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Real Estate

1.4 million homes have accessory dwelling units, Freddie Mac says

Portland, Dallas, Seattle, Los Angeles and Miami metros have seen more demand

Guest home, granny flats and mother-in-law suites are more commonly used terms for accessory dwelling units in the U.S., which have grown in demand exponentially since the 1950s.

According to research from Freddie Mac, there are 1.4 million single-family properties with ADUs. They were identified using a national-level dataset of 600 million Multiple Listing Service transactions dating back to the late 1990s, the report said.

California, Florida, Texas and Georgia account for half of the 1.4 million ADUs in the U.S., according to Freddie Mac.

Sam Khater, Freddie Mac’s chief economist, said there has been an increasing number of ADUs in the Portland, Oregon; Dallas; Seattle; Los Angeles; and Miami metro areas, with each market seeing double-digit growth since 2015.

“The nation’s affordable housing crisis has intensified in this turbulent economic environment, and ADUs are increasingly providing a viable affordable housing option for people of all ages,” Khater said in a statement. “This analysis is both unique and large in scale, giving us insight into the growing movement of accessory dwelling units.”

In 2019, 70,000 properties with ADUs were sold, which represent 4.2% of total homes sold on MLS. To compare, only 1.1%, or 8,000 properties, were sold with ADUs in 2000.

Between 2009 and 2019, the number of first-time listings of ADUs grew an average of 8.6% year over year, Freddie Mac said.

Meanwhile, the number of actively listed ADUs for rent increased from 2003 to 2019, from 1.8% to 4.1%, respectively, while the number of leased rental listings increased from 1.2% to 2.9%, respectively.

There were 8,000 ADUs leased in 2019, representing 2.9% of homes leased via MLS. Freddie Mac said these homeowners most likely used their extra space as another form of income.

Of course, the report is only looking at permitted ADUs.

Freddie Mac noted that “shadow housing,” or ADUs that aren’t legally accounted for, aren’t included in the report. This is because ADUs require building permits from respective local city permit offices, and depending on the location, ADUs might not be allowed.

In fact, the survey found three neighborhoods in Los Angeles with high numbers of foreclosures in which 34% to 80% of single-family housing units in these areas were likely to have illegal ADUs. Meanwhile, in 2011, researchers surveyed homeowners in the San Francisco Bay Area and found that more than 90% of secondary units didn’t have required building permits.

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