Did you know that America is facing a housing shortage? As millennials turn home-buying age, the need for home inventory grows. This is a huge problem because of the lack of supply. People aren’t selling their homes like they used to.

As of 2018, sales were 4.5% lower than the actual market potential. If you’re a current homeowner, there’s a great way to use the housing shortage as an opportunity for long-term investment. ADUs (accessory dwelling units) also known as granny flats, in-law suites, or backyard cottages. Let’s take a look at how ADUs help to raise the value of your home, increase your space, and provide a great return on investment.

What Is An Accessory Dwelling Unit?

ADUs should be thought of as permanent homess, constructed and designed to last long-term. Their role and purpose may evolve over the years, but they can be used for a variety of purposes. You can use them to house your grandparents or parents, home care providers, as young adults saving up or paying off student loans, a rental income, or even for yourself to downsize into. It doesn’t matter what the original purpose is, the value-add granny flats have on your home is great. The Various Uses of ADU Space in a Housing Shortage

There are a ton of different ways you use your ADU that take advantage of the housing shortage including bonus spaces for your kids, a home studio, or a specialized space.

Bonus Spaces

An ADU provides a separate space for your kids and their friends, without them needing to leave your property. They are at a distance, but still still close. Many families love this connectivity, and the positive impact it can make on young adults struggling to save and invest early in their lives. This is a great way to give your kids e some independence without worrying about them.

Home Office or Studio Spaces

Do you have a garage full of tools or crafts or any other hobby? You can turn your ADU into a private studio, workshop, or artist space--or even use it for a home business. If you have projects that you work on at odd times of the day, need independence, or just need more liveable, workable space, this allows you to work without disturbing anyone.

Specialized Space

Building your ADU as a specialized space brings tons of value to your property. Your property will be unique and your ADU provides extra space for families looking for homes when you’re ready to sell.

You can build your ADU any way you want. Make it high-tech with a movie room and surround sound. Turn it into a place where guests change and shower at your pool parties or store equipment for your pool. Needing alone time? Kick your spouse out to their man-cave or she-shed.

Any way you use it, it’s guaranteed to be unique and adds special value to your home.

The Ways ADUs Add Value to Your Home

One of the greatest benefits of adding an ADU to your home is that they add value to your current property and may help a loved one. Another plus is new homes don’t have hazards that older homes are prone to as such lead, radon, or faulty electrical wiring or sump pumps. You have peace of mind that your house has been overseen from start to finish, ensuring it adds value. Not only do ADU’s add liveable space on your lot, they also can add value to your family if you rent it our or have a loved one who needs assistance.

Reduction of Development Pressure

When ADUs are built, it increases the amount of housing units per acre, thus reducing the pressure that is put on local development companies trying to expand. This alone boosts property value while also keeping the neighborhood you live in alive.

The more new ADU developments that are built in a neighborhood build high value not only for the people that build them but for that particular subdivision. ADUs help neighborhoods stay away from deploying new developments or turning old developments into low-income housing.

The transition from larger developments to developers investing in ADUs or other small scale projects, help to preserve the integrity and character of the neighborhood.

Efficiency in Development

Another way ADUs add value to your property and home is by being efficient and protecting the environment. ADUs aren't mansions, but the smaller size of the units help to assist more people in finding housing.

The way you build your ADU efficiently will preserve precious resources and energy. Your example allows others in the neighborhood to follow suit. Because your smaller unit needs less energy and less building materials, it encourages sustainability and reduces your carbon footprint.

Lastly, you add value to your neighborhood as well. The more people per-capita, the more neighborhoods are encouraged to find alternative means of transportation such as biking, walking, carpooling, or taking the public bus.

How is Your Property Value Measured?

While all of the above things sound nice, how is your property value actually measured? Your property value is the cash price you would receive in the market for selling your house (and your ADU). Property value is constantly fluctuating when based on the cash price, but it can be measured against your income as well.

Property value also is determined by what is in the surrounding areas of the property. Do you live on a bunch of land in the middle of an urban city? Or are you on a tiny lot in the middle of New York City? Property value says that an acre in the middle of a large city would be worth more than an acre in an open, lesser populated city.

And, of course, ADUs add to your property value, not just because they are additional, square footage of living space--ADUS are fully functioning independent homes, whether they’re attached or detached. ADUs are rentable and can create rental income or greatly reduce the home care costs for an elderly or disabled person that would otherwise need to be placed in a facility.

How ADUs Change Property Value

ADUs have a negative effect on your property value if anyone and everyone in your neighborhood if they are of lower quality and a liability for the next owner of your home. . If you live in a neighborhood that's still being developed or re-developed, to include stores in walking distance, is on a bus route or other transportation line, or is compact, ADUs have a positive impact. They help contribute by supplying more population to grow small businesses.

If you're interested in using the current housing shortage as an opportunity for your advantage, and to improve your home's value, an ADU is right for you. Take a look at our ADU building team, and get in touch today.