How ADUs Can Help Solve America’s Housing Shortage Crisis

The current U.S. housing shortage is affecting millions of people every day. But there is a lot of land in suburban areas that hasn’t been developed, and many people are convinced that small accessory dwelling units (ADUs) can be a meaningful solution. The question is, how can ADUs help to solve the housing shortage crisis?

Because they are small and relatively inexpensive to build, ADUs are an obvious, lower-cost housing solution. They are affordable, and whether built for aged relatives, adult children who cannot afford their own homes yet, or to rent out, they increase housing opportunities for many people.    

I’ve been reading a lot about what’s happening in various U.S. states, and there are people across the land who are embracing the idea of using ADUs to help solve the current humanitarian housing crisis.

One of the things that’s interesting is the fact that ADUs are right in everybody’s backyard, which is an about-face from the established NIMBY (“not in my backyard”) concept. There’s more about this below.

So, let’s dive right in and see how ADUs can help to solve America’s critical housing shortage. It’s not a solution on its own, so I’m also going to highlight some of the barriers to the ADU solution. Maybe all this info can help you conquer your own accommodation issues and those of your family and friends.

Understanding ADUs & Their Benefits

It’s probably obvious to most people that ADUs can help those who aren’t able to afford conventional housing options to find places to live at prices that they can afford.

Generally, ADUs are built in suburban areas, on properties where there is already a single-family home. All are smaller than the main house, and they have their own facilities. Ultimately, although they are commonly designed for only 1-2 people, they enable two families to live on the same property, in their own separate homes. 

More commonly called granny flats, backyard cottages, in-law units, and even tiny houses, ADUs are constructed in many forms. Some are stand-alone homes detached from the main house, while others are built as apartments over garages, or as units that form part of converted basements, attics, and garages.

Over the years, ADUs gained a bad reputation in the U.S., largely because they weren’t allowed but many people went ahead and built them anyway. This may have helped provide shelter for some, but a lack of control led to many badly built structures that didn’t conform to standards and were often downright dangerous.

For example, some of those that weren’t built on proper foundations were destroyed in hurricanes and high winds.

Another stumbling block for ADUs was the NIMBY syndrome that was first identified in America in the 1970s. People in many neighborhoods began to oppose new development and vehemently resist the construction of ADUs. In general, they would maintain that ADUs would lower property values. BANANA, (“build absolutely nothing anywhere near anything”) is a similar movement.

Gradually at first, and now more rapidly, zoning changes and new codes and regulations countrywide are making it a lot easier for everyone to build ADUs. But there is still disparity across the nation, and it’s a lot easier to get approval for ADUs in some cities and states than in others.

How Can ADUs Help Solve The Critical Housing Shortage?

You may be surprised to discover just how much potential and how many possibilities ADUs offer. While the main thrust is that they help to alleviate the shortage of affordable homes, a few more specific solutions include the provision of:

• Homes for aging seniors close to their families who can help care for them.
• Stepping-stone lodgings for students who can’t afford their own homes.
• Homes for renters on a low budget, which will also help homeowners generate additional income.
• Homes for property owners who want to downsize and either let their family move into the main house or rent it out.

Nobody believes that ADUs are the perfect solution to our diverse and multifaceted housing crisis. But there is a growing body of thought that recognizes them as an important tool with growing potential.

Nevertheless, there are often stumbling blocks.

Barriers To The ADU Solution

Two major factors affect the current housing shortage crisis:

1. The fact that there is simply not enough housing available
2. The reality that a huge number of people cannot afford what is available.

Housing prices have increased astronomically and rentals have more than doubled in the past 16 years. There are fewer houses available for sale and prices have increased. According to research studies, homeless populations are growing by 2.2% every year.

Where land is available, it’s often centralized and over-regulated.

Even though there is loads of evidence that ADUs are a means for the sustainable development of affordable housing, many towns and cities still don’t have policies that make it easy to get planning approval.

In Massachusetts, for example, most towns and cities restrict ADU development. And even where they are allowed, very few appear to be built.

According to MassLandlords, a non-profit trade association for landlords, the local legislative boards that govern ADU zoning in the state exhibit a culture of NIMBY or BANANA. This, they say, is because neighbors of those seeking approval to ADU plans are afraid of increased density. That’s because ADUs will mean more foot and vehicle traffic, as well as increased noise and garbage in the area.

Exclusionary Zoning Policies

There is no doubt that zoning ordinances are a stumbling block for ADU construction in many areas.

Exclusionary zoning policies are inextricably linked with single-family zoning, which was first introduced in the U.S. just after the turn of the 20th century. What it does is to allow only one single home on each plot of land that is zoned single-family.

The alternative for property developers is to build multi-unit homes like small apartments and townhouses if they can meet multi-unit zoning requirements and find land where they can build.

That might sound fair enough, but when you consider that cities like Los Angeles, San Jose, and Seattle (to name just a few) have at least 75 percent of their land zoned for single-family homes, it’s easy to see why lower and lower-middle-income folks simply can’t find affordable accommodation close to school and job opportunities.

