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What is the market size of accessory dwelling units in the US? How many of them are built for the past 5 years?
Hello! Thanks for your question about the market size for accessory dwelling units in the US, including the number of units built in the last five years. The short version is that after searching extensively through industry reports, market research, government data, and other sources, I've determined that the information you requested is not publicly available because the nature of how the ADU system works makes it very difficult to gather any sort of accurate national data. However, I was able to come up with a very rough estimate for potential market size. I'll explain all of this in more detail below.
METHODOLOGY
To respond to your request, I began by looking for industry reports or market research on the accessory dwelling units market in the US. As I mentioned above, there is not solid research available on this market. From that point, I began looking for a way to calculate the marketing size using existing data. For example, I was able to find a source of the price of building an ADU. With that information, I could have estimated a market size, if I had found data on how many ADUs are built per year. Unfortunately, this data was also elusive, despite extensive searching through government and census data, industry reports, news articles, etc.
It became clear through this process that there just isn't enough data out there on the industry to calculate the market size in any accurate way. During my research process, however, I learned some of the reasons why that's the case. I even found this article on why ADUs are hard to research. To summarize: permitted ADUs are quite rare in the US, because many cities and counties don't allow them, create a lot of barriers to getting a permit, or having zoning that makes them illegal. As a result, most ADUs are not permitted, and therefore off-the-record, making it difficult to estimate the market size accurately. Moreover, many ADUs are built by the homeowner rather than a contractor or developer, adding to the lack of a paper trail or any official economic reporting of the project. In addition, it's hard to know how to classify an ADU, which is a problem when looking for data. They don't quite fit with single family homes or multifamily units, but they aren't just home renovations, either. This was a problem, for example, when trying to look at census data on residential construction. Finally, there are many different names for ADUs that get used interchangeably - in-law suite, multigenerational house, tiny house, backyard cottage, etc. This was certainly a problem I faced in my own research in terms of using the right keywords to find the best information.
HELPFUL FINDINGS
Despite all the problems I've outlined above, I did find some useful data, and I didn't want to leave you empty-handed if I could avoid it. So, I'm going to use the data I did find to triangulate an estimate for the market size. My disclaimer, however, is that this will be a very, very rough estimate, involving a lot of guesswork, and therefore should be taken with a grain of salt. The intention is simply to give you a ballpark figure and a place to start for possible continued research.
One thing I know for certain is the data provided in this source on how much it costs to build an ADU. The data is from a survey done in Portland, OR, but it should be fairly generalizable to the whole country. Based on the survey results, I was able to figure some simple averages: the average cost for an attached ADU is $54,000, and the average cost for an detached ADU is $72,000. That makes the overall average, including both categories, $63,000.
As I mentioned above, this fact combined with data on the number of ADUs built per year would give us the market size. Unfortunately, I was not able to find a concrete figure for this, so I'll attempt now to estimate it. This is where the guesswork comes in to play, so bear with me.
According to the City of Portland, they issue roughly 200 permits for ADUs per year. However, Portland is known for having one of the best ADU markets in the country, as the city has liberal and supportive policies regarding ADUs. So, let's take a leap and say that country-wide, the average number of ADUs being constructed is about 25% of that in Portland. The population of Portland is 632,000 people, so if we calculate a per capita ratio of the number of ADUs being built compared with the number of people, it's .0003 (that's 200 ADUs divided by 632,000 people). However, if we're saying that the national average is a quarter of that, we have to look at it as 50 ADUs for 632,000 people, which gives us a ratio of .00007.
Now, we can apply that per capita ratio on a national scale. There are 318.9 million people in the United States, so if we apply the ratio, that's 22,300 ADUs being built across the country per year.
318.9 million people x .00007 per capita ratio = 22,300
So, we know from before that the average cost of an ADU is $63,000. If there are 22,300 ADUs being built every year at an average cost of $63,000, that gives us a total market size of $1.4 billion. For comparison, the total market for residential construction in the US is worth $330 billion, so $1.4 billion is only a fraction of that total (.004%, to be exact).
CONCLUSION
To wrap up, after searching extensively through industry reports, market research, government data, news articles, and other sources, a direct answer to your question was not available because there is very little national-level data on ADUs. However, I was able to provide you with a very rough market estimate of $1.4 billion. I hope this information is helpful to you! Thanks for using Wonder.