Keeping Family Close: Increasing Number of ADUs Largely Housing Parents of the Owner

Does it have a backyard cottage? This is a question that more and more real estate agents are seeing come up across the country, as buyers are seeking their next dream home. It’s in part because of safety concerns about nursing homes, adult children who are moving home because of finances, and maybe even homeowners who want a second income source. For all of these reasons, Covid-19 has led to a trend across much of the country where people want that second mini house. In fact, according to data from the National Association of Realtors, this category of housing rose to 15 percent of total purchases across the country.  

 

In Michigan, the surge in Accessory Dwelling Units (ADUs) looks like backyard cottages, attic apartments, or garage additions that create a separate unit with all of the amenities. Moreover, in a recent survey from the real estate experts at HomeLight, more than a third of agents across the country saw an increased demand for ADUs in their markets.  

 

Why do I need an extra unit?

While giving aging parents a place to call home is the most common use for these additions (as 61% of agents reported across the country), ADUs aren’t just for grandparents. Did someone say a home office or home gym? Maybe that ADU is for adult children who need temporary housing for financial reasons (35%). Another popular option is for short-term renters with 32% of agents citing this trend. Moreover, a guest house (43%) and yes, that home office (41%), or home gym (16%), might make it worth the upgrade. 

 

Thinking beyond the backyard cottage

Even homes without expansive properties are getting ADUs. Over a third of agents said the most common type of ADU in their markets is a detached structure — like that backyard cottage. However, 24% said an attached structure or interior conversion (20%), or garage conversion (16%) were being used. In the Midwest, interior conversions and attached ADUs are the most popular, with 27% and 25% of agents citing them as the hottest in their markets. 

Does an ADU really add value?

The most obvious answer is yes, an ADU will add value as the demand for them continues. In fact, this is even more true in the Midwest as the value of ADUs here has increased by 54% since 2020 as compared to 38% nationally. If you are selling a home with an ADU in the Midwest, you could get more for your home than a comparable one without this feature. 

 

If you are a buyer who is looking for a home with an ADU, you are not alone, and the good news is that there are now more properties with this amenity, especially in the Midwest. If you are thinking about adding an ADU — whether it’s a cottage, garage addition, or an add-on within your home — there are some compelling reasons why this could be an investment worth going for. The flexibility of an ADU is that you can use it for whatever purpose serves you and your family best, and that reason might change over time. The bottom line is, when it’s time to sell, an ADU can put your home at an advantage.

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