Accessory Dwellings: Do you mind them increasing in your neighborhood?

[Keenan Fitzpatrick]

Though records indicate there are not more than 1,000 of them at the moment, accessory dwellings are increasingly common in Anchorage and already a trending topic nationwide.  They’re seen as part of the solution to the housing shortage in Anchorage and nationwide that has contributed to soaring home prices and rents. Do you agree about loosening regulations especially with using them as rentals?

[Bill Brandt]

I’ll probably never build one, but I believe you should be able to use your land in anyway that isn’t harmful to your neighbors. Imagine you have an acre lot and 10 or 20% of that is the house. Your aging mother needs a place to live where you can help take care of her. And as your neighbor I say no, I don’t want you building a casita on your land for your mom. Send her to an old folks home. You tell me who the jerk is. 

Once you allow that, you have to allow anyone to inhabit the extra housing. But then I also think you should be able to tear down your house and build a 4plex there instead. Or tack another house on to it. Most people, certainly almost all people without kids/dogs rarely use their yards. Especially for something better than housing people. 

[Henry T.]

It's a good thing. Just keep those extra kids/dogs outta my yard. ;)

[Keenan Fitzpatrick]

Quote from@Bill Brandt:

I’ll probably never build one, but I believe you should be able to use your land in anyway that isn’t harmful to your neighbors. Imagine you have an acre lot and 10 or 20% of that is the house. Your aging mother needs a place to live where you can help take care of her. And as your neighbor I say no, I don’t want you building a casita on your land for your mom. Send her to an old folks home. You tell me who the jerk is. 

Once you allow that, you have to allow anyone to inhabit the extra housing. But then I also think you should be able to tear down your house and build a 4plex there instead. Or tack another house on to it. Most people, certainly almost all people without kids/dogs rarely use their yards. Especially for something better than housing people. 

You are after my own heart, Bill.

[Landon Vowels]

I also agree that the accessory dwelling units are generally a good thing (I am building one now). I am under the impression that increasing density in our cities will help relieve the housing shortage, and is additionally a better use of resources than continuing to allow cities to sprawl (which creates more roads and sewers to maintain, more area for public services like firefighters, ambulances, etc. to cover). ADU's also make for a good investment, at least in the neighborhoods I'm looking in.

That being said, it can be a more complex issue. I live in Chicago, where allowing ADUs citywide would likely mostly benefit well-off neighborhoods (that have historically benefited from other city policies), not solely because those areas will have the highest rent demand, but also because those landowners will generally be the ones able to afford the costs of a new building. The popular neighborhoods will become more dense, and the neighborhoods with a low/declining population will continue to stagnate.

The neighborhoods that have historically not received the same amount of resources, that have been affected by redlining and other negative policies, would probably better benefit from other incentives for development -- ones that promote homeownership and attract/retain residents and businesses and help to fill in the empty lots.

All that to say -- one solution that is a good thing in one place or time might not be the right answer applied everywhere.

[Jonathan Klemm]

Hey @Keenan Fitzpatrick - I 100% agree with you.  San Diego where my buddy @Doug Spence is at has some amazing ADU laws!

I am also from Chicago and will echo @Landon Vowels post.  The hard part here is the costs.....the city of Chicago underestimated the cost to build out these ADUs.  

I am personally hoping that they begin to issue grants or provide more incentives for investors to build ADUs.

[Doug Spence]

@Keenan Fitzpatrick I think its a no-brainer way to start to solve the housing problem this country has! The NIMBY's won't like it though. We're seeing LOTS of ADU development in SoCal.

The downsides are greater population density in a given area, more vehicles parked on streets, and a greater burden on local governments from a permitting perspective. 

We already rent out a portion of our home to a tenant, and we're looking into building a detached ADU using a HELOC so we can increase our rental income and the overall value of our home!

[Dan Heuschele]

I will take a contradictory stance to the other posts as is often the case.

Answer: I do not mind them where the unit would have been permitted by the zoning as purchased.  I do not want the zoning rules changed to accommodate additional units.

When you purchase a property, it and the surrounding properties have a zoning.  I believe that units should be allowed to be built to the specified zoning.  If you wanted to build a 2nd unit (or 50 new units), you should have purchased a property that is zoned for what you desire.  Your neighbors who may have chosen the area because the density matched what they desire where they live, should not have to have their neighbors build beyond the zoning that existed when they purchased.  Traditionally zoning changes are subject to public comment and dissent can often prevent any zoning change.

In addition, I believe density decisions are best made at the most local area level. If the state decides that all lots can for example be converted to legally have a quad where zoned for SFH, it takes away low density options in all communities in the state. I believe all density choices should exist for the public to choose the density option they desire. I should be able to choose to live in an area with high density if desired. Similarly, I should be able to choose to live in an area with lower density. If I move into the country were the lots are zoned for low density, the state should not allow anyone to split their lot and build multi family units. The local community should be able to vote the density they desire for their community.

