Reply to Say it with me: ADUs drive housing prices UP not down

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]We live in a starter home with a decent sized yard. We could easily fit an ADU and we could pay for it by borrowing against the appreciation in the value of our home. And that would increase the value of our home overnight by probably 30 percent.

How exactly does that help affordable housing? How does that help someone trying to save up to buy their first home, a starter home like ours? All it does it drive the price of our starter home beyond the budget of anyone who would be in the market for a starter home.

I can't tell if the D.C. government is cynical or just stupid in how they portray policies that are designed to enrich developers and people who already own homes as somehow helping everyone else. [/quote]

1) the income it provides to you helps make your house more affordable
2) the rental unit provides a lower cost option to another person or family[/quote]

But it DOESN'T make the original property more affordable to the next buyer. It creates cheaper housing in people's backyards for rent. The property itself won't be cheaper after adding an ADU, but more expensive.

Do I have that right? [/quote]

Yes, the property will be more expensive because there are two units of housing on it instead of one. Just like, generally, a one-acre parcel with 20 units of housing on it will be more expensive than the same parcel with 1 unit of housing on it. It should go without saying that a one-acre parcel with 20 units of housing on it has 20 times as many housing units as a parcel with 1 unit of housing on it.[/quote]

So what you’re saying is ADUs are zero sum and we have to choose between rental affordability and purchase affordability. If that’s the case, it’s worth a conversation about balancing rental and purchase affordability, because those two things are actually linked. Monthly mortgage payments put a soft cap on rents, so if mortgage payments go up on average, rents have more headroom to grow. [/quote]

You are completely confused. Your error is in thinking that when the price of the property increases, the property remains the same. But it doesn’t. It now has more bedrooms and square footage. More baths. This makes it cost more.

The benefits in affordability are achieved by having more available bedrooms/sq ft available for occupancy in any given market. S[b]upply and demand. [/b]The additional bedrooms available for occupancy will create downward pressure on overall prices. You could still buy the original unimproved property for the same price or less if it existed. 
[/quote]

We've been hearing for a while now the same tired simplified trickle down economic theory from the development industry.  What we do know is that housing markets are highly segmented, even in proximate geographic areas.  But this notion that building more and more housing will drive down prices, much less create affordable housing, doesn't have much evidence behind it.  In NW DC, for example, there has been significant new housing stock built (at last in multifamily building) compared with the prior decade.  City Ridge has been the most significant example.  Has anyone noticed downward pressure on rents or condo prices.  And where is all of the affordable housing that we're being told will result from this?

ADUs are good for small, more affordable units in neighborhood.  But opening the sector to third-party investors and developers WILL result in increased rental prices for the ADUs themselves and the SFH homes to which they are paired.  [/quote]

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