What is an ADU and how is it increasing property value?

Five bills recently passed empowering California residents to build 1,000 square foot residences on their properties.

The bills allow for residents to build what’s termed an accessory dwelling unit (ADU) on their property. This could mean converting a garage into an apartment or completely building a separate structure.

Advocates of ADU legislation believe they could be a solution to the housing shortage. So, what does it do to property values?

In the San Francisco Bay Area, that would amount to 150,000 new homes, mixed in throughout existing neighborhoods, at no cost to taxpayers.

After California liberalized ADU rules in 2017, they accounted for one in five of LA’s total housing building permits in 2018.

An ADU is highly expected to raise your property value but it is a major investment. You can get some of your money back if you plan to use it as a rental.

The actual value to the property is hard to calculate. However realtors in Los Angeles are reporting that homeowners are recouping their investment when selling their homes with an ADU. One study in Portland, Oregon even suggested raising value up to 25 percent.

If you are trying to sell your home with an ADU and need help with the marketing, give me a call.

Market Update - Courtesy of Our Friends At Mortgage Capital Partners