What You Should Know about Accessory Dwelling Units

The popularity and demand for Accessory Dwelling Units (ADUs) continue to soar. Learn how people are using them, and if an ADU might just be the perfect space solution you’re looking for.

September 29, 2022

What is an ADU?

Granny flat, in-law suite, apartment, cottage, guest house—accessory dwelling units (ADUs) go by many names, but essentially, an ADU is a smaller structure that is distinct from a primary residence. ADUs are typically self-sufficient in that they contain their own bathroom, kitchen, and sleeping amenities. They can be located in a basement, a converted garage, or in a new addition built onto the main house. However, when people talk about ADUs, they are most often referring to small, separate structures, usually built in the backyard. More and more homeowners are discovering that ADUs can be an attainable option to provide affordable housing solutions, establish family-orientated senior housing, and to create a home office that can double as a space to accommodate guests or renters.

Affordable Housing

According to the United States Department of Housing and Urban Development, the median home price at the beginning of 2022 was over $400,000. High home prices have pushed the option of owning a home out of reach for many Americans and has contributed to a significant shortage of affordable housing, making ADUs an attractive housing option for adult children and extended family members.

Senior Living

According to the US Census Bureau, “The population age 65 and older increased from 39.6 million in 2009 to 54.1 million in 2019 (a 36% increase) and is projected to reach 94.7 million in 2060.” High demand for senior housing, as well as rising costs, have caused a lot of families to look to ADUs as financially feasible and comfortable dwelling options where elderly parents can spend their golden years near their adult children while still maintaining a modicum of privacy.
A contemporary Accessory Dwelling Unit (ADU) from Studio Shed featuring Marvin Essential windows.

Home Office—Plus

During the pandemic, record numbers of employees were forced to work from home, and it turns out—they liked it. According to a recent Gallup Poll, “Nine in 10 remote workers want to maintain remote work to some degree, and 3 in 10 employees working remotely say they are extremely likely to seek another job if their company eliminates remote work.” Statistics like these explain the exponential increase in the demand for home offices.

But many at-home workers are hoping to get more mileage out of their new at-home work space. Companies like Studio Shed, a Colorado-based firm, known for their sophisticated, well-designed, prefabricated backyard structures, has seen a tremendous increase in demand for their ADU product offerings.

Jeremy Nova, founder and creative director at Studio Shed, explained what his clients are after. “Many of our customers are looking for office space with the ability to flex into a weekend studio, guest house for friends and family, or maybe just a place to hang out. Some even rent them out as an Airbnb when not in use as an office,” he said.

How Much Do ADUs Cost?

ADUs can cost anywhere between $100 per square foot up to $500 per square foot. Seem expensive? One reason is that living spaces like family rooms and bedrooms are relatively inexpensive to build. Bathrooms and kitchens, on the other hand, are not. Unlike a bedroom, which only needs drywall, paint, flooring, and minimal electrical needs, a kitchen requires more extensive wiring, plumbing rough-in, plumbing fixtures, cabinets, hardware, countertops, and appliances. And there is typically a much higher ratio of kitchen and bath space compared to living space in an ADU.

Of course, where you live and who you hire has a lot to do with the price you pay. You may easily be able to build a 700-square-foot ADU yourself in the rural Midwest for well under $50,000. To hire a reputable contractor to build an ADU in the suburbs of San Diego will cost significantly more. Another variable is the condition of the existing utilities and how they’re situated on the property. Sewer, water, and electrical connections are inherently easier, hence less expensive, on some properties more than others.

Instead of thinking of the cost per square foot, it might be better to ask yourself, “Could I find a small house in my neighborhood for the price of building an ADU?” The answer will almost always be no. Once built, the cost of living is relatively low. If there is an increase in property tax, the amount should be negligible relative to the main residence. And if an ADU is well-designed, built using industry best-building practices, and assembled with the highest quality building materials, utility and maintenance costs will be low.

Are ADUs Allowed Everywhere?

ADUs are not allowed everywhere, and that’s because the demands upon and capabilities of each county, city, and town vary to such a large degree. Just some of the concerns that a municipality must consider when approving the construction of ADUs include:

Water Runoff:

In flood-prone areas, there may be restrictions on how much impervious surface (roofs, driveways, sidewalks, etc.) are allowed per lot.


Each municipality has unique capabilities when it comes to heating fuel and electricity supplies, road capacity, water supply, and treatment capabilities.

Historic Preservation:

Buildings located in historic districts are often subject to limitations as to the types of changes owners can make to the property.

Even if the town you live in does allow ADUs to be built, your homeowners association may not. There may also be additional restrictions on how you use your ADU. Renting ADUs for example, is not allowed in some neighborhoods. And while this all may sound discouraging if you’re looking to build an ADU, don’t lose hope. The combination of the affordable housing crisis, recent studies establishing ADUs limited impacts on infrastructure and the environment, and their potential to alleviate urban sprawl are driving more communities to embrace ADUs.

How to Choose an ADU Design Your Neighborhood Will Approve

The size and type of ADU you build will depend on your budget, the aesthetics of your primary home, the climate you live in, the restrictions of your local municipality, and most importantly, how you plan to use it. Pinterest and Google Images are always a good place to start, but when you’re ready to begin customizing a layout to fit your unique needs, there are great resources available like the design tool at Studio Shed.


A beautifully designed ADU that meets all your needs is of little worth if your local municipality won’t approve it. Because of the potential complexities of zoning requirements, it’s important to work with a contractor who is knowledgeable with the local code and zoning restrictions. Studio Shed has an entire department dedicated to helping its clients navigate the red tape that might be required by your municipality.

“The location, foundation, structure, and mechanical systems are all interwoven, key elements in the permitting process,” Nova said. “And because we are the ones who design and build the ADU, it just makes sense that we are the ones to have the engineering stamped and the project approved. That’s why we have an entire permit services department. It's a key component of how we manage each project.”

A contemporary Accessory Dwelling Unit (ADU) from Studio Shed featuring Marvin Essential windows.

How to Choose a Contractor

Building an ADU is a serious investment, which is why experience and reputation are the two most important considerations when choosing a contractor. If you know a nearby friend, family member, or neighbor who has built an ADU, ask them about their experience and find out if they recommend the contractor they worked with. Another safe bet is to contact a company that specializes in ADUs. Studio Shed has been building ADUs and other backyard structures for over 14 years and has a network of vetted contractors throughout the country.

Building Materials Matter

The amount of money you save by choosing inferior building materials may not be worth the headaches they can generate down the road. The engineers at Studio Shed have learned that choosing premium building materials is the best path to high performance, fewer callbacks, and long-lasting customer satisfaction. That’s why they decided to partner with Marvin.

“Our migration to Marvin was part of the process of wanting to create ever higher quality buildings, and to have the components that go into them really be commensurate with something you would consider high-end residential construction. Marvin’s industry-leading products really fit into that initiative. We've been very pleased with our partnership with Marvin,” Nova said.

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