It used to be that multiple generations of one family would live together on one property. In part because of Covid-19, we are seeing a return to that type of living, as real estate data shows us. That’s right, the backyard cottage, or granny unit, is on-trend and if you have one on your property, you could see big benefits when selling your house.
According to data from the National Association of Realtors, this category of housing rose to 15 percent of total purchases across the country and in the West, these numbers are even higher. Data from the real estate experts at HomeLight shows that 64 percent of agents have seen an increased demand for what we call Accessory Dwelling Units or ADUs, including in Los Angeles and Ventura County.
While ADUs aren’t only for grandparents — people are also using them for home offices, gyms, rentals, and guest homes — in our market having a place for your whole family is a definite advantage.
By doing some research about ADUs before you add one to your property, you’ll be in better shape to have an ADU that works for you and your extended family.
California is making it easier to add ADUs
In some states, adding an ADU requires jumping over innumerable hurdles. Permitting for an ADU could take months to make sure that your property will be aligned with building codes and safety requirements.
California has them too, but one of the reasons why we are seeing ADUs on the rise in our market is because California has statewide legislation that at least reduces the regulatory burden of permitting and construction for ADUs. And even homes without expansive properties can get ADUs as additions to an existing home.
Prefab tiny homes are solid candidates for ADUs, along with custom-built cottages. While detached structures are the most common type of ADU (as 58 percent of agents shared in the HomeLight survey) an attached ADU sharing a wall with the main property was the second most popular (17 percent). The advantage of detached structures is that they give everyone more privacy, and that is a big plus when thinking about an ADU for your parents.
How much will it cost?
Like any home addition, the cost of an ADU will vary depending on dozens of factors. Real estate agents are talking about how ADUs with luxury amenities like granite countertops, high-end appliances, and top-of-the-line furnishings might bring in a bigger return on your investment. But it’s also possible to keep costs down by furnishing an ADU with more basic amenities.
What’s right for you will depend on your long-term plans for your ADU, how you’ll be using it, and if you plan on selling your house soon.
However, if you want a ballpark estimate, agents in the HomeLight survey shared that the average cost to build an ADU in the Pacific region is $116,724 and that it will add just about the same amount in value to a property given the current market.
Your best bet is to price out a few different options with a contractor before moving forward with any major home addition like adding an ADU. If you have a long-term goal of creating an ADU, then doing your research to determine the costs can help you set a timeline for adding one and budget for how much it might cost.
Make your ADU your own
The design options for ADUs are neverending but there are some features that can be a plus for any ADU. Because you’re working with a small space, adding natural light can help your ADU seem larger, large windows, skylights, and sliding glass doors can all be ideal design elements for ADUs, too.
While you might have a small space to work with, by building up your ADU, you can make use of vertical space and use this to add height to tall ceilings. Having a second sleeping space in a loft can also create an ADU that’s ideal for two people or more.
Built-in storage is another plus for ADUs so that you can maximize storage space and leave floor space for furniture.
Other ways to make a small space work for an ADU are by selecting a color palette and using this to tie every element of your space together. Other than home decor, you can paint an accent wall, or use colorful tiles to bring energy and color into the space.
Does an ADU really add value?
While markets are constantly in flux, current data shows that ADUs will add value when it comes time to sell your house. In fact, in the HomeLight survey, real estate agents in the Pacific region were the only survey respondents to report a positive ROI (2 percent), from ADUs. Meanwhile, the average increase in a home’s resale value came in at 36 percent.
How much value an ADU will add to your home will depend on a lot of factors like the demand for them in your market, how much money you put into the remodel, and the final sale price for your home.
If adding an ADU is motivated by increasing the sale value of your home, then you’ll want to consult with a realtor and a contractor to determine the best strategy for your ADU project. If you are building an ADU to be lived in by multiple generations, you’ll also want to consider accessibility and whether you should build your ADU on a single level.
Adding an ADU is a major home update. If you are thinking about adding one for your parents or just as an investment on your property, there are some compelling reasons why this is a project with a lot of benefits. Buyers looking for a new home with an ADU are also in luck because there are now more homes with this bonus mini home. Remember that an ADU has numerous uses and if you have the space, it’s considered as a worthwhile addition to any property.