Why ADUs Aren’t Taking Off.....And What We Can Do About It
Accessory Dwelling Units (ADUs) get a lot of love on paper.
City planners, housing advocates, and policymakers have all pushed to legalize and incentivize ADUs as a low-impact way to expand affordable housing. And it makes sense:
ADUs provide aging in place options for elders
They create new rental opportunities in high-opportunity neighborhoods
They let homeowners generate income, build wealth, and support extended family
So with all that potential, why aren’t we seeing more of them?
After talking with over 75 homeowners, I can tell you: the issue isn’t interest, it’s funding.
The Reality on the Ground
Over the past year, I’ve spoken with dozens of homeowners, many of them in historically Black neighborhoods, who want to build an ADU.
They see the value. They have the space. Some even have a tenant or family member in mind.
But then they look at costs.
$120K–$250K construction estimates
Difficult access to HELOCs or cash-out refis
Traditional lenders unwilling to underwrite small infill projects
And they stop before they ever start.
This isn’t a knowledge gap. It’s a capital gap.
Zoning Reform Isn’t Enough
Cities love to announce that ADUs are now legal. And that is a win. But legalization without financing is like handing someone blueprints without giving them tools.
If we want ADUs to be more than a talking point, we need to build the infrastructure to actually deliver them.
That means:
City-backed ADU loan programs, especially for legacy homeowners
Pre-approved design templates to lower design and permitting costs
Design-build ADU partnerships that guide residents through the full process
Grants or forgivable loans tied to income-restricted rental commitments
ADUs Are a Justice Issue
In many of the communities I work in, ADUs could be a lifeline:
A way for elders to age in place while gaining rental income
A way to house young adults returning from college or entering the workforce
A way to prevent displacement while building community wealth
But right now, we’re asking people to act like developers without giving them the support, financing, or structure that developers get.
Policy change alone doesn’t build equity. Capital does.
What We Can Do
If you’re a policymaker: build the backend. Don’t just legalize ADUs, finance them.
If you’re a funder or lender: pilot an ADU-specific loan product that works for everyday homeowners.
If you’re a designer or developer: team up with community-based orgs to offer ADU delivery as a service.
And if you’re a homeowner: don’t give up. Let’s organize, pilot, pressure, and co-create new models that work.
Because one backyard unit at a time, we can move the needle on affordability, equity, and neighborhood resilience.