ADUs, Explained: A Series from Shelterforce
Shelterforce’s ADUs Explained series did an incredible job breaking down the world of ADUs - how they get financed and constructed, how they’ve shaped the world of affordable housing, and the major policy implications that come with legalizing them. Casita Coalition Board President Denise Pinkston and Board Member Louis Mirante were both interviewed for several of the articles. We want to thank Shelterforce for their dedicated effort towards great ADU journalism, and highlight the important work they’ve done to bring some of these issues to light. Even for those familiar with ADUs, these articles provide great information and some insights that aren’t a part of the everyday discourse on the subject, so they’re worth a read for all.
ADUs: Defined, Disambiguated, and Debated
Key takeaways:
Zoning affects ADU options, and in places where more affordable housing is needed, people have worked to change zoning rules to allow ADUs as a solution
ADUs can be both a worthwhile and imperfect solution: there are still plenty of financing and equity issues, but they remain popular as a means to gently create more housing
There are many more options and resources now for people who want to build ADUs, including local contractors, for-profit companies, and nonprofits
Memorable quote:
“While it’s true that myriad zoning and financing barriers must be removed before the nation can ramp up ADU development to a scale that could measurably affect either the undersupply or overpricing of rental units, they’re certainly being built—to the tune of 110,000 nationwide during the year prior to September 2021.”
ADUs: Laws and Uses, Do’s and Don’ts
Key takeaways:
ADUs have gained support as demand for scarce rental units has increased, with west coast communities like Portland and Vancouver, BC leading the way
Big barriers to ADUs across U.S. communities include parking requirements, floor area ratio restrictions, height restrictions, and owner-occupancy requirements. Short-term rentals are also a contentious issue
Memorable quote:
“Sometimes communities just don’t want rental housing in their community, and they use this as a way to say you have to have an owner living on the property. There’s no other kind of housing where we allow bans on renters.”
How Financing Barriers Keep ADUs Expensive
Key takeaways:
Just because a homeowner can legally build an ADU, doesn’t mean they’ll be able to do so
Loans are expensive and there aren’t enough loan products to meet demand; borrowers aren’t allowed to factor in projected rental income; and construction costs are high
These barriers make ADUs cost more to build and rent than lower-income homeowners and tenants can afford
Hopefully, change is coming - recent national attention on ADU finance has been a promising sign
Memorable quote:
“In the finance space, clearly federal lenders—the GSEs, the Fannies, and Freddies—need to decide that the future income from [renting out] an ADU can be used to size a loan for a homeowner who is house-rich and cash-poor,” says Denise Pinkston, founder and board president of Casita Coalition. “If they don’t do that, the people who will be hurt the most are the people we want the most to help: low- and moderate-income homeowners, seniors on a fixed income, communities of color.”
Affordable ADUs: How It’s Being Done
Key takeaways:
Pilot programs are deploying a variety of strategies to make ADUs more affordable: public and private entities joining together to support homeowners, programs that connect voucher holders with ADUs, shared equity programs like community land trusts, and companies that partner with landowners in long-term land leases to lease and manage an ADU, which passes to the landowner once the lease is up.
Even with these programs, there are some homeowners who simply cannot take on more debt and therefore have very limited options.
Memorable quote:
Many Americans, even homeowners, are saddled with significant amounts of debt. Those debt-burdened, often lower-income homeowners who can’t service the payment on an ADU loan would nonetheless benefit from the wealth-building opportunity that renting out an ADU would provide.
Going Statewide to Boost ADU Development
Key takeaways:
Small-scale solutions can’t fix large-scale problems - which is why California has the most aggressive statewide ADU laws in the country. CA’s state ADU law has produced immediate, widespread effects.
There has been plenty of backlash in California, but its challenges have been met with an even stronger coalition of ADU advocates who are committed to making sure the statewide laws last.
A few East Coast states have been exploring statewide ADU legislation as well.
Memorable quote:
“If you take away one barrier at a time, you don’t get more housing. You may get a few more units, but if you think of zoning barriers as a brick wall, you cannot take away one brick and expect the wall to move,” Pinkston says. “And if you try to do it one city at a time, you can’t actually lower the cost [of building housing] because people don’t build in one city alone. They build all over a region or all over a portion of the United States. If you really want to . . . lower the cost of building housing, you’ve got to do it at scale.”
Why ADUs Can’t Solve the Housing Crisis
Key takeaways:
ADUs come with limitations, and their increased popularity has had unintended consequences, including compounding the opportunities of mostly white, affluent homeowners while those opportunities continue to be unattainable for the low-income POC homeowners who could benefit most.
By legalizing ADUs, local lawmakers can claim they’re solving the housing crisis and get away with refusing to address needs like more public housing and affordable housing for very low-income renters.
Landlord support is a big missing piece of the puzzle - not all homeowners want or know how to be landlords.
Memorable quote:
“ADUs are just not enough. We need, in my view, the whole football team. We need the small-scale developers. We need the nonprofits. We need the large developers. And we need the homeowners to do ADUs. We need it all.” - Sherry Taylor, an asset manager at Durham Community Land Trustees, a Durham, North Carolina, nonprofit
About Shelterforce
Shelterforce is the only independent, non-academic publication covering the worlds of community development, affordable housing, and neighborhood stabilization. Dedicated from the beginning to everyone working to empower and support low-income communities, Shelterforce provides a venue for conversations that need to be had—on topics from community planning to racial equity, housing affordability to homeownership, and the future of community development.
Member Corner
July 23: Join Casita & Napa Sonoma ADU for a Prefab ADU Tour in Santa Rosa
Join us to tour model prefab ADUs from Homes for Sonoma and Connect Homes, plus meet and talk to reps from prefab companies, architecture & design firms - several of which are Casita Coalition members!
July 16 & August 13: ADU Tour Series hosted by Maxable
Meet with the designers, builders, and homeowners responsible for some of these projects and gain real insight into what it takes to build an ADU. Get a realistic idea of budgets and timelines from real projects. From above garage units to brand new standalone ADUs, this tour will leave you inspired to take the plunge into building your own dream ADU. As an added bonus, get exclusive access to a virtual presentation from Maxable CEO & Founder, Caitlin Bigelow, and Financing Expert at Cross Country Mortgage, Meredith Stowers.
Visit ADUtour.net to get a sneak peek of some of the stunning ADUs on our tour and RSVP today.
Los Angeles: Saturday, July 16th 9am - 3pm
Bay Area: Saturday, August 13th 9am - 3pm