Hottest trend in real estate: tiny add-on homes for in-laws or millennials

Posted by Lauren Spencer on Monday, December 1st, 2014 at 10:31am.

The hottest trend in real estate these days is carving out some space for your in-laws, the Wall Street Journal says.

And it has the potential to lift your home value as much as 60 percent.

Known informally as "in-law suites" or "granny flats" and formally as "accessory dwelling units" (ADUs), these little homes, usually somewhere between 300 and 800 square feet, are going up in backyards across the country. The multigenerational living trend has been picking up steam through the Great Recession, both as millennials return to their parents' homes and as boomers (and their parents) age.

To skirt zoning rules, in-law units often lack stoves. Click photo for a slideshow.

To skirt zoning rules, in-law units often lack stoves. Click here for a slideshow.

The main obstacle is zoning. Cities generally restrict the number of residences that can exist on a property. But often there are ways around that, if the structure is short enough, and/or if it's small enough in proportion to the property. In such cases, it's viewed not as a residence but as more of an outbuilding, skirting neighborhood restrictions.

Strangely -- and perhaps highlighting the dated way many of these zoning laws regulate residences -- the stove is frequently the dividing line over whether or not a structure is considered a home or not. So some developers add in small kitchenettes, but not stoves, simply because of zoning.

Kevin Casey, the CEO of New Avenue Homes, has been helping homeowners build these backyard cottages for about five years using his project planning software. "It's not a cultural shift; it's a reversion to the norm," he says. "If you go to Europe or Asia, this is what it's like. This is the way families have been living for centuries."


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