ADU Housing: Why ADUs Are the Future of the US Housing



ADU housing could very well be the future of the US property and housing market. As prices of homes continue to soar all over the country, ADUs are giving people a more affordable option without compromising on quality. In this article, we will give you all of the things you should know about ADUs, why it’s here to stay, and why they could very well be part of the future of US Housing. Read on.

What Is An Accessory Dwelling Unit (ADU)?
An Accessory Dwelling Unit (ADU) or secondary unit is a smaller housing unit on the same lot as your primary dwelling. They’re known by other names too, including backyard cottages, granny flats, laneway houses, or in-law units. ‍ADUs are either attached or detached from the primary house. ADUs have a lot of similarities with tiny houses, except for some distinguishing features. They come complete with all sorts of LDK features and facilities, only without the mobility function. You cannot buy or sell ADUs as it is. All ADUs are still considered a part of the main house and property even if it’s single-detached. Moreover, ADUs cannot be a separate property. They must be secondary to an existing space.
What Are The Different Types Of ADUs?

ADUs come in various shapes and sizes. They cap at 1,000 sqft (and 1,200 sqft in some parts of the US). As of today, there are four common types of ADUs.

Detached ADU

It’s as the name suggests. Detached ADUs or Detached Accessory Dwelling Units are living spaces built separately from the main house and act as smaller homes.

Detached ADUs are relatively more expensive to build considering it requires more materials than other ADU types. However, Detached ADUs are not entirely as expensive as building a full-sized home.

What’s special about Detached ADUs is they usually come with separate utility lines, sewer systems, and furnishings.

Attached ADU

Attached ADUs are ADUs that share a wall with a room in the primary residence.

It’s typical for Attached ADUs, Garage Conversion, and Basement Conversion to have their utility lines and sewer system hooked to the main house.

Garage Conversion

Garage conversions are on the cheaper side of ADU builds because it’s an existing structure. For garage conversion rental units, contractors usually reinforce the roof and add walls on the main house to restrict entry.

You can use garage conversions as ordinary rooms in your house or turn them into a utility room like a small office, entertainment room, rentable co-working space, or an Airbnb with a separate entryway.

Basement Conversion

A basement conversion involves taking an existing basement space and turning it into a spare guest room or a basement apartment. It is achieved by either excavation or expansion.

What Problems Do ADUs Solve?

Accessory dwelling units are more than a trend. We believe they’re a solution to many of today’s most prevalent problems. Here are a few major problems that an accessory dwelling unit can solve.

Inadequate Living Space

ADUs provide a way for multi-generational families to live together on the same property, which can help address the issue of expensive and inadequate living spaces for both bigger and smaller families. One of the main benefits ADUs bring is that they help minimize strain on the housing market and the need for large-scale developments.

Expensive Property Prices

According to ExtraSpace, a median family home in California costs $683,996 in 2023. ADUs are a promising solution to the US housing crisis because they provide affordable housing options and help reduce demand for expensive properties. By increasing the supply of housing, ADUs can also help lower property prices over time and make homeownership more accessible.

Unsustainable Construction Practices

Traditional builds emit large quantities of carbon dioxide that affect the environment. Since all ADUs are compact, it requires fewer materials and gas consumption. ADUs are also relatively easy and quick to build, helping minimize the carbon footprint, unsustainable, unethical traditional builds produce.

Lack of Access to Property Investments

ADUs give homeowners a chance to generate rental income and build wealth, while also increasing the availability of affordable rental housing in desirable areas and communities which helps the local economy thrive.

Financing ADU Construction

These are the common ways to fund your ADU project:

1. Personal savings or cash on hand
2. Home equity loans and lines of credit
3. Traditional mortgage funding
4. Government funding programs, such as an FHA Loan and Veterans Affairs loan
5. Private loans or raising funds from house family members and friends
6. Grants and other financial incentives from local or state government programs
7. Crowdfunding

Some financial options mentioned depend on your location, the type of property you have, and your creditworthiness. It’s always best to ask a financial advisor to determine the best funding option for your situation.

Legal Considerations of ADUs

You don’t want to be on your city’s watch list for breaking legal ADU considerations.