An article on America’s housing shortage stretching budgets and costing jobs was published in the Davis Political Review, a non-profit magazine produced by political science students. In it, Marcos Lopez talks about single-family zoning resulting in racial and economic segregation. Exclusionary zoning, he says, reduces rental housing significantly, and he backs up his statements with facts.

The Washington-based non-profit Urban Institute published a paper on Strategies for Increasing Housing Supply in High-Cost Cities in 2016, that, among other things, looked at single-family neighborhoods in Fairfax. While very few ADUs had been built in the district, the authors believed it made economic sense to build more ADUs.

With an aging population in many of Fairfax’s single-family neighborhoods, it would allow older adults the opportunity to stay in the homes, albeit in the ADU.

In Washington, D.C., there was clear resistance to changing the single-family property concept. A trend, at the time, was to demolish single-family houses and replace them with bigger ones rather than convert “row houses” to flats that would accommodate more people.

One idea to encourage ADUs in D.C. was to offer tax breaks if units meet affordability requirements. While it’s regarded as a possible model that could be an important tool, many skeptics don’t believe an ADU strategy will increase affordability.

Yet, in California, and in Vancouver, Canada, things have worked out differently, and more quickly (see below). 

Why Exclusionary Zoning Policies Must Change

 If ADUs are going to play a role in helping to solve America’s housing shortage crisis, zoning policies need to change. In many areas, they are, but clearly not fast enough. But let’s look at some positives and how changes in zoning policies are helping.

It appears that ADUs were accepted in Canada a few years before the Canadian government began to ease regulations to make them possible. But California has certainly led the movement in the U.S.

According to the Sacramento-based Pacific Legal Foundation, the state issued 158 ADU permits in 2012. Three years later, in 2014, they issued 728, and in 2019, after the regulations were eased, even more: 14,702. There’s no doubt that these numbers are going to keep rising and that California will be doing its bit to help solve the housing shortage crisis in our country.

But even in California, there is a disparity in terms of requirements and approval conditions.

Vancouver, Canada

A decade ago, Vancouver faced skyrocketing house prices and an affordability shortage. So, in 2009, the city legalized ADUs and made 65,000 lots eligible for ADU construction. Take-up was quite slow, but by 2018 more than 2,000 units had been built. As a result, it’s often cited as a symbol of what we can accomplish with the right rules and regulations.

Tucson, Arizona

In Tucson, Arizona, housing costs rose by nearly 27 percent last year, according to this article. So, local leaders started looking at ADUs to fill the much-needed housing gap. Obviously, the first step was to begin the re-zoning process to make them legal and encourage people to build them.

It’s only natural that there are concerns, particularly that people might convert ADUs into short-term Airbnb-type rentals rather than using them for desperately needed local housing. To counter this, the authorities are going to have to prioritize the use of ADUs to make sure they are available to low-to-moderate income people or the owners’ families.

Boston, Massachusetts

An article in the Stanford Social Innovation Review urges national, state, and local communities to remove, or at least reduce, regulatory barriers so that more homes can be built more quickly and more cheaply. It also encourages using existing housing and land to provide increased housing opportunities. An obvious example of this is the ADU.

The article cites the City of Boston as an innovative example of the difference this approach can make. Here, they provide gap funding through a zero-interest loan for people who have been approved for an ADU. Incredibly, there are no monthly payments due until the owner of the ADU either refinances or sells the unit.

Denver, Colorado

An ADU pilot program in Denver, Colorado is doing something similar. Here, the West Denver Renaissance Collaborative (WDRC) is in charge of an initiative that helps less-wealthy residents build ADUs. They offer pre-approved designs and technical assistance that can save homeowners between $50,000 and $75,000 when they build ADUs.

In a similar move to the City of Boston, the City of Denver offers free $30,000 “loans” to owners who agree to rent units out at affordable rates for 25 years. 

Typical ADU Restrictions

There is no doubt that the critical housing shortage has pressured many municipalities to allow homeowners to build ADUs on their properties. But many impose restrictions that might include:

• Minimum property sizes for ADUs, meaning that your property must be large enough to accommodate one.
• Minimum and maximum sizes that are commonly specified for units.
• The number of units allowed on one property may be specified, and more often than not, only one is permitted.
• Sometimes, only the property owner or family members may live in an ADU.
• While not really a restriction, ADUs typically need to meet the same codes and regulations as the main residence on the property.
• When you sell the property, the sale must include both the main house and the ADU.
• The ADU must match the style of the main house and might have to be constructed using the same materials.

Can An ADU Help You?

Even though I am looking at the bigger picture here, the fact that ADUs can play a role in helping to solve America’s housing shortage crisis means that the information I have shared could help you personally.

I am currently planning an ADU on my property in Florida, and some of the facts that I’ve shared with you are certainly meaningful to me.

Without a doubt, if you have elderly parents, young adult children, or you have the means to build a unit that you can rent out to create an additional income source, an ADU could be just what you’re looking for.

We also wrote some more articles on ADU’s for more information if you’re interested:

• One on what to look for when building your ADU, or whether you can build one on your property in the first place!
• And another one how to finance your ADU, once you learn that you’re able to build one.