This post is part of a series about accessory apartments.
Perhaps you’ve heard about accessory apartments (also commonly known as Accessory Dwelling Units, or ADUs) being allowed in DC, but did you know they can help our affordable housing crunch? We’ll break down what these apartments — which can be made from basements, attics, carriage houses, pop-ups, and more — can do.
In 2016, DC adopted a new zoning code. In addition to simplifying and updating regulations, the changes included significant policy reforms. One of these is a provision that allows homeowners to develop accessory apartments in most residential areas of the city without needing any special permission. Accessory apartments can make housing more affordable for homeowners and renters alike.
To be clear, without additional incentives or regulations, the apartments that are developed as a result of the zoning change will not be “designated” (i.e. income restricted) as affordable housing. Rather, they can help make homes more affordable by increasing the overall stock of available housing, by offsetting the cost of owning a home, and by increasing options for relatively affordable rental housing in high-cost areas.
Accessory apartments and housing affordability: supply and demand
At the macro level, housing prices follow the rules of supply and demand: supply and price are inversely related, meaning that as supply increases, prices decrease, (and vice versa). There are a number of factors that contribute to the insufficient supply of housing in high-cost areas — scarcity of land, restrictive land-use controls, environmental and other regulations, insufficient infrastructure, expensive building materials, cumbersome permitting processes, community opposition to higher-density development, tight credit and financing, and more.
The severity of these barriers varies from place to place, but taken as a whole, they almost always lead to the production of too few housing units. Various factors have contributed to escalating housing prices in the Washington region specifically. Most fundamentally, the shortage of buildable land has limited development options and slowed housing production. At 68 square miles, the District has little land that isn’t already developed or owned by the federal government, and the height limitation inhibits efforts to increase density.
Insufficient housing supply causes households that wish to reside in a particular area to compete for a limited number of units. This competition leads to a bidding up of housing costs, pricing some households out of the market altogether.
Accessory apartments have the potential to help increase the overall supply of housing in the District, thereby driving housing prices down, or at least slowing housing price increases — if enough units are built. Under current zoning, which permits accessory apartments to be developed in DC’s lowest density residential zones, about 69,000 lots are eligible to build these units without any special permission.
To be sure, some lots will be excluded due to other zoning-related limitations (including setbacks, lot coverage, etc.), and by owner-occupancy requirements. However, based on an analysis of DC’s residential lots, it is fair to assume that DC could add a significant number of homes to its overall housing stock through accessory apartments, thus relieving some of the macro-level pressure that drives up the price of housing in the District.
Accessory apartments and housing affordability at the household level
Secondary units can help both renters and homeowners: accessory apartments provide an income stream to homeowners, and provide a relatively affordable rental housing option in high-cost areas.
When an accessory apartment is rented and produces rental revenue, it can offset the cost of housing for homeowners. The rent that the homeowner collects each month from the tenant in their accessory apartment (or in the primary dwelling, if the homeowner chooses to live in the accessory apartment and rents out the primary residence), may be used to offset expenses like mortgage payments or taxes and maintenance costs that may increase over time.
This makes housing more affordable for the homeowner and helps them achieve more housing stability because they have more money to pay for increasing housing expenses. This is important for all homeowners, but has particular value for low- and moderate-income homeowners who may be particularly susceptible to rising expenses and may be at greatest risk of displacement.
For renters, accessory apartments are an opportunity to access homes that are affordable in comparison to standard high-cost options in amenity-rich neighborhoods. Many neighborhoods containing primarily single-family homes with large lots are well-served by amenities like transportation, retail, and good schools. Increasing options for smaller, cheaper units allows more households to have access to amenity-rich neighborhoods.
Of course, in order for accessory apartments to produce these benefits, they must first be built. I’ll follow up with a post about the development process and resources for homeowners interested in developing accessory apartment. In the meantime, if you are interested in learning more about accessory apartments and the rules in DC, or if you have a question or experience you’d like to share, please check out the DC Accessory Apartments Forum.