”--not to mention, if above a garage, “carriage house,” or even a “mother-in-law suite.” Recently, there has also been an uptick in the label “backyard house.” As the name implies, an ADU is an additional, self-contained living space attached or adjacent to the primary house on a single family residential lot. In other words, it’s an extra place to live on a property, whether separate from the house as its own structure, or added onto the existing building. If you watch HouseHunters, you’ve probably seen couples who desire a separate space for their mother or other aging parent to live, one with its own bathroom, kitchen, and relative privacy. That is the ADU.

Joe Gebbia, one of the co-founders of Airbnb, has branched out into a new startup called Samara that, in search of new products that could create social change, has recently focused on backyard houses. The prefab houses are available in two different sizes, either a 430-square-foot studio, or a 550-square-foot one-bedroom, and Samara has ensured that they all generate more electricity than they use with electric appliances and solar panels on the roof. In addition, the company handles the entire construction process, from surveying to obtaining permits, in hopes of diminishing obstacles and increasing demand.

How Can ADUs Benefit Society?

Samara’s ADUs in particular are clearly aimed at sustainability. ADUs in general, however, are inherently sustainable; building on existing properties (particularly in urban areas) adds to the housing supply while avoiding the creation of sprawl. Plus, the necessarily compact size of an ADU means that it takes fewer raw materials to build, which conserves resources and takes a much smaller carbon footprint to build. That said, the potential for sustainability is merely one of the benefits that ADUs in general present to American society.

First, let’s consider the simultaneous prioritization of single-family housing and soaring housing prices–both resulting in a distinct lack of what we used to call “starter homes.” Due to zoning restrictions, it’s actually illegal to build any housing structure other than single-family homes on about 75% of residential land in American cities. Inevitably, these policies have severely limited the amount of affordable housing and led to higher costs and eventual displacement and segregation. The higher costs, in particular, have largely priced out millennials.

ADUs can fill the gap of housing options for millennials in multiple different ways. ADUs that are used as rental units will help put a stop to skyrocketing rental costs, merely by adding to the rental supply. Plus, such units could provide passive income for the homeowner who needs assistance to pay off their mortgage. But with so many millennials living at home, the ADU could also serve as a more private space on the property for a family’s adult child or children who can’t afford to purchase single-family homes of their own.

However, the flip side is also true. The United States is in the midst of a senior housing crisis. With the number of elderly citizens increasing (expected to almost double by 2060), combined with climbing life expectancy, there just aren’t enough options for those who are retired and living (for the most part) on low monthly incomes based on pensions and assets. Those who wish to downsize face enormous housing costs, rising inflation, and low supply–just as millennials do. But those who desire to stay in their homes and communities and age in place (the majority, according to the AARP) must contend with rising property taxes and the costs associated with growing older in a home not built to suit the needs of an elderly person (think of stairs, for example).

An ADU in the backyard, or attached to the house, can be a huge game-changer in this scenario. Firstly, ADUs increase the housing supply in general, providing seniors with an increase in affordable housing options within their choice community. But one can imagine a more specific scenario in which elderly parents could relocate to an ADU built to accommodate aging-in-place; such a situation encompasses all the benefits of the multigenerational household, plus the additional (and significant) gain in privacy. When multiple generations of a family share the financial burden of obligations such as groceries and bills, seniors are enabled to stay within their strict fixed incomes. If their adult children have children of their own, grandparents on site are also able to not only conveniently provide childcare, but be a positive, continuous presence in the lives of their grandchildren. This scenario also ensures that the seniors will not suffer social isolation and become casualties of the “loneliness epidemic,” which can lead to health risks comparable to those of smoking and obesity.

Regardless of one’s age, the simple truth is that housing prices have continued to rise faster than inflation and wages in the United States. Never mind the ability to put a downpayment on a house; many, particularly those working minimum wage jobs, struggle to afford continuously rising rent. Partly, the lack of rental options contributes to this difficulty. Were districts rezoned to allow homeowners to build an ADU on their property, the supply would increase and lead to lower rent prices. Bonus: homeowners would benefit from the source of monthly income via the rent.

Bearing these facts in mind, Los Angeles has recently established a free, pre-approved Accessory Dwelling Unit Standard Plan, which would save homeowners between $20,000-$30,000 in architectural and design costs and cut the time it takes to obtain permits by two to four months. The hope, articulated by the City Council, is to increase housing stock and combat the lack of affordable housing options in the city.

Of course, not every city has a program like Los Angeles. And building an entire tiny home in your own backyard, or an attached (but private) addition to your house, isn’t exactly cheap. However, if you are interested in pursuing the option, you might benefit from a Unison equity sharing agreement. Unison enables you to access the equity built up in your home, giving you up to 15% of your home’s value in cash in exchange for a percentage of your home’s future change in value. The best part? Unlike loan products like a HELOC or a reverse mortgage, Unison equity sharing agreements have zero interest and no monthly payments–in other words, no added debt. If this sounds good to you, you can type in your address and receive a free estimate within minutes and with absolutely no obligation!

The content on this page provides general consumer information. It is not legal or financial advice. Unison has provided these links for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of the other websites.

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