Why Are ADUs So Popular? 8 Contributing Factors

May 23, 2022

As housing shortages continue across the U.S. – especially in California – local governments are looking for long-term and short-term solutions. Enter accessory dwelling units (ADUs), the affordable housing fix that takes advantage of existing space on the same lot as a single-family home. But why are ADUs so popular? What factors have contributed to their rapid rise? 

Read on to learn more about why ADUs are becoming a popular option in areas like the San Francisco Bay area, where the affordable housing need is prevalent. You’ll discover the factors that contribute to ADU’s success, and how that makes them a good investment decision.

Why are ADUs important?

Accessory dwelling units (ADUs), also known as “granny flats” or “mother-in-law suites,” are important because they’re regarded by many to be a practical and attainable solution to affordable housing availability. ADUs provide housing in a real estate market with a shrinking housing stock and higher rents. They require notably less energy to heat and cool a living space. And though ADUs aren’t the same as tiny homes, they share similar interests in minimalism and sustainability. 

In a lot of ways, ADUs are the future of housing. When you build an ADU, you open your property to a new world of possibilities. Your ADU will increase the property value of your primary residence when you decide to sell. It can create a source of passive income if you decide to rent the space. Or it can simply create extra space to house vacationing relatives or older children returning from college. 

Are ADUs a good investment?

Yes, ADUs are a great investment. An ADU adds value to your home both literally (in terms of property value) and figuratively (more space for yourself, family, or friends). How much literal value it adds depends on the housing market and the size of the ADU you build. 

Living room area in Spacials One Bedroom ADU.
Photo by Spacial

Based on current market trends, it’s safe to say you can earn more selling a home with an ADU than without. That’s because, right off the bat, an ADU increases your square footage, which automatically makes your property more desirable. This notion pertains to both detached and attached ADUs. 

ADUs are also a great investment for the way they transform unused portions of your property into revenue-generating homes. You can rent out your ADU to short-term or long-term renters, though some jurisdictions may impose minimum stay periods for short-term renters. Either way, renters will earn you extra income. You can also save money through your ADU if you house aging relatives there instead of paying for senior care. In short, the versatility of an ADU makes it a good investment for saving or earning money year over year. 

8 factors that contribute to ADU popularity

While the concept of an ADU sounds wonderful on its own, they haven’t gotten to their current growth point without a little help. 

1. California has an ADU friendly regulatory climate

Thanks to recent changes to California ADU legislation, you can build an ADU in a short time period. For starters, if an ADU application doesn’t receive a response within 60 days, then it’s automatically approved. Along with decreasing ADU prices, relaxed zoning laws, ADU grants providing up to $40,000 for eligible builders, and loosened HOA-related ADU restrictions, significant roadblocks to construction have been lifted.

Additionally, recent updates to California ADU laws have removed owner-occupancy requirements for all ADUs other than junior ADUs (JADUs). That means you can rent all ADUs other than JADUs as a source of income without having to live on the property. 

This all makes now the perfect time to install an ADU on your property, and Californians are definitely on the ADU bandwagon. In Los Angeles, the city witnessed a 3,500% increase in ADU permit applications between 2016 and 2018. From 2018 to 2020, the state of California approved 33,881 ADU permits, 22,695 of which entered the state’s housing supply. 

2. They add more rental options to a strained housing market

Close up of a hand holding house keys with a door lock in the background.
Photo by Maria Ziegler on Unsplash

San Francisco is home to the most expensive rental market in the United States. Understandably, this puts a strain on many who struggle to find an affordable place to live, as well-priced or rent-stabilized units are quickly rented out. And while inventory is on the rise, the need for affordability is still there. That’s where ADUs come in. More affordable and simpler to build than larger housing complexes, ADUs are making great strides to fill a significant need.

3. They increase property value 

An ADU’s additional square footage can increase your property value. And thanks to ADUs’ rise in popularity, home buyers see the value in buying a home with an ADU in the mix. That means buyers are willing to pay more knowing they can save in the long run by not investing in the construction themselves. 

4. They create an opportunity to earn extra income

Maybe you aren’t looking ahead at selling your home, or maybe you’ve found your forever home. Either way, you can still reap the benefits of an ADU by renting it out to long-term or short-term renters. Both options have their perks, but the short-term route can eliminate the commitment of leasing out your property for a year. That’s important if you think you might ultimately decide to keep the space for yourself. 

5. ADUs make it easy for older people to age in place 

Elder care is expensive, and often, people don’t want to see their older loved ones living far from their friends and family. An ADU is a great way to keep older relatives close by and ensure they receive the best care possible. They’re especially useful because new ADUs must be built to California’s ADA standards, so they’ll remain accessible if an older relative needs a walker or a wheelchair. Plus, if they’re up for it, they can spend more time with grandchildren and babysit on occasion when you’re looking for a night out. 

6. Build an office space in your backyard 

A home work desk with an open monitor, laptop and additional materials such as a white lamp, water bottle, mouse, mousepad, plants, and a stylus pen.
Photo by Domenico Loia on Unsplash

Let’s say you work from home or you’ve recently spent a lot of time taking Zoom calls from your couch. If this sounds like you, then you probably understand the importance of a space that’s separate from your home life. And now that work-from-home is here to stay for many companies, an ADU used as an office space provides the perfect space. ADUs can help you maintain a sense of separation between the 9-to-5 and the “5-to-9,” while giving yourself a quiet environment free from distractions.

7. Energy-efficient design contributes to an eco-friendly build

California buildings are required to meet certain energy efficiency standards, referred to as Title 24 standards. ADUs like Spacial have risen to the challenge, outfitting all their ADUs from the get-go with energy-efficient appliances, electric utilities, LED lighting, and the option to add solar panels at a later date. These steps help contribute to a greener world while helping you save money on your monthly energy bills.

8. Modular ADUs are quick to build

The two main types of ADUs are stick-built and prefab. When you go with prefab, or “offsite construction,” models, you shorten your home-building timeline. You can cut the build time by as much as half, as these units are already designed. With a stick built ADU, you would need to hire your own architect and design firm to bring your vision to life. This simplicity alone makes the ADU construction process much less of a hassle when opting for a modular ADU.

And with Spacial, you’ll have dedicated concierges who handle each step for you, from permit submission to arranging installation of your ADU. All the hard work is taken off your hands as your dedicated specialist handles these details on your behalf. With this kind of assistance, ADU construction is a much more attainable reality for many.

Realize the benefits of an ADU

Bedroom in Spacials Studio ADU. Featuring a home office area, living room space, dining space, and bedroom area.
Photo by Spacial

When you find the right partner to handle your ADU construction needs, you can get the process started and finished in no time. With Spacial, that means seven to nine months, and this includes all the heavy lifting, like craning it into place. We’ll work with you from start to finish – creating permit sets, preparing your site, installing your unit – to bring your ADU dreams to life. Contact us today to learn how you can get yourself an ADU more easily than ever before.