Fortunately, ADUs in Coastal Souther California are showing to be a poor investment. The value of the ADU is far below the costs to add an ADU. This implies that adding an ADU starts with a negative position. In accounting terms this destroys the return for a similar reason that leverage helps the return. ADUs additions provide one of the worse returns out of all RE investments. Much better off buying a property with an existing ADU. You would likely be getting the ADU at less than 50% of the cost of the ADU addition. This reduced value is also showing in the appraisals associated with refinances. This implies adding an ADU will increase the amount of time until when you are able to extract equity obtained.

Typically, an ADU only makes sense to add if 1) you are a developer or 2) you are adding if for use by family and not as an investment.

[Karen Margrave]

In my area ADU's cannot be used for STR, only LTR. The purpose of the widespread acceptance of ADUs is the housing crisis in America. We used to have 2.1 MILLION homes on the market at any given time. We now have 871k. The costs of building new construction is too high; and the time to get anything off the ground is too long. ADUs are the fastest way to get massive numbers of units to market. Unfortunately, many cities rather than embracing the change, waiving fees, and doing all they can to help accomplish this goal, fall prey to the NIMBY people and slow roll development. Local leaders and Planning Departments should be much more aggressive in finding ways to help get these units built, by waiving fees, etc.

[Jennie Berger]

Quote from @Landon Vowels:

I also agree that the accessory dwelling units are generally a good thing (I am building one now). I am under the impression that increasing density in our cities will help relieve the housing shortage, and is additionally a better use of resources than continuing to allow cities to sprawl (which creates more roads and sewers to maintain, more area for public services like firefighters, ambulances, etc. to cover). ADU's also make for a good investment, at least in the neighborhoods I'm looking in.

That being said, it can be a more complex issue. I live in Chicago, where allowing ADUs citywide would likely mostly benefit well-off neighborhoods (that have historically benefited from other city policies), not solely because those areas will have the highest rent demand, but also because those landowners will generally be the ones able to afford the costs of a new building. The popular neighborhoods will become more dense, and the neighborhoods with a low/declining population will continue to stagnate.

The neighborhoods that have historically not received the same amount of resources, that have been affected by redlining and other negative policies, would probably better benefit from other incentives for development -- ones that promote homeownership and attract/retain residents and businesses and help to fill in the empty lots.

All that to say -- one solution that is a good thing in one place or time might not be the right answer applied everywhere.

Good points. Could also look at it from this perspective: Most Chicago homes have basements, many of which are unfinished but contain a lot of useable space. Assuming the ceilings are tall enough and no digging down / underpinning is required, how nice would it be for homeowners in less 'well-off' areas to be able to convert their basement into an additional 'legal' living quarter and rent it out for extra income? Many homeowners who may never have even thought about househacking--much less being a real estate investor--would have a brand new opportunity to get closer to financial freedom. 

There would be an educational element to this as well--where communities come together and organize learning sessions on how/why/where/who/etc this all works. There are already so many localized neighborhood incentives for existing homeowners to improve their properties--I don't see how this is any different. And a legal conversion in the basement would be so much more affordable than building an actual detached coach house in the back.

Needless to say--I am a big advocate of allowing ADUs in all parts of Chicago as long as they don't infringe on or harm the neighbors or community in any way.

Jennie Berger
Property People

[Landon Vowels]

I agree that education on how to finance and what can be built would be beneficial to homeowners. I'm just pointing at how policies that are blanket applied often affect/benefit people and communities differently. And I agree that incentives should be provided for ADU developments, especially those that prioritize long term resident homeowners and/or implementing requirements that the lot has to be owner occupied to receive an ADU permit (possibly even have lived there x amount of years). For REI, this would essentially incentivize house hacking - which is how many newcomers get into the REI world - but would slow outside investors from quickly pushing out long term residents.

To be transparent, I'm building an ADU for an investment property that I am not living at. Zoning policies get implemented, and investors respond and push the limits of what is allowed in an effort to find creative ways to grow their portfolio. I'm just thinking about how to develop cities in a way that brings everyone up along the way.

These are of course just my thoughts. I do agree with the intent of the ADU ordinance. In metropolitan areas, SFH zoning should be rethought, and ADU's are a great tool in the strategy toolbox.

[Dan Heuschele]

Quote from @Karen Margrave:

In my area ADU's cannot be used for STR, only LTR. The purpose of the widespread acceptance of ADUs is the housing crisis in America. We used to have 2.1 MILLION homes on the market at any given time. We now have 871k. The costs of building new construction is too high; and the time to get anything off the ground is too long. ADUs are the fastest way to get massive numbers of units to market. Unfortunately, many cities rather than embracing the change, waiving fees, and doing all they can to help accomplish this goal, fall prey to the NIMBY people and slow roll development. Local leaders and Planning Departments should be much more aggressive in finding ways to help get these units built, by waiving fees, etc.

 I do not view anything wrong with being a NIMBY.  Developers want to develop and they try to make NIMBY a bad thing (and are succeeding in many places) because they want to build in as many areas as possible.  

