Backyards might help the housing crunch
Accessory dwelling units create more affordable options
For Megan Klepp, the small two-bedroom unit she and her husband, Matt, built in their backyard behind their 2,000-squarefoot cottage-style house in Portland, Ore., represents a much-needed source of income now — and financial security well into the future.
They rent out the 800square-foot unit to a friend, with a long-term goal of occupying it themselves and renting out their main house to help finance their retirement.
In doing so, Klepp is taking advantage of efforts by states and municipalities across the nation to ease long-standing restrictions on accessory dwelling units, or ADUs, allowing homeowners to earn extra cash and renters to find housing in communities where the shortage of affordable apartments has reached crisis levels.
“It’s expensive to rent around here,” said Klepp,
43. “Through the ADU, we’re able to generate some extra income and keep the rent more affordable for our friend.”
ADUs, commonly called “granny flats” or “motherin-law suites,” date to antiquity. But there has been renewed interest as housing costs soar across the United States, especially in highdemand, relatively lowdensity 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. It 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 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. These homes tend to blend in with their surroundings, 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 though 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 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 has more than 1,000 ADUs in the pipeline, with officials looking to increase that number. Portland issued fewer than 100 ADU permits as recently as 2010. In 2016, the number surged past 600 permits 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 concept is gaining traction elsewhere, too, in expensive cities such as Boston and Washington and even in smaller communities such as Albany, N.Y.
Several organizations are championing the concept. In Los Angeles, an organization called LA Mas 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 grassroots by nature, many local and state governments are working to remove roadblocks, 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.
Los Angeles Mayor Eric Garcetti has set a goal of seeing 10,000 more backyard units built there by 2021. 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.