The ADU Boom Has Begun. Is It Adding the Housing We Need?

In 2021, city officials in Malibu, California, denied a family’s request to attach a 460-square-foot accessory dwelling unit (ADU) to their home to accommodate an immunocompromised grandmother in her 80s. As the California Globe reported, they believed that "because of its status as a coastal city, it was free to ignore the state law on ADUs." After three years of litigious back-and-forth, in July, the family appeared to have prevailed, and were able to apply for building permits.

While the scenario may present a less-than-flattering picture of the exclusive, upscale oceanfront community, it also signals the phenomenal advent of ADUs. Over the last several years, design publications—including, of course, Dwell—and social media platforms have piqued interest in ADUs with images of compact, smart-looking structures, which are often stunning examples of minimalist architecture. But their growing popularity is less about living sleek and small than about housing at large. In the last four years, U.S. housing prices have skyrocketed by 47 percent, and longstanding housing shortages culminated in a deficit of more than seven million homes last year, "the result of more than a decade of underbuilding relative to population growth," according to Realtor.com.

Such dynamics have prompted new local and state policies that promote ADU construction. After some Pacific Northwest cities began relaxing restrictive residential building regulations, California passed two bills in 2016 that produced a statewide pro-ADU law effective in 2017. Six other states—Colorado, Oregon, Washington, Montana, Arizona, and Massachusetts—and British Columbia have since followed suit; ADU-friendly ordinances have appeared in more than a hundred jurisdictions coast to coast.

"This is coming up in places as different as New Mexico and New York," says Celeste Goyer, operations director for Casita Coalition, a California multisector nonprofit that works to advance middle housing. "Solutions that fit more than one home on a parcel, like ADUs, duplexes and triplexes, townhomes, and cottage clusters, provide more housing and bring down rental and sales costs, which is the only way to get a pipeline to more attainable homes."

Casita Coalition helped author the bills for the 2017 California law, a watershed moment that continues to resonate beyond the state’s borders, especially since the coronavirus pandemic. In the least affordable housing market in 40 years, steep land and construction costs compel developers and builders to target higher-income buyers in active markets, jacking up local rents at a pace that far exceeds income growth and pushing more people to the edge, and over. From 2019 to 2023, the number of people who used emergency shelter for the first time rose by 23 percent. "Only 15 percent of Californians can afford a median-priced home," says Goyer.

As housing policy organizations like Casita Coalition chipped away at zoning and other regulatory barriers, California has passed a raft of laws around ADUs since 2017, including one in October 2023 that allows people in participating jurisdictions to buy and sell ADUs as condos. San Jose, with one of the country’s priciest housing markets, became the first city to opt in earlier this year. As the L.A Times reported, more will likely follow and lay out a potential welcome mat for "a new generation of starter homes that cost a fraction of a full-sized house on a full-sized lot."

This year, three new Casita Coalition–supported bills were signed into law to further expand ADU production by streamlining permitting and lowering costs, including one focused on "coastal zone" communities where the non-judiciary California Coastal Commission has development oversight. Effective July 2026, SB 1077 will require the commission to work with the state housing department to help local governments simplify ADU permitting in what is expected to be an incremental housing win in coastal zones statewide.

As legislation supporting ADU construction continues to evolve in California and beyond, the underlying question that set much of it in motion remains: What kind of impact are these units actually having on the housing crisis?

Los Angeles and San Francisco

While some communities have been hesitant to get on board, Los Angeles emerged early on as a clear leader in "the backyard revolution." In the two years since the first statewide law passed, nearly half of all ADU permits were in the L.A. area, where a robust ecosystem around ADU production has thrived.

"The population size and critical mass of homeowner demand supported the development of a large cottage industry of ADU designers and builders," says Goyer. "Every day they’re helping to realize the advantages of this flexible long-term housing type."

Like its potential uses—multigenerational living, aging-in-place, generating rental income, and more—the housing type comes in various forms. In L.A., garage conversions represent a significant percentage of ADUs, but the state allows for a wide range of ADU possibilities, from fully detached stand-alone structures to junior suites attached to main houses, with separate entrances and kitchenettes. The average unit size is around 600 square feet.

In 2020, California added a now-popular multifamily ADU provision allowing for the conversion of non-livable spaces into ADUs—up to 25 percent of the existing unit count, plus two new detached units. Effective in January 2025, a new bill will increase the number of detached units to a maximum of eight. This is especially significant considering how restrictive zoning laws discourage new development in wealthy cities.

Mark Hogan is a principal of OpenScope, an architecture firm that wrote the ADU handbook for the city of San Francisco: "There’s been all this huge growth in high-wage jobs here in the last 10 years and the city just stopped building enough housing in general, which has driven up the cost of housing and construction and everything else, so it kind of becomes a self-perpetuating cycle," he says.