The U.S. has an affordable housing shortage. Could ‘granny flats’ be the answer?

ADUs, commonly called “granny flats” or “mother-in-law suites,” date to antiquity. But there has been renewed interest as housing costs soar across the United States, especially in high-demand, relatively low-density cities along the West Coast.

In Southern California, for example, the median sales price for homes is now above $510,000, according to real estate data firm CoreLogic. The figure was below $300,000 as recently as 2012. Higher housing costs and accompanying property taxes have pushed homeownership out of reach for many millennials and have made retirement math more complex for low- and middle-income seniors.

Because most U.S. cities are developed around single-family homes designed for automobile owners, it’s difficult to increase density and provide housing relief through new construction. One potential solution to the problem is the relatively simple concept of ADUs, either a new structure built adjacent to an existing home or added to it in what’s known as an attached or “junior” ADU.

Sizes and amenities vary, but the homes are typically on the small side – between 700 and 1,000 square feet, with 1.5 baths, on average. These homes tend to blend in with their surroundings rather than drastically alter a neighborhood, quietly adding density and new options for renters.

“People have always added on to their houses and put structures into their backyard,” said Karen Chapple, a professor of city and regional planning at the University of California at Berkeley who has written and researched extensively about ADUs. She built one in her own backyard in 2011. “We’re at the point in the U.S., with the economy growing and housing prices going through the roof, where many young adults and seniors aren’t able to find a place to live. All across the country, we’re going to have to densify our suburbs,” she said.

The West Coast has become a leader in both high housing costs and in ADU construction, with California and Oregon mandating that most cities must allow ADUs, leaving only limited power at the municipal level to legislate how the structures look and to whom they can be leased.

Fear of regulation is thought to be one of the biggest deterrents to ADU construction, both through permitting costs and government inspections.

“Homeowners need to be reassured that if an inspector comes to look at their second unit, they won’t go looking for code violations on the main dwelling,” Chapple said.

Easing regulation seems to be having an effect. San Francisco, for example, has more than 1,000 ADUs in the development pipeline, with officials looking to increase that number. Portland, Oregon, issued fewer than 100 ADU permits as recently as 2010. In 2016, the number surged past 600 permits in a single year and could soon surpass the number of new homes under construction.

Like other housing solutions, ADUs have run up against a host of opponents whose concerns include parking and traffic, changes to neighborhood character, and fears that the units will be rented to unruly college students or Airbnb tourists.

But the high demand and low density of U.S. cities feeling the housing crunch underwrites the financial feasibility of ADUs. According to UC-Berkeley research, average accessory dwelling construction costs are $156,000, whereas even a modest three-bedroom, two-bathroom home can sell for more than $1 million in the San Francisco Bay Area.

The same research found that 58 percent of ADUs are rented at or below market rates, in part because they are often leased to friends or family members, and that average construction time is 18 months.

There appears to be plenty of room for accessory dwellings in America’s backyards. In Portland, for example, 43 percent of all developable land is dedicated to single-family homes, according to the city’s Bureau of Planning and Sustainability. Just 15 percent is dedicated to multifamily dwellings. Overall, 60 percent of all housing consists of detached single-family homes.

The concept is gaining traction elsewhere, too, in expensive cities such as Boston and Washington and even in smaller communities such as Albany, New York.

Several organizations are championing the concept. In Los Angeles, an organization called LA Más is establishing an ADU Section 8 program to provide homeowners with incentives to build ADUs specifically for Section 8 voucher holders.

Although ADUs tend to be grass-roots by nature, many local and state governments are also working to remove roadblocks to their construction, such as restrictive zoning and code enforcement ordinances that scare away potential builders.

“The big shift for Portland came not after several rounds of relaxing the requirements, though that certainly helped, but when we began waiving our systems development charges, which can increase the cost of a building permit by $10,000 to $15,000 for an ADU,” said Morgan Tracy, a project manager with the Portland Bureau of Planning and Sustainability.

Financial issues on the part of homeowners can also impede ADU instruction, although if successfully rented, the units can pay for themselves in as little as four or five years. Another issue is reluctance on the part of some homeowners to have strangers living on their property, even within a detached structure. This concern helps explain why they are so often rented to friends, children and parents.

A Portland State University study released this year found that 42 percent of ADU owners built them for long-term rental housing and that 35 percent planned to rent to family members or friends. When asked to provide two reasons they chose to live in an ADU, renters listed cost of living at a rate of 50 percent and “neighborhood” at a rate of 41 percent.

Portland has developed substantial momentum in its push to encourage ADU construction, Tracy said. Homeowners see their neighbors building them and become interested, which helps bring more people into the fold.

Los Angeles Mayor Eric Garcetti , D, has set a goal of seeing 10,000 more backyard units built there by 2021, and the city went from issuing 142 ADU permits in 2016 to nearly 2,000 last year. Portland is considering a measure to double down on its popular ADUs by allowing two per home – one attached and one detached – and by allowing ADUs on the same lot as duplexes for the first time.

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