The national housing shortage has prompted a push toward increased housing density, with accessory dwelling units (ADUs) emerging as a key solution. The rise in demand for smaller homes located near urban centers, combined with the need for more affordable housing, has led state legislatures to introduce policies aimed at easing the construction of ADUs.
In 2024, several states—including Colorado, Arizona, Massachusetts, Hawaii, and California—passed or updated laws to simplify ADU development. However, local governments still have significant control over whether these new policies will be successfully implemented.
In Colorado and Arizona, new laws have made ADUs legal by right, meaning local governments can no longer prohibit their construction. These laws also eliminate or minimize additional requirements such as parking, design restrictions, and owner-occupancy mandates, which have previously slowed down ADU development. Hawaii followed suit with similar legislation, although it did not address parking requirements.
In Massachusetts, the Affordable Homes Act passed in August, allowing ADUs up to 900 square feet on single-family lots, with the expectation that 8,000 to 10,000 new ADUs will be built within five years. These laws aim to lower the barriers for homeowners and builders looking to construct ADUs.
California, a state with a long history of supporting ADU development, introduced several new laws in 2024 to further streamline the process. Key measures include the permanent removal of owner-occupancy requirements, the ability to sell ADUs separately from the primary residence, and the establishment of programs to pre-approve ADU plans, which will speed up permitting.
States Push for Increased ADU Development to Tackle Housing Shortage, But Local Governments Hold Key to Success
Additionally, California introduced laws requiring utilities to post clear estimates of fees and timeframes for service connections, providing homeowners with greater transparency. These changes are designed to make building ADUs a more straightforward and predictable process, contributing to California’s efforts to address its housing crisis.
Despite these advancements at the state level, local governments remain the ultimate gatekeepers when it comes to the implementation of ADU policies. Many municipalities still prioritize large single-family homes, which can create financial obstacles for ADU development.
For instance, in towns like Lyons and Nederland, Colorado, high impact fees can make building ADUs unfeasible. In Nederland, the cost of impact fees for an ADU can reach $65,000, a significant burden for smaller housing projects. While some towns are working to reduce these fees, the high costs remain a major challenge to increasing the supply of ADUs.
To further promote ADU development, municipalities could adjust their approach to impact fees, prorating them based on the size of the building rather than the type of dwelling. Other strategies include adopting more flexible zoning regulations for smaller homes and offering incentives such as fee waivers for ADUs that are not intended for short-term rental use.
Fast-tracking the permitting process for pre-engineered ADU plans, as California has done, could also speed up construction. Ultimately, while state laws have made significant progress in facilitating ADU development, the success of these efforts depends on how local governments choose to implement and adjust their policies to support smaller, more affordable housing options.
