[jarnagin]

One unfortunate side effect of this is that this behavior ultimately gets priced into the market. When a house with an ADU will reliably fetch 20% more than one without, then eventually all houses on the market will have ADUs, with the consequence that people buying will need to depend on short term rental income in order to make their mortgage. I’ve seen this happening where I live (West LA) over the last ten years, and it feels like a net decrease in quality of life for everyone at this point.

[margalabargala]

If every house has an ADU, then the effective number of housing units in that area has been doubled, putting downwards pressure on housing prices.

If people bought their houses anticipating high rental income to make ends meet, that's a separate problem, and less bad than "people are becoming homeless because there are too few housing units".

[twblalock]

ADUs are not sold separately from the homes on the same lots, so the number of homes for sale has not doubled. The value of a lot with an ADU increases because the ADU offers rental income and/or extra living space to potential purchasers.

[BeetleB]

Could those ADUs not be used for long term rentals? If so, than I think that was the point being made - the effective number of units available goes up.

[twblalock]

Right, the effective number of rental units increases, which can help make rent more affordable, but this does not lower housing prices for purchasers.

It's not like the inventory of lots for sale doubles -- it stays exactly the same, but some of those lots increase in price because the ADU adds value.

[BeetleB]

The original thesis was:

> When a house with an ADU will reliably fetch 20% more than one without, then eventually all houses on the market will have ADUs, with the consequence that people buying will need to depend on short term rental income in order to make their mortgage.

If you significantly increase the number of units available via ADUs, then there's a lot more options to rent, and the demand to purchase houses goes down, bringing the prices down.

If the number of properties with ADUs doesn't go up enough to have that effect, then STR via ADUs will not significantly impact the housing market.

The reality is that if every house in the city had an ADU, most of them will not be used for STR, as the demand for STR isn't that high. They bring in a lot of money precisely because there aren't many options. If every house in LA suddenly had an ADU, you wouldn't get a proportionate increase in visitors. There will be an equilibrium point.

This is also ignoring the pain involved in building an ADU on an existing property. Depending on the locale, it can more than double your property taxes. Most existing homeowners will not build an ADU. Too much hassle, with uncertain income - most AirBnB hosts don't make much money via AirBnB - it's a fairly active investment and requires a lot of time/coordination.

[twblalock]

> If you significantly increase the number of units available via ADUs, then there's a lot more options to rent, and the demand to purchase houses goes down, bringing the prices down.

Why would demand to purchase houses go down? People aren't buying houses because they can't find rentals. People buy houses because they want to be homeowners.

[moistly]

I live in the BC interior. It is virtually impossible to find a place that does not have an ADU. Old house, new house, small house, large house, it doesn’t matter: perhaps 1 out of 50 is single occupancy, all the rest have a rental suite. I think your notions are incorrect.

[jarnagin]

Unfortunately most of the ADUs around here are converted garages--maybe 300 square feet with a micro kitchen. They're essentially hotel rooms, not a place where someone would live. This is a much different thing than a multi-unit lot.