Let’s consider these two scenarios:
1. You built a big, beautiful house with enough room for your children to live comfortably and grow. The home has given you great joy; however, your children have since moved out, have started families of their own, and you just no longer need all of that extra space. You continue to pay taxes, utilities, gardening and maintenance expenses for a house that has now outgrown you. Having grandchildren occasionally come to visit does not warrant the extra expense of keeping the large house.
2. You’re a young family struggling to find affordable rent—yet another of the many consequences of the housing crisis.
Two concepts, aging in place and affordability, have become important issues being addressed through a new yet old idea: the Accessory Dwelling Unit (ADU). An ADU is a secondary housing unit on a single-family residential lot.
When America was young, a person would typically buy land and build a house for their family. As the family grew, they would build another house on the property. It was common during this time to have more than one home on a single lot of land. Until the end of World War II, when developers built communities for GIs, there wasn’t a strong commitment to the concept of one house per lot. That changed following the end of the war and has since become the prevalent policy of most communities.*
Due to the concerns of affordability and aging in place, many communities are beginning to consider adding a secondary unit to existing homes. It could include a finished garage, an addition to the home or even a separate unit in the backyard.
California passed legislation years ago that allows for one additional unit, either attached or detached, on a single lot. As described in AARP’s “The ABCs of ADUs,” the state of California and several other municipalities are providing grants, among other incentives, as part of affordable housing strategies. AARP has prepared sample legislation to help municipalities navigate through the process that describes the typical aspects of an ADU–Accessory Dwelling Units, Model State Act and Local Ordinance.
Recently, there was a Senate hearing in Trenton, N.J. addressing the topic of ADUs in regards to proposed bill NJ S345. The state is acknowledging that a housing crisis exists, and the hope is that ADUs would help address these concerns with minimal impact on the community. The goal is to create affordable housing as well as to enable seniors to age in their homes. In the last few years there has been a greater interest in this concept as more states are beginning to encourage their towns to implement such plans. In fact, the towns of Princeton, N.J. (Ordinance #2020-16), Montclair, N.J. and Maplewood, N.J. (ordinance 3008-20) have instituted plans that allow for ADUs. The state of Connecticut has passed legislation allowing for ADUs (File 716) and New York is considering passage as well (A4854).
Here are some scenarios where an ADU would be beneficial:
An empty nester who owns a large home but only uses one bedroom could build an ADU to rent out and use the income to help offset monthly costs. This would help the person age in place in his/her home and community.
An empty nester who wishes to pull their equity out of the home but prefers to remain in the community could sell his/her home but stay as a tenant in the ADU.
An older person who wishes to have his/her family nearby can build an ADU for them so that both parties have privacy.
An older person who needs an aid for assistance can build an ADU so that both parties have privacy.
A young person trying to find affordable housing in an expensive community could see an ADU as an option.
A person seeking an affordable housing option could benefit from an ADU.
A person selling their home with family remaining in the neighborhood could build an ADU in their family member’s home and live there.
There are benefits not only for the person who builds or lives in an ADU, but also for the surrounding community. By increasing the number of housing units, the town might see a positive impact on the cost of other rental housing units in town.
Even while the benefits of an ADU are clear, many communities are apprehensive of the idea, fearing that converting single-family homes to multi-unit properties will change the character of the neighborhood. Proponents of ADUs try to address this concern by including significant limitations on size, character and usage of the units. For example, additional off-street parking is required, these units cannot exceed a certain size, construction must be in line with zoning regulations, it must be in character of the primary house, and the owner must live in one of the two units. Lawmakers don’t want these units to become investor-driven projects. The model legislation sets out many of these terms that are intended to help meet both the needs and the concerns of the community.
Most people testifying at the aforementioned Senate hearing were in favor of the resolution, although there seemed to be a difference of opinion on whether individual towns should be able to opt out of this type of legislation. Those against opting out felt if the state is seeking a more aggressive approach to address the housing crisis, allowing towns to opt out would defeat that purpose. Others in favor of opting out say that different municipalities have different needs and we should allow the individual towns to determine what is appropriate for them.
While ADUs are thriving in certain communities, they may not be permitted in your town. If this topic interests you, please reach out to me to discuss possible ways you can help your community consider the implementation of ADU legislation. There is likely already an effort underway to propose the benefits of ADUs in your town, and it could use your help.
* (“The ABCs of ADUs, A guide to Accessory Dwelling Units” (AARP)).
David has over 15 years of experience at both major banks and mortgage bankers and understands the guidelines of different lenders to help direct his customers to the best loan type for their needs. Contact him via email at [email protected], or phone 201-725-9527.
