Backyard cottages and in-law apartments breathe new life into existing homes.
Itās a new life that lets multi-generational families live together, seniors age in place, and owners on fixed incomes stay in their homes. Tucked into or alongside existing houses, these small homesācollectively termed accessory dwelling units (ADUs)ācan meet evolving household needs and help families of all kinds find greater housing security. And by converting empty yards, basements, and attics into valuable living space, ADUs save modest, older houses from replacement by supersized McMansions.
Washington has a chance to let thousands of homeowners across the state breathe this new life into their homes. Last week, both houses of the state legislature advanced a bill that has the potential to be the most pro-ADU reform ever passed by a US state.
As lawmakers brush off the notion that re-legalizing small cottages is a dangerous new ideaārather than a return to the perfectly normal wisdom of our grandparentsāletās try to count the ways ADUs help hold families and communities together.
Rental income from an ADU can provide a relief valve for homeowners struggling to pay the bills. Throughout Cascadia, homeowners most burdened by housing costs include seniors, low-income families, and households of color. Almost one in three senior homeowners, and nearly 40 percent of Black homeowners, in Oregon and Washington spend over 30 percent of their income on housing.
Most owners put their ADUs on the long-term rental market, grossing an average of $15,600 per year. Twelve percent opt to use them as short-term rentals, mainly through AirBnB and VRBO. Airbnb estimates that short-term rentals bring in an average of about $11,000 per year in Portland and Seattle, though that figure may underestimate the income-potential of ADUs because the average includes low-rent shared rooms.
The flexibility to switch between long- and short-term rental gives owners additional financial security that helps defray the risk of investing in ADU construction. For example, an owner with a routine need to temporarily accommodate relatives can still earn income at other times by filling in the gaps with short-term rentals. Taking way that flexibility by banning short-term rentals in ADUs inhibits owners from building themāespecially owners with limited financial resources.
Loan payments, operating costs, repairs, maintenance, insurance, and taxes can take a big chunk out of rental income, perhaps as much as 50 to 75 percent. Whatās left over for the owner depends, of course, on the specifics of the ADU in question. Most ADU owners can expect to net perhaps $3,000 to $8,000 per year.
Seniors increasingly report a desire to age in placeāan aspiration jeopardized by housing expenses. Many seniors live on fixed incomes, and rising costs such as property taxes can push their budgets beyond the breaking point. Rental income from an ADU can mitigate that squeeze. Nearly 60 percent of senior AirBnB hosts report that the supplemental income from AirBnB allowed them to stay in their homes, including 13 percent who say it helped them avoid foreclosure.
ADUs also give aging owners the option to downsize out of their house while continuing to live on the same lot, in the same neighborhood. Owners who no longer need all the space in their house but donāt want roommates either can move into an ADU that provides them a private space, while it frees up the main house to generate rental incomeāusually much more rent than the ADU would have brought in.
Whatās more, for seniors with health issues, ADUs can provide a home thatās physically accessible and private yet just steps away from support in the main houseāwhether thatās a relative or a professional caregiver. ADUs can even be custom-designed with on-site medical equipment. MEDCottage, in North Carolina, rents backyard cottages with wheelchair accessible showers and toilets, rail systems, and padded floors, for as little as $750 a month.
Some families want a backyard cottage or in-law apartment not as an income source, but as a means to live together. Nearly one in five US residents lives in multi-generational households. Such households might consist of grandparents who enjoy being around grandchildren, adult children starting out in a first job who havenāt yet established financial independence, or non-related housemates combining resources. Participants in a 2018 survey of Seattle low-income house