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Pandemic, Recession, and... Building ADUs?

I know what you’re thinking. How can I build an ADU now? Times are tough, and the threat of recession looms above us like a dark and ominous cloud. The average cost of living continues to increase, but the cost of housing doesn’t decrease. “The share of Californians with excessive housing costs is quite high: 30 percent of mortgaged homeowners and 46 percent of renters spend more than 35 percent of their total household income on housing, compared with 21 percent and 40 percent, respectively, nationwide.” (Source)

In the first quarter of 2019, The National Association of Home Builders found that 20% of the nation’s home remodeling projects included ADU conversion projects, and almost as many projects involved adding on an ADU as an addition. And even after the shelter in place order began in March of 2020, United Dwelling, a company that assists homeowners with ADU builds in Southern CA, saw an increase in inquiries about ADU builds. So why now - and what are the benefits? Here are the top three reasons we found:

An investment that could bring you through a recession - Portland, OR was hit hard by the 2008 crisis. However, during the hardest recession times, it still saw an increase in ADU permits. It’s a stretch to say that ADUs contributed to growth in Oregon, but many folks saw the benefits and took advantage. “With an ADU, you’re investing right directly into your future self. Once you’re done, you immediately add substantial extra income in your life if you rent one unit. That income will generally be greater than the costs of the construction loan for the project.” Read more here.

Boosting accessibility and affordability of prime real estate.

Because ADUs can increase the potential purpose and value of homes, the state is taking advantage by increasing accessibility to build them in CA. Developers are taking advantage of this opportunity - and in the long run, this will bring down the price of building these versatile units. Read more here.

A place for the whole family Building an inlaw suite can be a great place to house your family who may be working or schooling remotely. Issues with nursing homes make it more essential than ever to have safe, adequate space for elderly relatives as well.

At the moment, Monterey and Santa Cruz Counties don’t have a calculator that is localized and will estimate your returns on building your ADU. In the mean time, check out this resource from San Mateo county to see what is possible.

The Whitley family in front of their Habitat-built ADU

Have other ideas? Leave some comments and let’s discuss!

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