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A new Freddie Mac study, using the 1997-2019 Multiple Listing Service transactions data, identified 1.4 million properties with accessory dwelling units (ADUs) in the United States. According to the study, first-time listings with ADUs grew most rapidly during the last decade. Analysis from the National Association of Home Builders' (NAHB) Eye on Housing blog finds the expansion of ADUs is fastest in high-cost areas in the southern and western regions of the country.

Accessory dwelling units (ADUs) are housing units that provide independent living though built on the same lot where the principal unit is located. ADUs can be detached or attached to the principal residence and are known by a variety of names – in-law suite, basement units, granny flats, carriage houses, guest houses, garage apartment, etc.

The percentage and number of rental ADUs increased as well. Close to 8,000 ADU rentals were leased in 2019, representing 2.9% of total homes leased on MLS. By comparison, less than 1,000 ADU rentals, or 1.2%, were leased in 2000.

The growth in ADUs matches NAHB survey data, which find that ADU development was widespread in the remodeling industry. A 2019 survey found that approximately one in five remodelers completed at least one ADU development project, with a median cost of between $100,000 to $150,000.

Data suggests California, Florida, Texas, and Georgia account for half of the identified ADUs and metros such as Portland, Ore., Dallas, Seattle, Los Angeles, and Miami are the fastest-growing ADU markets.

A recent NAHB survey found that one in five remodelers created ADUs by creating an addition or converting an existing space in the past year. Of remodelers reporting completing ADUs, nearly a third indicated the project cost at least $150,000. In a recent article for Forbes, Brad Hunter wrote that ADUs may grow in popularity, particularly among the millennial generation. Millennials, according to Hunter, are likely to renovate their garages and basements to create ADUs for a source of rental income to help with mortgage payments.

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