Mar 20
Acton Construction

This is What Could Happen to Your Resale Value if You Add an Accessory Dwelling Unit (ADU) to Your Silicon Valley Property

Posted on by Acton Construction
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To ease the crushing housing shortage in Silicon Valley, laws have changed to encourage homeowners to build accessory dwelling units on their property—to house aging family members, help grown children find a place to live in this challenging rental market or generate extra income using the space over a garage or in the backyard. But some Silicon Valley homeowners are asking, “How will an ADU affect my home’s resale value?”

Remodeling Magazine has some good news for Silicon Valley property owners: real estate professionals in high tech areas of the West Coast (Silicon Valley, San Francisco, North Bay, Santa Rosa, etc.) report that most of the homes sold in the last year that included a recently-added ADU more than recouped the ADU project cost in the resale—well beyond, in most cases.

Nevertheless, it’s still hard to pin down exactly how much resale value an ADU might add to your property. The topic hasn't been explored in depth yet, but homeowners don’t have to be totally in the dark: A 2012 study published in The Appraisal Journal titled Understanding and Appraising Properties with Accessory Dwelling Units surveyed 14 ADU-enhanced properties in Portland, Oregon. The study concluded that ADUs generally contributed about 25% to 34% of each property’s assessed value. Furthermore, adding an ADU demonstrated an average of 51% increase in resale value.

Should I Build an ADU on My Property?

That’s the million-dollar question for many Silicon Valley homeowners. With Acton Construction’s specialized knowledge of the latest ADU laws, codes and local impacts, we can help you find the answer.

One misconception many homeowners have is that they need their neighbors’ permission to add an ADU or that they need a large plot of land. But, this isn’t usually the case. There are also many ways to add an ADU that can fit your situation.

“Almost everyone has the right to build an ADU,” said Stan Acton of Acton Construction. “That could mean converting a basement or an attic, building an addition onto the main home, remodeling an existing space or adding a cottage to the backyard. It could be a playroom or an apartment. There are many possibilities.”

Also, ADUs can be as small as 250 square feet for a studio. A one-bedroom cottage can fit into as little as 450 square feet. A comfortable two-bedroom can occupy between 650-700 square feet. Acton Construction’s ADU team specializes in optimizing these smaller spaces.

Windermere Real Estate reports that Santa Clara County’s median home price now tops $1.7 million. With our community in dire need of more affordable housing, why aren’t more people jumping into an ADU project?

“It’s a big investment, but you’re creating a new house—and adding value—in the most expensive real estate market in the nation,” said Acton. “For many of our clients, an ADU helps them keep family close, with the added benefit of helping solve Silicon Valley and Santa Clara County’s housing crisis.”

If you're considering adding an ADU to your property, but need some questions answered first, schedule a complimentary design consultation with our ADU experts, or call 408.369.1103.

You can also subscribe to our popular e-newsletter or sign up for one of our free ADU seminars to learn about California laws permitting you to build an ADU on your property, the benefits, potential designs and how to finance a project. Please RSVP early as space is limited and demand is high!

Our passion is designing creative, functional plans for spaces that meet your needs, style, and desires.

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