Senior Spotlight: Not Your Granny’s ‘Granny’ Unit

ADUs can be an affordable senior housing solution - and may now be more accessible than ever!

The great thing about retirement today is that there are more options than virtually ever before. This perspective holds true with regards to a growing trend – tiny homes. Also known as granny units, in-law quarters, guest houses and moreover Accessory Dwelling Units (ADUs), these small residences are becoming largely popular. The best news - they are no longer the small, dark, flat-roofed, un-permitted cottages that many of us think of. These retirement homes of today offer minimalist design with maximum features - and a (finally!) more attainable construction process.

According to Freddie Mac, listings for sale with ADUs have risen nearly 9% in the last 10 years. Legislation has also attempted to encourage the building of ADUs to ease the affordable housing crisis by streamlining the permit process, prohibiting an owner-occupant requirement of the unit, limiting municipality abilities to reject units of 850 square feet or less and speeding up the approval timeline.

So, what does this mean for your parents and grandparents?

Here are 5 things to know about granny units today.

1) There are still costs to build affordable housing! While ADUs cost significantly less than retirees trying to buy near a loved one, they are not ‘cheap.’ Kiplinger reports that the higher the cost of housing in your area, the higher the cost of construction. In addition, converting existing space is generally cheaper than building a detached unit. Have great expectations - albeit reasonable ones too.

2) Consider going as big as local regulations allow. Building a detached home of any size comes with a number of fixed costs; larger units are only marginally more expensive than smaller ones. If you are going to break ground, extend utilities, draft a floor plan, choose materials and the like – adding a few more square feet to each room often makes more sense than being ‘penny wise and pound foolish.’

3)  Weigh the pros and cons of custom vs. pre-approved plans. A number of cities are further encouraging homeowners to build ADUs by providing a list of pre-approved ADUs by vendor. While these often prove to be the most efficient, cost-effective and quickest option – they rarely offer entirely age friendly design. Wheelchair accessible doorways, no-step entrances, easy open windows, easy read thermostat systems and curbless showers are just a few of the features that an age-friendly home should have.   

4) Inquire about the reassessment calculation. An ADU can be a great addition to your home’s resale value – but may also add marginally to your property taxes. In general, most resources report that construction of an ADU will trigger a blended assessment – meaning the ADU will be assessed by itself, but the existing home will not be reassessed.  For informational purposes only, be sure to consult with your local assessor’s office for specific information relevant to your situation.

5) Look at the short- and long-term benefits. ADU’s offer solutions on multiple fronts! They often allow aging loved ones to maintain independence and proximity to family. They can serve as a source of rental income until your parents are ready to move in, can increase the resale value of your property down the road and can even serve as your own retirement plan if you wish to downsize into the unit yourself later and rent out your primary residence.

The Bottom Line

If you have considered adding an ADU for an aging loved one, it may be possible in ways that did not exist 10, 5 or even 3 years ago! Be sure to check with your local ADU guidelines; you may be surprised to learn that lot size requirements, pre-approved unit options, streamlined processes or design ideas are at your fingertips. This does not mean it will be easy – but may be the easiest it has ever been!

Resources Used:

A Retirement Home Is a Tiny House in the Kids’ Backyard

New California Laws Will Make It Easier To Build Granny Flats

SMC Accessory Dwelling Unit Ordinance

Age-Friendly Home: 18 Features 

Taxes and ADUs?