The Promise of Accessory Dwelling Units as an Affordable Housing Option




As the population continues to grow in many urban areas in this day and age, the demand for housing continues to increase, leading to a shortage in housing. And if you guessed right, with housing shortage comes an increase in housing prices, both rentals and owner-occupier. Thanks to innovation and law reforms, however, there are quite a number of housing alternatives, which are more affordable and especially ideal for low-income earners. These range from mobile homes to prefab houses and ADUs or Accessory Dwelling Units, which (the latter) brings us to the main subject of this article.


ADU’s come with quite a number of benefits, but one of the most significant ones as we’ve hunted out before, the aspect of affordability. Before we get to the main juice on the promise of Accessory Dwelling Units as an affordable housing option, let’s delve a bit deeper on what ADUs are in the first place.


What’s an ADU?

Accessory dwelling is an age-old form of housing that is more prominent in urban areas, especially in some of the most populated states and cities around the globe. Simply put, an ADU is a second dwelling unit that is often attached or next to the main house, on the same grounds, especially single-family houses. It can be an apartment over your garage, a tiny house in your backyard or even an apartment in the basement. Whether you build one above your garage or next to your attachment, the ADU will legally be considered as part of the main property. Since it is assumed that the owner of the ADU is the owner of the main house, the cottage housing unit cannot be sold or bought separately. However, the owner can still decide to rent out the ADU for some income if they choose to. Other common names for ADUs include laneway houses, granny flats, and in-law units, just to name a few. Despite the fact that there are many reasons why people construct ADUs, the most common reasons are to gain income through renting or perhaps house an extra family member.


With that in mind, there are many reasons why ADUs are an affordable housing option. This is the case to renters, owners, and even the neighborhood or the local government, which we’ll discuss briefly below.


1. Lower Construction Costs


The number one benefit of accessory dwelling is that these units are considerably affordable and easy to build. As a matter of fact, studies have shown that constructing an attached ADU can actually be cheaper than some high-end bathroom and kitchen remodeling projects. The Oregon Department of Environmental quality revealed that building an attached ADU in Portland, Oregon could cost somewhere between $40,000 and $50,000, while a detached unit could cost around $90,000 to $100,000. This is way much affordable, especially considering the fact that the housing market in Portland is relatively expensive, which also suggests that these costs could even be lower in other locations. Additionally, ADUs are generally easier to get financing for, compared to other housing units. Some common financing options for homeowners who want to build ADUs on their property include unsecured personal loans, home renovation loans, and equity line of credit, just to name a few.


2. Affordability to the Renter

Just like in any other areas of commerce, the real estate industry also follows the age-old law of supply and demand. When the supply of housing increases, it often leads to lower rent and housing costs. This is what exactly happens with ADUs. In addition to being cheaper to rent, an increase in these housing units often leads to a decrease in rent for other housing alternatives. Especially in areas such as California, where there has been a significant increase in housing shortage since 2005, ADU laws have even been reviewed and made better to support the establishment of these alternative dwelling units.  For this reason, it has become easier for renters to find the best ADU California backyard homes, granny flats, and backyard homes at an affordable price. This has made it quite easy for low to average income earners to find homes that they can comfortably afford in their desired neighborhoods without feeling financially drained.


3. Income and Increased Convenience for the Owner

As hinted out in the first few paragraphs, ADUs provide another substantial income-earning opportunity for homeowners looking to make some extra bucks. Even in some of the most developed neighborhoods in urban areas, many property owners are resorting to building attached ADUs and backyard houses for rental income, among other potential uses of accessory dwelling units. Also, these units come in handy for owners who have aging parents, adult children, or guests who would bring on the need for extra room or accommodation. Furthermore, you can also use an ADU or backyard house for a home office, a studio or even as creativity space. What all this means is that it spares you the extra costs you would have incurred renting, constructing or buying new property for those purposes.


4. Affordable To the Government

Last but not least the aspect of affordability of ADUs extends far beyond the renter and the owner. An increase in accessory dwelling units will also benefit the local government in the sense that there’s less pressure for development. Also, these cheaper housing alternatives attract investors who prefer dipping their money in lower-cost projects, not forgetting that they also create more employment for middle to low-income earners who spend the little they get in the economy of the local area. It adds a population density without interfering with the character of the specific neighborhood. Also, building ADUs means adding more living space without necessarily taking up new construction space. Needless to mention accessory dwelling units have a lower impact on the environment compared to single-family units and other conventional forms of housing.



In sum, accessory dwelling is here to stay. It is an affordable housing option that not only benefits property owners and renters, but it is also advantageous to local governments. With the above few pointers, you literally have what you need to know about the affordability of ADUs.