With housing prices soaring beyond the reach of low- and middle-income Americans, many cities are moving to create more affordable rentals by significantly expanding dwellings commonly known as garage apartments, in-law suites and granny flats.
The official name for the apartments created from converted space is accessory dwelling units, commonly referred to as ADUs.
Affordable housing advocates promote accessory dwelling units as a way to modestly increase housing stock without drastically altering the neighborhoods that surround them, and a steady stream of new city, county and state regulations is making them easier to build.
“There has been a dramatic uptick in ADU regulatory relaxation over the last few years,” said Kol Peterson of Portland, author of “Backdoor Revolution: The Definitive Guide to ADU Development.”
“A number of cities and states have come to the conclusion that ADUs are a good thing and that they should put forth enabling legislation to hopefully spur their development,” added Peterson, who is also the owner of Accessory Dwelling Strategies, a company dedicated to accessory dwelling unit-related education, advocacy and consulting.
Cities that have eased or are looking to ease regulations for these units include Evanston, Illinois; Greenfield, Massachusetts; Maplewood and Princeton, New Jersey; and Edmonds, Washington . Missoula, Montana, home of the University of Montana, relaxed accessory dwelling unit regulations in October, raising the maximum allowed height to 25 feet, and removing requirements for owner occupancy and parking.
Also studying the concept are Chicago, which is allowing accessory dwelling units under a pilot program, and Alexandria, Virginia. Perhaps most notably, California and Oregon have passed statewide legislation making accessory dwelling units easier to build.
“The major factors in favor of ADUs are affordability and flexibility,” said Sam Khater, chief economist and head of Freddie Mac’s Economic and Housing Research division. “The share of entry-level homes has declined a lot, yet demand has more than outstripped the declining new supply that’s coming out of the market.”
That’s especially true in the high-cost, low-density metropolitan areas of the West Coast.
Accessory dwelling units fell out of favor starting in the 1950s as suburbanization and zoning codes discouraged their creation. Even so, many were built illegally in the ensuing decades.
Freddie Mac released a research report in July that attempted to identify how many accessory dwelling units there are, legal or not, by text-mining 600 million multiple listing service transactions from 1997 through 2019 and searching for the various terms used to describe ADUs.
The research found striking growth in accessory dwelling units, jumping from less than 2,000 listings per month in 1997 to more than 12,000 in 2018. Between 2009 and 2019, the number of first-time accessory dwelling unit listings averaged 8.6% in year-over-year growth. Those figures could also be set to jump as cities and states change codes in favor of accessory units.
As a percentage, accessory dwelling units remain a very small part of the overall housing stock. At its peak in 2019, the share of active for-sale listings with accessory dwelling units reached just 6.8%.
Many experts agree that granny flats and in-law suites will go only a small way toward easing America’s affordable housing crisis, mostly because they are built at an individual level rather than on a large scale. In a way that’s an advantage — their small impact doesn’t alter neighborhood character or add a bunch of new cars to the roads. The flip side is they’re more of a small tool in the box than a full-scale solution to affordability problems.
“There is so much promise and potential with ADUs, and yet the devil is in the details,” said Sarah Brennan, a senior vice president managing Self-Help Federal Credit Union’s market presence in Southern California. “Most homeowners don’t have the experience necessary with architects, with managing a general contractor, with going to city hall to get permits.”
Banks are often unfamiliar with accessory dwelling units and thus reluctant to lend at favorable interest rates.
Ebonée Green understands both sides of the accessory dwelling units issue. She lives in Chicago and is an organizer with groups including Black Youth Project 100.
Green rents a garden unit, an attached accessory dwelling unit connected to a main dwelling, that sits partially underground, in the South Shore neighborhood. She describes it as a clean, well-decorated place where anyone would want to live.
But a decade ago, she was forced due to the recession to move to a less-than-desirable accessory dwelling unit in the Uptown area. She eventually discovered a leak in the foundation that caused the place to mildew and had trouble getting the landlord to fix it. The experience left her more cautious about why accessory dwelling units are affordable.
“My concern about ADUs is that they seem like such a great idea — and I work with affordable housing so anything that increases housing stock is great — but we have to be careful because a lot of ADUs are affordable because they’re not exactly legal,” she said. “For every one you find that is nice like the one I’m in now, you’ll find one that’s really just a basement with a bathroom.”
Green’s roommate Reggie Tucker added: “There definitely needs to be oversight (of the accessory dwelling unit landlords). If there’s no oversight it would be the wild, Wild West, and that brings its own set of problems.”
Accessory dwelling unit advocates counter that allowing the units can help bring them up to code since more will be built legally. Green isn’t against them, but she wants to be sure any accessory dwelling unit regulations are built with the tenant in mind as well as the owner.
“It’s exciting because we get to open up housing stock, but what housing stock are we opening up?” Green said. “It still doesn’t absolve the city from the protections they need to keep for renters.”