• Accessory Dwelling Units (ADUs) have become a popular alternative to traditional homes and apartments.
• Three people who built and moved into ADUs shared with BI how they improved their lives.
• One person said moving into an ADU "was the best decision we ever made."

For newlyweds Aislyn and Ali Benjamin, purchasing a traditional home in Danville, California — a small city just over an hour's drive east of San Francisco — wasn't financially feasible.

It's easy to see why. Data from Realtor.com shows that the area's median home sale price is about $1.9 million as of December.

The Benjamins weren't keen on moving too far from Danville in search of a more affordable home, nor were they interested in renting long-term. So, they opted for another solution: building an accessory dwelling unit, or ADU, in their parent's backyard.

Today, they live in a 1,200-square-foot, three-bedroom, two-bathroom ADU in San Ramon, a city neighboring Danville. The home cost $500,000 to build, which the couple paid with their parents' help.

"This was the best decision we ever made," Ali Benjamin told Business Insider. "It allowed us to save so much money and live where we wanted."

ADUs are an affordable entry to homeownership

ADUs are compact housing units, typically 150 to 1,200 square feet, depending on location. On average, they cost between $100,000 and $300,000 to design and build, though additional expenses — such as site preparation, inspections, utility hookups, and permits — can drive up the total cost.

Thanks to their affordability and minimal land requirements, ADUs have become a popular alternative to traditional homes and apartments, particularly for first-time homeowners like the Benjamins, who navigated high home prices, mortgage rates, and a shortage of available homes.

To boost the supply of affordable housing, several states, including California, New York, and Vermont, have supported ADU construction by offering grant programs to help homeowners finance the building process.

In California, where most backyard homes are built, the state's Accessory Dwelling Unit Grant Program has provided grants of up to $40,000 to qualified homeowners — it's been instrumental in driving the growth of ADUs across the Golden State.

According to an April report from the Urban Institute, ADUs accounted for just 8% of permits and 5% of completions in California in 2018. By 2022, however, they represented 18% of total permits and production.

A couple built an ADU to give their adult son more independence

People build ADUs for various reasons, including generating income by renting out the ADU or their main home. Others build ADUs to create comfortable, semi-independent living spaces for aging parents or adult children who may need assistance or support.

Take Todd Kuchta, a 58-year-old engineer who built an ADU in his Napa, California, backyard for his 26-year-old son, Jacob, who has autism.

As Kuchta's son grew older, he desired more independence from his parents but still needed their help with daily tasks like cleaning, taking medication, and preparing meals.

Unable to afford a larger home or an assisted living facility for their son, Kuchta and his wife hired Bay Area-based ADU builder Villa to construct a 480-square-foot, one-bedroom, one-bathroom tiny home on their property.

The ADU cost over $248,000 to build. The Kuchtas received financing through Napa County's Affordable ADU program, which provided a $63,000 forgivable loan. They also secured a $160,000 loan from a credit union as a second mortgage.

The new living arrangement has mutually benefited the Kucthas and their son.

"Jacob really enjoys living on his own — he's thriving," Kuchta told BI.

He added that he and his wife's "stress has significantly decreased, and they have peace of mind knowing they can still provide the emotional support he needs."

A woman built an ADU in her backyard to age in place

The growing trend of multiple generations living together, either under the same roof or on the same property, has fueled the rise of "granny pods" — small outbuildings designed to provide support while allowing older adults to age in place and maintain their independence.

Struggling with the stairs in her two-story home, 72-year-old Wilder-Abrams moved into a 560-square-foot, one-bedroom, one-bathroom granny pod in her backyard in 2022.

Meanwhile, her 34-year-old daughter moved into the home she had lived in for 35 years — a 2,000-square-foot, three-bedroom, two-bathroom home — with her 3-year-old daughter.

"I was ready to downsize and have a smaller place to live and take care of," Wilder-Abrams told BI. "The home is in an urban area, so there are a lot of possibilities for my daughter, too."

The ADU cost $350,000 to build. Wilder-Abrams secured a second mortgage on her home to finance the construction, as the original mortgage had been paid off years ago. Her daughter now pays $1,500 monthly rent, covering the new mortgage payment.

Beyond the financial benefits, home swapping has provided Wilder-Abrams with valuable physical and emotional support. She said having her daughter nearby was crucial to her recovery after knee surgery last year.

