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Housing shortages in the United States are driving an increased interest in accessory dwelling units (ADUs) among cities, counties, and homeowners. ADUs, which have strong appeal as a housing option for young people, couples, small families, or seniors, are self-contained apartments, cottages, or other small residential units located on the same property as a separate single-family home. In order to increase the supply of ADUs, many cities or counties need to revise zoning policies, a move that is sparking debate on the community level in some markets. By paying attention to the ongoing ADU debate, developers can learn important lessons about housing production trends, zoning policy shifts, and the importance of stakeholder buy-in.
Legislators in communities across the United States have been looking for ways to cut zoning red tape and boost housing production in recent years, from allowing commercial space to be converted into residential units to rezoning for higher-density housing near transit. Loosening regulatory requirements on ADUs may seem a no-brainer for cities and towns needing more housing, especially those predominately zoned for single-family. Still, the changes have been met with resistance in many communities, and the discourse around ADUs is a microcosm of broader zoning disputes. Identifying markets with ADU resistance can help you determine which regions are resistant to new commercial development on a larger scale.
Here’s everything you need to know about the ADU debate, and what it reveals about broader housing production trends:
The ADU Debate
Accessory dwelling units (ADUs) or ADUs are prevalent in communities across the United States, though the name of the units may vary regionally, with the most common being accessory apartments, granny flats, cottages, or secondary suites. ADUs have become an important topic on the community level amid the affordable housing crisis, as the internal, attached, and detached units can increase housing affordability and create a wider range of housing options within the community. The units, which are usually hidden from the street, are considered a politically expedient way to increase housing options. Even so, community resistance is fairly common, and efforts to rezone ADUs have been limited in success.
In order to boost ADU construction, many cities and counties need to shift zoning and building codes to allow for the units to be built in low-density areas. The effort has not been successful in every state, and in some areas, community resistance has blocked legislative changes from going into effect. For example, two zoning bills SB 9 and SB 10 were introduced in San Diego, California to allow for more units to be built on parcels of land zoned for single-family homes. Neighborhood organizations argued that single-family homeowners shouldn’t bear the responsibility for the housing crisis, and the building of ADUs would make the neighborhood lose “aesthetic value,” depreciating property values. SB 9 passed and became effective in January of 2022, but SB 10 passed on an “opt-in” basis for counties.
Understanding ADU Support + Opposition
Housing advocates have long touted accessory dwelling units (ADUs) as a solution to shortages and rising living costs. ADUs are affordable to construct, as the units do not require new land, major new infrastructure or utility hookups, structured parking, or elevators. The buildings are able to house people of any age and help communities increase housing options without contributing to urban sprawl. The units are especially useful in high-demand, job-rich metropolitan areas with a high cost of living.
Even though ADUs are considered a relatively uncontroversial form of development, efforts to shift zoning policy to allow for more to be built are still facing opposition from certain constituents. Housing advocates are sometimes among the legislative opponents, as some would rather see the space be rezoned for high-density affordable housing. More often, NIMBY (not in my backyard) community groups drive the opposition to changing laws over aesthetic concerns and out of a misconception that property values will be decreased.
The ADU Debate’s Implications on CRE Housing Production
The ADU debate demonstrates how community opposition is often a primary obstacle to shifting zoning regulations. Local resistance to changing regulatory policy often comes from neighborhood associations, or in areas where local representatives have done the majority of urban planning and don’t want state or federal policy to mandate changes. You might find less opportunity in markets where there is already significant opposition to shifting simple zoning policy, as these can represent resistance to multifamily or affordable housing more broadly.
Looking toward communities open to ADUs and with a successful record of rezoning policy can help your team identify markets with opportunity for higher-density, multifamily housing developments. Legislative efforts to reduce the barriers to ADU construction have often coincided with other laws and policies to boost housing production. Finding states where robust housing packages have passed is a useful strategy for identifying markets for residential and mixed-use development projects.
The ADU debate also emphasizes why stakeholder buy-in is an essential component of your development process. Building positive relationships with local planning authorities and engaging the local community during pre-development can help ensure project timelines are not disrupted by local resistance. Hosting community question and answer sessions can help you communicate project goals, long long-term value for residents, and gather input on the neighborhood's needs. Establishing partnerships will also continue to benefit your team as you pursue new projects, allowing the permitting process to be completed smoothly.
Leveraging Technology to Boost Housing Opportunities
Modern real estate development software can help your team plan complex projects in high-demand markets where zoning policy is shifting in your favor. Northspyre’s purpose-built, single software solution keeps you informed of every aspect of your projects, including opportunities to save money and eliminate overspending. You’ll be notified of potential exposures, spend forecasting, and remaining contingencies, to ensure that your project comes in on time and under budget.
Northspyre 2.0, our latest update, was informed by developer feedback and designed to further facilitate budget oversight. You can leverage our enhanced and modernized Anticipated Cost Report to stay ahead of any financial curveballs and efficiently manage commitments and expenses with crucial alerts, per-unit totals, percentage completion, and more features that let you streamline your entire project. In a field where marginal errors can lead to exponential cost calculations, Northspyre 2.0’s streamlined approach ensures you’ll have minimized errors and maximize savings.
Download our white paper Driving the Next Decade of Development, State-by-State to learn more about zoning-policy changes and the opportunities these present in high-demand markets across the country.
Tag(s): Real Estate Development
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