The Role of ADUs in Affordable Housing

The Role of ADUs in Affordable Housing

Housing prices have cooled, but inventory is still low, inflation is up, and interest rates are rising. While we don’t necessarily think accessory dwelling units (ADUs) will entirely solve these issues, we believe they can help.

ADU’s are cheaper to build, more energy efficient, and do not require additional infrastructure. They also open up opportunities for low and moderate-income households to live in neighborhoods they could not otherwise afford. These are only a few ways ADUs could help transform the market. Let’s explore these and others in more detail.

What are ADUs?

An ADU is a small, self-contained residence that shares a single-family lot with a larger structure. These units are typically detached from the main house but can also be attached to it, built new, or converted from an existing structure like a garage.

In addition to offices, additional sleeping quarters, or rental units, ADUs can also serve as guest houses, studios, or even spaces for aging relatives or caregivers. 

How ADUs Help Create More Affordable Housing 

ADUs are growing in popularity with homeowners and renters for a few reasons. Homeowners find them appealing because they offer opportunities to supplement their income, put unused space or land to good use, and increase the overall value of their property. ADUs are also attractive to young, single professionals, small families, seniors with fixed incomes, and those with low and moderate incomes. Here’s why. 

Increased Supply

The beauty of ADUs is that they are far more cost-effective to build than a single-family home. Because they share the same lot as a primary structure, the infrastructure is already in place. This convenience and cost-efficiency mean that ADUs can be built quickly and at a fraction of the cost compared to traditional homes.

This translates to more homes and favorable price points for owners and renters. This particularly appeals to those in high-demand urban areas with limited space and soaring rental prices. 

Rental Income

ADUs also offer rental income potential. Homeowners can rent their ADU to tenants, creating an additional source of income that can offset mortgage payments or monthly expenses. This option is helpful for “empty nesters,” retirees, and traditional homeowners wishing to reduce their costs or generate extra monthly income. 

Multi-Generational Living 

Retirement homes and senior care facilities are costly, particularly in California. 

ADUs offer a cost-efficient alternative for caregiving children and their senior parents who wish to “age in place” while maintaining independence. This arrangement not only facilitates closer family relationships and offers greater flexibility in care options, but it could also eliminate the need for costly senior care services. 

Making Use of Underutilized Space

Undeveloped land is scarce (particularly in population-dense California) and expensive, which makes building new cost-prohibitive. This is another reason to love ADUs. 

Because of their small footprint, ADUs use underutilized land on already-existing properties. This increases housing density, solves housing shortage issues, and lowers costs—all without breaking new ground on expensive, undeveloped land. 

Ready to Take On the Affordable Housing Crisis While Generating Passive Income?

If you’re ready to get started on your ADU journey, our team can help. With over 30 years of experience, we have the experience to bring your ADU project to life, just like we have for thousands of satisfied clients. If you have any questions or are ready to get started on your San Diego ADU design, contact us today. We’d love to help bring your project to life!