Accessory dwelling units (ADUs) should get a new lease on life in 2020 due to a heavy push for affordable housing perfectly timed with state regulation and advancements in construction technology.
The ADU housing approach is a fast and creative way to address affordable housing. ADUs, which have been around for years, go by a variety of names: casitas, pool homes, in-law suites, granny flats, guesthouses and secondary dwelling units, among them.
They are getting more attention amid the housing crisis as a way to leverage existing city infrastructure preventing urban sprawl and costly system expansions. Construction of ADUs creates jobs as well as additional tax revenue. And since ADUs are typically smaller than a traditional home, they are less costly to build. With so many wins, why haven’t ADUs gone viral?
NIMBYs, BANANAs and local government
Developers have another name for NIMBYs, or the not-in-my-backyard crowds: they’re BANANAs. The build-absolutely-nothing-anywhere-near-anything movement is real, loud, costly and frustrating for states attempting to address affordable housing. When affordable housing projects land at a city, unhappy citizens protest the elected officials they put in office and projects get nixed.
But, NIMBYs can’t take all the credit. Berkeley’s Terner Center for Housing Innovation produced a report, “Residential Impact Fees in California,” and found some cities in California were charging upward of $50,000 in impact fees for accessory dwelling units. This is particularly troublesome since ADUs range from 350-1,200 square feet and are placed on existing sites with existing infrastructure. Exorbitant impact, park, utility and school fees are just a few ways cities are stifling the ADU movement in California which has been pushing ADUs since 2017.
In October, the city of Los Angeles released findings on its $1.2 billion affordable housing bond (Proposition HHH) showing since 2016, of the 6,000 housing units in process, the average per unit cost is over $500,000. The mouth-dropping cost combined with news of a 16% increase in LA’s homeless population to 36,000 means LA – and other California cities – need other options.
October 2019 was one for the ADU history books. California Gov. Gavin Newsom signed 18 real estate related bills – including five on ADUs – making good on his promise to address California’s serious lack of construction and shortage of affordable housing.
Local control stripped for ADUs
California’s handful of bills addressing ADU issues were far reaching and took away local control from city governments, effectively eliminating NIMBY pushback.
Updates necessitate that cities standardize size requirements, update set back rules, approve permits within 60 days, clarify parking rules and launch a five-year owner-occupancy moratorium. It also drastically cuts impact fees. The goal is to make ADUs cheaper, faster and easier to get through the building-approval process.
Since the state is allowing and recommending ADUs count toward affordable housing numbers – which only a small fraction of cities in California are meeting – we can expect to measure the impact starting in 2021 after a year of tracking ADU numbers.
Thankfully, two technology trends are gaining traction that will address two key issues for the ADU market: skilled labor shortages and construction costs.
Prefab Construction and 3D Printing expand ADU options
According to the NAHB/Wells Fargo Housing Market Index in 2019, the cost and availability of skilled labor was one of the top challenges builders faced in 2018 and expected to face in 2019. It will likely receive top billing again in 2020. That’s where prefab construction comes in.
Not to be confused with manufactured homes, prefabricated homes are also built in an indoor plant and shipped and erected on site, however, they fall under the same code as stick-build homes. The smaller size of ADUs fits in perfectly with prefab manufacturing and companies are taking notice, including the likes of Amazon.
Amazon announced an investment into Plant Prefab via the Alexa Fund in 2018. Plant Prefab positions itself as a fully integrated design and custom manufacturing firm able to design, build and install the prefab home of your dreams. From the 406 square foot AD1 model to the affordable multifamily Nest model (not to be confused with Alphabet’s Nest brand), Plant Prefab is making waves in the affordable housing space.
Prefab manufacturers will get additional competition via 3D printed homes in the next few years. Apis Cor, Mighty Buildings, Haus.me and ICON are just a handful of 3D printed home manufacturers. A select few are specifically targeting the affordable housing space.
In 2018, ICON built a 350 square foot home in 48 hours with the printed structure costing $10,000. ICON’s stated goal is getting that cost to $4,000. Apis Cor alerted Facebook followers in October to expect news on affordable housing projects in California and Louisiana. They’ve partnered with the Housing Trust Fund of Santa Barbara County to create a one-story affordable home prototype.
Where Technology Meets Need
Prefabricated and 3D printed home technology are gaining momentum at a time when skilled labor and affordable housing shortages are forcing state legislators to look at all options. If California successfully pushes ADUs into the mainstream, other states will follow. 2020 will likely be the year of the ADU.