Jul 19th, 2023

How to Cash In On the Growing Demand for ADUs

Accessory Dwelling Units, also known as ADUs, have had a dramatic impact on the real estate market ever since the tiny home craze took over the country in the early 2000s. While younger generations look at real estate differently and multigenerational households are becoming more common, construction companies are struggling to keep up with the times and offer ADUs to the millions of homeowners and investors who are ready to pull the trigger on this lucrative business opportunity. So, let’s take a closer look at the tiny home and ADU market, why it’s gained so much popularity, and the positive impact it can provide to the housing industry and our society as a whole.

Anchored Tiny Homes is in a growing industry, so join our franchise and cash in on the real estate market.

Why Accessory Dwelling Units are Growing in Popularity

Everyone from current homeowners to prospective home buyers and real estate professionals have watched the housing market change and adapt in recent years. With multigenerational households gaining popularity, a solution has come to the housing industry to provide a new opportunity to those looking for additional space in and around their home. ADUs have become an increasingly more viable option for property owners to invest in, and as the ADU market continues to experience unprecedented growth, it’s become a more lucrative business opportunity for home builders and housing developers alike.

The Housing Market

The state of the housing market has always been a topic of conversation but has been especially on our collective mind since the 2008 market crash and with the internet providing more available information and news on the subject. While this industry has seen massive shifts in the past three years due to the COVID-19 pandemic, we saw 2022 come and go, with it remaining a seller’s market for the majority of the year. So far, 2023 has seen buyers begin to gain an upper hand in the equation, with the supply slightly outweighing demand. However, there’s another, bigger aspect at play: interest rates.

In the past, interest rates have risen and fallen based on a number of typically fixed factors. However, the biggest conversation surrounding this subject stems from their change during the pandemic, where the average home mortgage rate dropped below 3% in response. Today, most densely populated areas have since seen this rate climb to upwards of 6 and 7% in just under three years, making millions of buyers wary and hesitant to jump into buying their first home or even a new home.

Additionally, it goes without saying, but the average price of a home has grown steadily over the past hundred years, while the median household income has not progressed at the same rate. It’s no longer feasible for everyone to purchase their own home as in previous decades, and those that have been able to afford it have been mostly from existing homes and not new home builds.

The Housing Crisis

While the phrase “housing crisis” is thrown around often in conversation and in the media, it is a serious issue across the nation and affects a variety of aspects in our society today. Essentially, the affordable housing crisis is the term given to the long-term shortage we’ve seen of affordable homes available to low- and even median-income renters. This has resulted in people being forced into lifelong relationships with renting and increased rates of homelessness–especially in areas with higher population density.

According to The National Low Income Housing Coalition’s 2023 report, most renters across the country are feeling restricted to renting due to both the limited real estate inventory in their areas, and the markedly high interest rates being placed on home mortgages today. This shortage disproportionately affects people of color and the most severe shortages are being seen in states like Nevada, Oregon, Florida, California, Arizona, and Texas.

The Solutions Accessory Dwelling Units Provide

ADUs, whether they’re built as 300-square-foot studios or they can boast multiple bedrooms and over 1,000 square feet, are the alternative homeowners today are turning to when they both want to avoid diving into an expensive housing market and want to do what they can to provide affordable housing to their friends, family, and community. Everyone from aging parents moving in with their adult children, people moving back in with their parents after college, and homeowners needing additional space in the wake of the work-from-home and small business ownership movement can benefit from ADUs.

A beautiful Anchored Tiny Homes project, ready to be enjoyed by someone.
  1. Additional Space for Family
  2. Thanks to today’s housing market, more and more people are choosing to move in with family and friends who are already homeowners, instead of taking their chances with rentals. This generational shift away from purchasing a home to retire in or buying your first home just after college has led millions of homeowners to cramped living situations that are being solved by the addition of ADUs. This can provide the aging parent that’s moving in with their adult children with independence or the recent college graduate privacy from their parents.

    Today, accessory dwelling units are no longer the repurposed garages or prefabricated sheds they used to be; now, stick-built ADUs can mimic the same homey feel as the main house, whether they’re attached to the main building, or detached and maintaining their own space in the yard. Custom-built ADUs give homeowners the freedom to create additional living spaces that match the aesthetics of their current homes, without asking them to sacrifice any interior square footage. This is giving people flexible living arrangements that help them spend more time with their family, in addition to a financially smart investment that adds to the value of their property.

  3. Room to Accommodate Telework
  4. While the work-from-home arrangement is far from revolutionary, the pandemic and all the associated lockdowns it caused led to a sudden, nationwide shift in the way they see the physical workspace. Today, with over a third of employees with ‘teleworkable’ jobs continuing to do so full-time, it’s made people look differently at their homes and consider how they can create the hybrid space that’s growing so necessary for millions across the country.

    Since the housing market in many metropolitan areas remains unsteady and interest rates remain sky-high, homeowners are turning away from rejoining the buying crowd and instead are considering ADUs to supplement their existing square footage and shrink their unused backyard space. These ADUs are often built to be multipurpose, solving homeowners’ need for a home office, as well as additional space for storage as an alternative to the storage unit industry, and to create spare bedrooms in the form of mother-in-law units.

  5. Additional Space for Revenue Generation
  6. Rental properties are nothing new, with homeowners and real estate developers alike having regularly capitalized on this market for hundreds of years. However, as the internet has grown, so has the availability of information surrounding this type of revenue generation, leading to more people joining the landlord profession in the past few decades. While the traditional practice of turning newly purchased real estate into rental properties is still incredibly common, more people are recognizing the opportunity in their own backyards.

    Thankfully, this isn’t an isolated trend we’re seeing in just a handful of states; more and more parts of the country are passing legislation to allow the construction of ADUs, including California, Texas, Oregon, and more. This is because these states recognize the potential impact these units can have on the housing crisis and the positive effect they’ve already shown in the affordable rental market.

    Whether a housing developer is considering adding multiple ADUs to a small parcel of land to maximize profitability, or a homeowner is looking to bring in revenue by using an otherwise underutilized portion of their property, ADUs are becoming the popular solution in real estate today.

The Only Tiny Home Franchise Catering to this Demand

As the popularity of ADUs and tiny homes continues to grow, only a handful of construction companies and firms are taking advantage of the demand, leaving customers on months-long waiting lists. That’s why our Anchored Tiny Homes founders took their construction experience and put it to work in the ADU space after recognizing the incredible revenue potential and seeing how it would give them an opportunity to help solve the U.S. housing crisis. Today, the tiny home franchising opportunity they present gives entrepreneurs and prospective business owners across the country the chance to make the same money and impact.

The gorgeous interior of an ADU project done by Anchored Tiny Homes - a franchise for sale.

Break into the Accessory Dwelling Unit Space

Anchored Tiny Homes is the only tiny home and accessory dwelling unit franchise in the U.S. today and has created the ground-floor franchise investment opportunity for those who feel motivated to change their community for the better and to escape corporate work. When Scott Paulhus and his two sons, Austin and Colton, broke into the unique niche that is ADUs, they knew that the solutions they provided to investors, homeowners, and disadvantaged renters alike would transform the construction and housing industries altogether. With our low initial financial investment and minimal employee requirements to start, it’s easy to get in on the ground floor, capitalize on the ADU home-building service in your market, and start making a difference.

Whatever your life looks like now, know that there is another way to provide a brighter future for your family and the community that surrounds you. When you leave your day job to start your own Anchored Tiny Homes business in your area, you get the impactful, turnkey opportunity that comes with all the support you could need to get started. To learn if you qualify, check out our website or contact us to learn more.