These are the make-or-break things you should know before you plan your project:

• Renting out illegal ADUs can penalize landlords.
• Tenants who live in illegal ADUs are protected by local ordinances, and landlords who rent out illegal units can face lawsuits if found guilty.
• The absence of a Certificate of Occupancy means it is illegal to occupy a unit and collect rent.
• Insurance policies may not cover damages from illegal ADUs.
• Misrepresentation of ADUs on the MLS can cause problems for property buyers and sellers. Landlords can be sued by tenants even after selling the property.
• Converting common areas like laundry facilities, storage areas, and parking spaces into ADUs is prohibited by law resulting in rent reduction for tenants.
• Upgrading an ADU to code compliance may require temporary relocation of the tenant.
• Local governments may have different rules for building ADUs or legalizing illegal units.
• Unauthorized work and unlicensed contractors during the ADU conversion process can result in permit violations and penalties.

Planning for Accessory Dwelling Units

Deciding whether you need an ADU and what type of ADU to choose involves several factors to consider. Here are some steps to help you plan:

• Identify your needs: Start by listing and narrowing down everything you need. Maybe you don’t really need an extra living space, but a downstairs room for an elderly family member and guests. A guest house for the in-laws? List it down.
• Check local government zoning laws: Many cities and counties permit ADUs, but you’ll have to follow certain laws. Check with your local government to determine whether an ADU is allowed on your property and what the zoning requirements are.
• Evaluate your property: Get your property inspected by a professional. You can hire an ADU.Works Feasibility Technician to evaluate your property and determine the best type of ADU for your needs.
• Finding a contractor: Once you have a plan in place, hire a qualified contractor or architect to help you design and build your ADU.
• Misrepresentation of ADUs on the MLS can cause problems for property buyers and sellers. Landlords can be sued by tenants even after selling the property.
• Choosing an ADU: There are several types of ADUs to choose from: detached, attached, and converted ADUs. Your consultation with a contractor will help you choose.
• Setting your budget: ADUs can be expensive to build, so set a realistic budget. Consider the cost of construction, permits, and other expenses; such as, concrete demolition, tree clearance, or extended piping. You may need to consult with a financial advisor to determine the best way to finance your ADU.
• Obtaining the permits: Before building your ADU, obtain the necessary permits from your local government. Your contractor can help you navigate the permit process and ensure that your ADU meets all local zoning and building codes.

Planning for Accessory Dwelling Units

How Much Does An ADU Cost To Build?

ADUs range from $200 and $300 per square foot and can typically go up to $400,000 for the entire build.

Do I need a permit to build a guest house?

Yes. It’s always best to check your local city government and ask for laws and regulatory information. To check California’s latest laws around building your ADU house, you can check out this article.

Is it legal to build a house or an in-law suite in your backyard?

It depends. There are places that banned ADUs to prevent overcrowding. You can always check with your local city government if it’s allowed and ask for a permit.

Does an ADU Add Value to Your Home?

Quick answer, yes. For your discretion, adding an ADU to your property also means additional property taxes. In most cases, property taxes are only minimal considering that ADUs are small.

How Much Does It Cost To Add An ADU?

It depends on your location, the materials, the contractor, and the design you’re going for. Adding an ADU to your property can range from $200 and $300 per square foot and can go up to $400,000 for the entire build.There are low-cost, but high-value builders like ADU.Works. There are also mid-tier builds and high-end build options in the market. You just have to find which one best fits your needs.

Does an ADU Require a Kitchen?

Yes, ADUs must have a fully-functional kitchen with a sink, bathroom, proper sleeping area, and heating/cooling controls.

Will adding an ADU increase my home’s value?

Yes, it will increase your home’s value. On top of your property’s appraised price tag, building an ADU will increase its value from 30% up to 50% (or more) depending on the location, added space, and facilities. Plus, you can legally start to generate passive income by renting out your ADUs.

What are JADUs?

JADUs (Junior Accessory Dwelling Units) are the smaller version of ADUs capping at 500 sqft. Its utilities are shared from the main house including the sewer systems.

Final Thoughts

If you’re looking for sustainability-driven, cost-effective, and no-compromise ADU builders in California, we at ADU.Works would love to help you out.We’re extremely passionate about helping solve the housing crisis in California and firmly believe that ADUs are one of the best solutions out there. We also do not waiver on quality, safety, and design. Our goal is to do all the heavy work for you as you simply watch your dream ADU come alive.


With the inflating cost of living and the demand for affordable housing in desirable and urban areas such as California, people don’t have much of an option but to adjust.Local property owners are aging and eventually need to start a business, so building and renting out their ADUs for extra income is an easy option. On the other hand, multi-generational families with tighter budgets can get decent and affordable housing options at the same time.ADUs are more affordable and much easier to build and maintain. They’re modern, stylish, and sustainable, making them a great alternative for housing and a way to solve many of today’s most prevalent real estate issues in expensive cities around the United States.What do you think? Let us know! We’d love to hear your thoughts on this.

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