"The first few days, she stayed with me to change the ice packs regularly," Wilder-Abrams said. "It was so convenient for both of us."

• New York City is on the verge of legalizing accessory dwelling units in much of the city.
• One expert estimates the city's housing reform will create 20,000 such secondary units.
• The effort is part of the mayor's "City of Yes" housing plan, designed to boost the supply of homes.

In a city where reasonably priced apartments are difficult to find, a new type of affordable home might soon be legal.

As part of Mayor Eric Adams' "City of Yes" housing package — an effort to create more housing of all kinds by loosening regulations — New York City is on the verge of legalizing accessory dwelling units, or ADUs, in certain neighborhoods across the five boroughs. The policy reform is expected to result in thousands of backyard tiny homes and converted garages, basements, and attics.

Housing policy experts view the shift as a first step in expanding a neighborhood's capacity for additional residents and a way to create more affordable housing, particularly in neighborhoods dominated by single-family homes.

These homes are an increasingly popular way to boost density without building apartment towers, adding new housing options and income opportunities for homeowners who choose to rent out their extra units. More than a dozen states across the country have legalized ADUs in recent years, and New York State greenlit the secondary units in 2022, although New York City has restricted them.

"ADUs are a proven tool in cities across the country to support working families with extra space, additional income, and the opportunity to age in place," Dan Garodnick, director of the New York City Department of City Planning, told Business Insider in a statement.

In a key vote last week, two city council subcommittees agreed to a modified version of the mayor's plan that's expected to pave the way for about 20,000 ADUs over 15 years — about half as many as would have been built under the original plan, according to Marcel Negret, director of land use planning at the Regional Plan Association, a pro-housing nonprofit focused on the tri-state area. City of Yes is expected to pass the full council on December 5.

A nationwide push for ADUs

New York is following in the footsteps of cities like Los Angeles and Seattle that view ADUs — also known as "granny flats" — as low-hanging fruit in the quest for more affordable housing. ADU construction has surged in California, where accessory units made up nearly 20% of new homes built last year, and tend to offer more affordable rental units.

Nolan Gray, research director at California YIMBY, called ADU legalization "the beachhead for broader reform" of housing policy because backyard homes tend to be popular with homeowners who've otherwise resisted new housing in their neighborhoods.

"You start to de-normalize this idea that 75% to 90% of the typical American city is going to be off limits to any form of multifamily," he said.

Last year, New York City rolled out a pilot program that awarded 15 homeowners with up to nearly $400,000 in funding per household to build an extra dwelling in their backyard, basement, or attic. The city has since expanded that program, but it only applies to lots that are already zoned to accommodate another unit.

As part of the policy reforms, the City plans to adjust a slew of zoning laws and building codes to allow for ADUs. It will also create a "one stop shop" website to guide homeowners through the construction process, including a set of pre-approved designs, the city said.

"What we're doing, essentially, is just ensuring that every layer of government that could potentially have some sway over whether you can build an ADU is actually allowing you to do so," Casey Berkovitz, press secretary for the Department of City Planning, told Business Insider.

Some outer-borough councilmembers are skeptical

Outer-borough members who represent some of the least dense neighborhoods in the city — where ADUs are potentially most feasible — are among the most vocal opponents of City of Yes. Councilmember Vicky Paladino, a Republican who represents Northeast Queens, has called the mayor's plan "a calculated effort to destroy the character of our districts." Another Republican council member opposed to City of Yes derided ADUs as backyard "treehouses" that would depress home values.

While the city's original plan was estimated to create up to 40,000 ADUs over 15 years — as part of a total of more than 100,000 new units — the councilmembers imposed some additional restrictions that will shrink that number, including blocking them in neighborhoods that only allow rowhouses or single-family detached homes.

Despite the council's restrictions, there are many neighborhoods that aren't exclusively zoned for one- and two-family homes, but are still dominated by them. Such areas could be prime targets for backyard units, garage conversions, and other types of accessory units, Negret said.

"There are many other locations that still have single-family parcels that are not zoned under those categories where you could probably see ADUs popping up," Negret said.

Are you a New Yorker interested in building an ADU? Are you a homeowner with an ADU? Reach out to this reporter at [email protected].