For Nancy Stern, adding an Accessory Dwelling Unit to her backyard made sense on several levels.

Knowing that the cost of Bay Area housing is “outrageously expensive,” Stern looked at adding an additional dwelling to her Richmond Annex property, as a flexible housing option for either her or potentially her friends and family.

Building Accessory Dwelling Units — known as ADUs, in-law units, or granny flats – have become an increasingly enticing option for Bay Area homeowners in recent years. Some see the added flexibility as another layer of housing security.

The addition to Stern’s property is not just a boon to the family, it is another way that Stern, 67, is preparing for the future. Along with the current dream of using the 315-square-foot studio to help support family members, Stern sees it as a way to potentially downsize in the future.

“There are fewer steps in the back, so in my aging process, it could have the potential that I would stay back there, and this main house could be rented, or part of it could be rented,” Stern said.

The Bay Area doesn’t keep strict records on the usage and building of ADUs, but experts say that the overall demand for the granny flat is steadily increasing across the state. Bills such as California’s SB 1069 and AB 2299, which took effect in 2017, are being credited with growing this particular area of housing, according to Matt Regan, senior vice president of public policy with the Bay Area Council.

“We made it much clearer and simpler for homeowners to build [ADUs], and we saw a huge spike,” said Regan. “Between 2014 and 2017, we’ve seen an uptick of maybe 15 to 20,000 ADUs across California.

“Significant, but still not going to solve our housing crisis — but we’re still in the very nascent stage of this effort.”

San Francisco and Oakland are among the cities in the state feeling the increase in ADU applications. San Francisco went from receiving 41 ADU applications in 2015, to 384 applicants in 2016 and 593 applicants (through Q3) in 2017. For Oakland, the city received 33 applications to build an ADU in 2015, before tripling to 99 applications in 2016, and 247 in 2017 (through November 2017), according to UC Berkeley’s Terner Center for Housing Innovation.

While Regan said that ADUs won’t be the only solution to the local housing crisis, one area where he felt it could be helpful are parts of the area being hit hard by gentrification.

“What ADUs do in a lot of lower-income communities that are at risk of gentrification, it allows existing homeowners to stay,” said Regan. “They can capitalize, monetize their asset, their home as you will, and it allows them to stay in the community and add a new unit of housing.

“So it’s a win-win situation to prevent the pressures of gentrification that you see in low-income communities, where you know multi-generational homeowners are often the glue that holds those communities together,” Regan continued. “Far too often, we see people going into those communities making all cash offers for a home that that homeowner can’t afford to meet.”

Anecdotally, those working in local construction are seeing plenty of clients who are in a similar, familial mindset such as Stern’s, constructing ADUs with the intent to help family members. Steve Vallejos of Valley Home Development said about 80 percent of his clients constructing ADUs are doing so with a family-oriented goal in mind.

“Usually it’s something with either an aging parent, looking for a place to put them; it could be children who are struggling to launch,” said Vallejos. “It could be children who are already launched and started families, but they’re struggling, and so there may be a single parent or grandparent who decided, ‘I’ll move into the ADU and you take over the primary residence.’ There’s also a growing niche of families who are doing ADUs for their disabled adult children and trying to get them acclimated to living on their own.”

Working in building ADUs since 2006, Vallejos said that up until 2016, his firm was building 10 or 15 a year. These days, that number has multiplied, with Vallejos saying his company is on track to work on almost 100 this year, including Stern’s new studio.

The increase in ADUs, especially within a family unit, mostly has to do with necessity, said Regan, especially with extended family that an existing home cannot accommodate, such as kids moving home from college or aging parents.

“You can build an accessory dwelling unit in your backyard for $100,000,” said Regan, “Try putting two parents in assisted living for a couple of years — very soon that $100,000 is gone. You can do an ADU and have your parents in the yard, and have them close by and cared for at a much lower cost than assisted living.”

While ADUs aren’t necessarily a cure-all salve for the Bay Area’s housing issues, some say it can help ease the regions struggles in untapped ways. David Garcia, policy director for UC Berkeley’s Terner Center for Housing Innovation, called the growth of ADUs “a positive” for the Bay Area.

“[ADUs are] one of many tools that the region needs to confront its broader housing crisis,” said Garcia. “I think ADUs present the lowest hanging fruit: They typically encounter less resistance [from cities], they’re cheaper to build and they’re oftentimes rented at below market rates, or for many times, nothing at all because of the relationship between who lives in the ADU and the homeowner.”

The gold standard of ADU usage is the case study of Vancouver, Canada, where 35 percent of single-family homes have an accessory dwelling unit as of 2016, according to independent, nonprofit research group Sightline Institute, with a resulting 26,000 ADUs in the area.

If the Bay Area could get closer to that 35 percent figure of Vancouver homeowners converting their garages and basements, or building an ADU in their backyard, we would be putting our “grossly underutilized” suburbs to good use, said Regan.

“We have a million and a half single-family homes in the Bay Area … if we could get a 10 percent saturation, we’d get 150,000 new homes built with no public subsidy required, built at much less cost than existing techniques and construction and — if they can be built relatively quickly — they don’t require the same painful, multi-year permitting and approval process that the standard, multi-family housing project requires,” said Regan. “We’re adding gentle density to the suburbs and maximizing a lot of the underutilized land in our suburban communities.”

Pricing for ADUs can vary, depending on the size, but ADUs can cost an average of $156,000, according to the Terner Center, a hefty price for some, but can seem like a bargain in the context of Bay Area real estate prices. Stern’s studio addition to her backyard cost her $119,204 (without furnishings), and was built in 90 days — and she couldn’t be happier with the outcome.

“It’s a gift to be able to be a homeowner, to begin with. If you can do something on your property to allow more flexibility for your family, then that’s also a gift,” said Stern. “Not everybody can do it, so I think that trying to encourage people to really do something like take their garage down or convert their garage or whatever, is really a very practical thing to do.”

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