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More than 30 percent of the nation’s accessory dwelling units (ADUs) are in California. Their prevalence in the Golden State may stem from the high cost of living there: ADUs both provide affordable housing and create a revenue stream for property owners. In either case, an ADU can be a great addition to your home – and bring some significant value to your California property.
So, just how much value does an ADU add in California? The answer to this question depends on a few factors. Below, learn all about how an ADU can increase your real estate property’s value and all the factors you should consider.
ADUs can add about $470 per square foot to the value of your property in California. However, this amount is just an average and can widely vary across the state. For example, some ADUs in San Carlos have added more than $500,000 to the property’s value. In Berkeley, some ADUs have increased the property’s value by more than $600,000.
There are several types of ADUs, and each of them can add a different amount of value to your property. Below are the four types of ADUs that can increase your property’s value the most.
The value that an ADU can add to your property depends on a few factors. Below are six factors that can affect an ADU’s value.
The size of an ADU may be the single greatest factor influencing its value. In many cases, a studio ADU will be worth less than a one-bedroom ADU.
In the San Francisco Bay Area, the average single-family home cost per square foot was $762 as of January 2022. Additionally, the average size of a new ADU in California is 615 square feet. That makes the average value of an ADU in California approximately $468,630. This value would increase if your ADU were larger – say, closer to 1,000 square feet. In the simplest terms, the larger your ADU, the more value it adds to your property.
The type of ADU on your property can pose limits on how it impacts your property value. Typically, detached ADUs carry the most value since they are truly a separate space with a natural sound barrier.
Detached ADUs’ versatility can also make them more appealing to potential buyers if you sell your home in the future. For example, you can use a detached unit as a granny flat or a standalone rental space that introduces another income source.
In some cases, a detached ADU can increase your property value by as much as 30 percent. That said, attached, garage, and basement ADUs can still bring immense value to your home, as they can also function as living or rental spaces.
You’ll need contractors to transform your ADU vision from an idea into a reality, and these contractors typically charge in dollars per square foot. These rates vary by contractor and location and typically only include construction costs. That means they don’t account for fees, design services, permit plan set creation, and furnishing your ADU.
ADUs have all the same standard appliances and features as standard homes – a full kitchen, a great shower, and more. There are additional amenities you can choose to add to your ADU to further increase its value.
You might choose to add premium flooring, energy-efficient appliances, durable countertops and cabinets, and higher-quality windows. Each of these amenities can help make your space unique and more valuable. The quality of these amenities can also add to your ADU’s value. Basic items might barely make a dent – choosing more expensive, well-regarded brands can more significantly drive your property’s value.
Just as having an ADU on your property can increase your lot’s value, your property’s value can affect the value of your ADU. For example, if one property is worth $375,000 and another is worth $600,000, an ADU on the latter will have a higher value.
Your ADU can also be more valuable if your existing property is in a desirable location. An ADU away from a busy road but near parks and shopping centers can be highly valuable. Just as these factors can increase a home’s value, they can contribute to your ADU’s value.
You must obtain proper city and county permits before building an ADU. These zoning and building permits vary by city. In San Francisco, for example, ADU permits can cost anywhere from six to nine percent of your construction costs.
Your permitting costs are typically based on the complexity of the ADU project, the size of the unit, and the value of the construction. For example, you can expect the permits for a 400-square-foot studio ADU to cost less than the permits needed for a 500-square-foot one-bedroom unit.
Under California state law, you can rent out your ADU. Doing so can increase your ADU’s return on investment and the amount of income generated from your property. In fact, San Francisco Bay Area ADU owners charge their tenants a median rent of $2,200 per month.
You can rent out your ADU on a long-term or short-term basis, though some cities restrict new ADUs to longer than 30-day rentals. You can have tenants sign a regular lease agreement for a defined period, or you can rent out your unit as a vacation rental. ADU owners in San Francisco, for example, are renting their units to Airbnb users for an average of $191 per night.
Whether you want to build an ADU to generate rental income or create additional living space, your unit can drive your property’s value. It’s also easier to build with a dedicated design and installation partner, and Spacial can be that partner for Bay Area ADUs.
Here at Spacial, we’ll survey your site, get your permits in order, and then construct your ADU offsite while we prep your site. After we crane your ADU into place – in one piece, in one day—we’ll furnish it through our West Elm partnership. And after that, it’s ready to go—with Spacial, a hassle-free process and a high-value ADU are a package deal. Contact us now to get started.