Despite recent improvements, household formations have been lagging since the latest economic downturn, impacting housing production and the replacement rate of older housing units. According to the National Association of Home Builders (NAHB), remodeling is also impacted by these developments, as many homeowners may choose to modify an existing home to create an accessory dwelling unit (ADU). The NAHB found that one-fifth of remodelers surveyed for the first quarter 2019 Remodeling Market Index (RMI) undertook projects that created an ADU by converting an existing space or created an ADU by building a new addition.
NAHB chose to start addressing this topic in its RMI survey, because it is not possible to detect national trends in ADU creation through existing data sources. ADUs in general require permits, but ordinances vary tremendously across the country, and there are no federal government standards or programs to collect the information in a consistent way.
Most remodelers who reported undertaking projects to create an ADU in the past year relied on something other than knowledge about a government permit as evidence. The evidence cited most often was that the renovated area had its own kitchen facilities, followed by a renovated area with its own entrance, and comments made by the customer.
The price of most remodeling projects that create ADUs indicates that they often entail considerable work. Only 6% of remodelers who reported creating an ADU reported doing ADU projects that cost under $25,000. At the other end of the scale, three-fourths reported ADU projects costing at least $50,000, and a substantial 28% even reported projects costing at least $150,000.
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