I believe a community should be able to make decisions that it deems in the best interest of the community. I believe that having local communities have a say maintains community uniqueness. If the state decides every SFH zoned lot in the state is now allowed to be a quad, then that removes low density communities as an option. I desire both options, high density urban for those that appreciate the hustle and bustle of city life and low density rural for those who want some space and not to be on top of their neighbors. I believe there are people that desire both and that those that want a low density option should be able to have it if they can afford the costs (more land cost more than less land, home placed on more land must cost more).

Would you be willing to have a landfill placed next door to your house?  If not, you have some NIMBY.  Nothing wrong with that, just pointing it out.  

We choose our communities to match what we desire in a place to live, but state rules are blurring the lines between the different communities.

The area I live has the nickname "City in the Country".  It used to be an appropriate nickname.  Now we are like many other communities in the area and the nickname no longer applies.  

[Karen Margrave]

@Dan Heuschele There's a huge difference between landfills and ADUs. I live in CA. Every lot in the state basically can build an ADU, and possibly more. America is in a crisis when it comes to housing, with a deficit in the millions. Costs to develop land and build new homes are out of reach, which means we have to find more efficient ways to house people on the already developed properties. ADUs and higher density on all developed lots is the only way to do it.

[Dan Heuschele]

Quote from @Karen Margrave:

@Dan Heuschele There's a huge difference between landfills and ADUs. I live in CA. Every lot in the state basically can build an ADU, and possibly more. America is in a crisis when it comes to housing, with a deficit in the millions. Costs to develop land and build new homes are out of reach, which means we have to find more efficient ways to house people on the already developed properties. ADUs and higher density on all developed lots is the only way to do it.

I live in California also and am very familiar with the ADU laws.  

you indicate America has a housing crisis.  I challenge that view.  Nationwide Population is increasing slowly.  Only 2 states have population increasing due to birth rate. Immigrants make up the increase, but the increase has been modest nationally for quite a few years.   

what we have is a housing crisis in certain desirable areas to live.  Look at the population of cleveland over the last handful of decades as one example.  What do you think happens to all the housing when the population has declined by over 0.5m?  How about Detroit whose population is down over 1m?  They have a declining housing need and there are many such cities. 

so the coasts have housing issues because of a historical migration to the coasts and already high density.  In recent years, ca population has not increased and by percentage the increase between 2010 to 2020 was modest. States like texas that have been in numbers the fastest growing state have a fairly low density (parts like Austin are not as low).  

assuming Californias recent housing trend continues, the CA (different that American housing crisis) housing shortage is already on the downside of the peak.  

 The stats do not point to America having a housing crisis unless you consider having a surplus in some areas and not enough in other areas to be the housing crisis (I invite you to fact check my items).

Developers like to build.  They like to think the nation wide population is increasing at a high rate.  They like to believe there is not housing going unused in places like cleveland and Detroit (using two cities that has seen large declines in population since their population highs).

I am a proud NIMBY. I believe no one knows better than the community what is best for that community. As for difference between ADU and landfill, there is a difference but if you are against either being your neighbor you are a nimby. Landfill has to go some where. Why not next door to you? Someone will be the closest residence to the landfill.

[Karen Margrave]

In the last few years we have had a few million illegal immigrants enter America, and fan out to every state. Every city in CA has homeless people on the streets, and they're not all drug addicts or mentally ill.Do  you ever go out and talk to them, and ask what happened? I do.

 We have a lot of Veterans, working poor, etc. that are homeless, because they cannot afford the rent on the wages they make, and with the rising cost of living. Many are made to move by investors buying properties, rehabbing, and increasing rents, which they cannot afford; and with no affordable units to buy, they end up on the streets. We have far more demand than supply in my area, and most of CA, where the policies on development push prices further and further out of reach. Hence, we need more ADUs. 

Whether you believe we have a crisis or not, we do. Here's one article. Yes, there are pockets of poor areas that have no growth and people are leaving. We have CA where taxes are high, and crime is growing, so people are fleeing, but there's still people that want to live here, because look at the natural beauty!

[Karen Margrave]

Quote from @Landon Vowels:

I agree that education on how to finance and what can be built would be beneficial to homeowners. I'm just pointing at how policies that are blanket applied often affect/benefit people and communities differently. And I agree that incentives should be provided for ADU developments, especially those that prioritize long term resident homeowners and/or implementing requirements that the lot has to be owner occupied to receive an ADU permit (possibly even have lived there x amount of years). For REI, this would essentially incentivize house hacking - which is how many newcomers get into the REI world - but would slow outside investors from quickly pushing out long term residents.

To be transparent, I'm building an ADU for an investment property that I am not living at. Zoning policies get implemented, and investors respond and push the limits of what is allowed in an effort to find creative ways to grow their portfolio. I'm just thinking about how to develop cities in a way that brings everyone up along the way.

These are of course just my thoughts. I do agree with the intent of the ADU ordinance. In metropolitan areas, SFH zoning should be rethought, and ADU's are a great tool in the strategy toolbox.

 I agree, there have to be stipulations that ADUs need to be for long term rentals, and in my area there are.