New ADU Housing Bills Could Add Value To Your Home


In order to help alleviate the housing crisis, the California State Legislature recently passed a series of bills aimed to facilitate the addition, or new construction, of accessory dwelling units (ADUs), also known as ‘granny flats,’ ‘in-law units,’ ‘guest apartments,’ etc.

The most common uses for ADUs are:

    • Housing grandparents and older parents independently
    • Bonus space for older kids
    • Low-cost housing for adult children
    • Space for a home office or studio
    • Private accommodations for guests

  • Efficient quarters for single or empty-nester homeowners


  • Long- or short-term rental income

Adding an attached or detached unit to an existing single-family dwelling, prior its sale, is something homeowners should consider. This is a way to increase their property’s value, while it also can enhance a home’s profile and price-point before it is brought to market. In rough terms, the addition of an ADU with excellent rental potential could increase the value of a Bay Area property by hundreds of thousands of dollars.

“As states and cities relax zoning laws,” reports Diana Olick for CNBC, “auxiliary dwelling units are cropping up and fast becoming big business for homeowners.”

But before deciding on breaking ground, homeowners should consider these factors:

  1. ADU regulations may vary by jurisdiction. Click here for specific rules in your area, or visit the webpage for your city’s planning department.
  2. Upfront and ongoing cost. On average, a detached ADU can cost more than $100,000 to build and outfit. An attached ADU is liable to cost upwards of $40,000. It’s possible to finance these costs with a secured loan, but that requires you to shell out several hundred extra dollars per month. If you’re not planning to rent out your ADU or sell your property soon after construction is complete, your household’s cash flow needs to be sufficient to absorb this added monthly payment.
  3. Higher property taxes. Adding an ADU to your property raises its value which results in a higher property tax bill. This added cost must be factored in your calculations.
  4. Greater maintenance load. More square footage means more maintenance. Whether you rent out your ADU to a long-term tenant, list it on Airbnb, or keep it as a studio or bonus space, it’s your property. And that means you’re responsible for keeping it in good (or at least acceptable) shape. Home maintenance costs vary significantly depending on a home’s age, size, configuration, location, and other factors. It’s true that newly constructed ADUs are likely to be cheaper to maintain than sprawling older homes. Still, maintenance costs can add up over time. Homeowners should budget roughly 1% of the value of their home for maintenance and upkeep. That’s $1,000 for a $100,000 ADU.
  5. Security recommendations. Detached ADUs that sit vacant for long periods can be particularly vulnerable because of their distance from the hub of activity at your main house. At a minimum, you’ll want to install motion-activated floodlights. External cameras aren’t a bad idea either.
  6. Potential for conflict with neighbors. ADUs can upset neighborly relations, especially in smaller towns and quieter neighborhoods. Even if you’re not required to do so by law, it’s not a bad idea to keep your neighbors looped into your ADU plans before and during the construction process, just so everyone is on the same page.

Building an ADU is an almost near-certain way to boost the resale value of your home. But even if you are not interested in undertaking such a project, determining the feasibility and potential of adding an ADU to your home can be an attractive feature for potential buyers. It makes a solid financial reason to negotiate a better price.