The circumstances of life have ways of upending our comfortable routines. Medical emergencies, financial setbacks, legal challenges, family dramas and political reversals -- not to mention fires and floods -- each and all can interrupt our ordered existence with new demands. The COVID-19 pandemic is one such shocker, forcing many to work from home. Aging parents or relatives down on their luck also force homeowners to make hard decisions about how to utilize their properties. Accessory dwelling units (ADUs)are often an answer to many such difficult surprises. Not only do they offer solutions, they also boost property value.

What Is an Accessory Dwelling Unit?

The American Planning Association defines an ADU on its website: "An accessory dwelling unit (ADU) is a smaller, independent residential dwelling unit located on the same lot as a stand-alone (i.e., detached) single-family home." Architectural Digest offers a simpler description: "An accessory dwelling unit is typically described as a self-contained structure on the same property as a single-family home." These explanations are fairly general because the precise criteria for what makes an ADU is most often determined by state law. Many suburban communities nationwide have properties supplemented with an ADU.

How Are Accessory Dwelling Units Used?

Among the frequent purposes of an ADU is to shelter an aging relative. This might be a way of preserving the relative's assets instead of sinking them all in a senior care facility. Alternatively, it serves to allow the relative to exercise some degree of independence while still under the watchful care of loved ones. Another popular use for an ADU is that of a home office. It could be a small workspace or a full-fledged professional office -- as with a physician or dentist -- complete with waiting and examination rooms. Other ADU functions include:

  • Guest rooms for company
  • Rooms for rent
  • Art studios, workshops or other hobby spaces

Does an ADU Increase the Home Value?

How much an ADU affects property value is likely dependent on multiple factors -- location, condition, demographics, etc. However, one thing is fairly well corroborated, the presence of an ADU more often enhances the worth of a property. Studies of re-sales in the Pacific Northwest and northern California recorded ACUs contributing up to a 51 percent uptick in sales price. Again, such results are tethered to multiple factors that are qualitative, economic and geographical.

Are They More Prevalent in Certain Places?

ADUs are not only subject to state laws, but to county and city ordinances, as well. The city of Chicago, Illinois, for example, forbids them altogether. In general, they are more easily erected west of the Mississippi River. According to a Forbes magazine feature, accessory dwelling units find welcome in such cities as Anchorage, Alaska; Atlanta, Georgia; Austin, Texas; Denver, Colorado; Honolulu, Hawaii; Houston, Texas; Philadelphia, Pennsylvania; Phoenix, Arizona; Seattle, Washington; and Washington, D.C. Of course, suburbs of these large cities make their own rules. Many states are now recognizing ADUs as a solution to affordable housing shortages.

Is It Expensive to Build an ADU?

Realtor magazine has surveyed academic research on the cost of an ADU. On average, it reports, the investment hovers around $156,000. Per square foot, the price is close to $130 when owners build the dwelling themselves from a kit. Employing a contractor will lift that to about $200. Of course, there are other items to pay for: construction permits, insurance, utility hook-ups and the like will add to the final tab. Still, the augmented home value suggests such an expenditure will be recovered at re-sale time. Whether for love, money or both, building an accessory dwelling unit is becoming an attractive means for problem-solving.

By the way, an ADU need not be detached from the house. A converted basement or garage sometimes qualify.